Category Archives: Monetary Policy

Boom, boom goes the market, unions get whacked and Elon is still on the dole!

We haven’t really touched on the economy in a while, so I’ll briefly hit some of the latest news and invite your discussion in the comments. First up is the state of the markets.  Many Berean readers know that I’m suspicious of the markets, and have been for years, since valuations by most conventional measures are on the very high side. I have attributed this primarily to the low interest rate policies of the global central banks (not just the… Continue Reading ››

“If we don’t buy this apartment, we’ll miss the chance to get rich.”

Mr. Trump blames bad trade deals as helping the Chinese profit at the U.S.’s expense.  Undoubtedly we could have better trade deals, if we made them one-page long rather than the monstrosities that Washington normally cooks up.  Nevertheless, I remain convinced that on balance free trade agreements are beneficial, leading to higher standards of living than we would otherwise have had.  I assert that our economic problems are primarily located in Washington DC, not in Beijing or Mexico City. When… Continue Reading ››

Stock Markets hit record highs, yet earnings are crushed…what’s up with this? And will it make Donald Trump the president?

Stock markets hit record highs this week, and yet most people aren’t excited about it.  Google “the most hated bull market in history” and you’ll find many reasons for pessimism–we just don’t trust this market.  In normal times, this would indicate we are still healthy, as legendary investor Sir John Templeton once said: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” Yet we’re in anything but normal times.  I often tell people… Continue Reading ››

The Trend of Economic Freedom in the United States

Yesterday the Heritage Foundation released the 2016 Index of Economic Freedom. This annual publication is produced by the Heritage Foundation in conjunction with the Wall Street Journal. In addition to the 2016 Index the foundation also published Economic Freedom in America, a supplement outlining trends in economic freedom in the United States. Figure 1 illustrates the overall composite freedom score of the United States from the inception date of the index in 1995 to the latest figures which cover through the midpoint of… Continue Reading ››

Just one little interest rate hike…and stock market bubble is bursting?

This blog is not investment advice.  Mainly because yours truly has no clue what to tell you to do, although some foolishly ask him, demanding SPECIFICS.  As if without a specific prediction you have nothing worthwhile to say.  It is absolutely true that I might have nothing worthwhile to say–but not because I fail to include specifics!  I should also say I’m not currently shorting the market–although I wish I was.  I personally ended most of my “long” or bullish… Continue Reading ››

It’s a Central Banker’s World now! Buy the dips! Or maybe not…

It always amazes me that most people think that the effect of central bankers on the global economy is small. Its not just our resident critic here @ BATG. I went to a conference last year where a very conservative Christian financial advisor told me that the stock market was basically just about the great earnings. Bubble? I don’t see no stinkin’ bubble! Yet virtually daily other players say the most important thing to follow in markets is the lead… Continue Reading ››

International Monetary Fund warns on the bubble they encouraged! But has the horse already left the barn?

  Yes, another blog post on the Fed’s failed monetary policy.  I hate to keep blogging on this particular issue, but it continues to be the major economic issue facing us.  Now that the effects of the easy credit bubble deflating are becoming apparent to everyone, including famed corporate takeover investor Carl Icahn, the IMF is warning the Fed not to raise interest rates, lest it trigger a wave of emerging market corporate defaults and panic in financial markets as liquidity… Continue Reading ››

In Fed We Trust!

Tomorrow the Fed will announce its decision on whether to increase interest rates for the first time since 2006, and the markets seem to be thinking we’ve got at least another meeting until it happens. Markets are up in the last couple of days and even long-beaten gold is catching a bid, sensing that interest rates won’t rise. In one of my last posts I opined that the Fed wouldn’t increase rates, but I can’t disagree with one of my… Continue Reading ››

Boom Boom! Bust?! What’s next for world markets?

Lots of press the last few days on the markets crashing, with the first stock market correction since 2011.  I’ve been warning that this won’t end well, but that doesn’t mean I have the answer to what happens next–if I did I would be making the trades first thing tomorrow to profit from it myself.  As is often said, he who lives by the crystal ball eats lots of broken glass. Nevertheless, there are some things we know.  Central banks… Continue Reading ››

175 quadrillion Zimbabwe notes will get you $5…Sounds like a deal to me!

One of the joys of teaching economics is pointing out the foolishness of poor economic choices.  It is precisely by showing the linkage between cause and effect  and demonstrating unintended consequences that helps students understand “the economic way of thinking.”  As a monetary economist, there is perhaps no better visual aid than passing around an actual $100 Trillion Zimbabwe note.  These notes were basically worthless at the end of Zimbabwe’s hyperinflation in 2008-2009.  Yet I gladly paid $5 including shipping… Continue Reading ››