In part 1, I walked us through the basic macro model of aggregate supply and aggregate demand to show that either increased demand or decreased supply, or both, could lead to higher prices. In this post, I want integrate money into the picture, since I agree with Milton Friedman’s famous dictum, “inflation is always and […]
Archives
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Are you ready for your 401k to be cut in half?
10 Oct 2021
If you can’t stand the thought of your 401k being cut in half, then perhaps you ought not be in the stock market. It’s unfortunate, but the Federal Reserve has engineered asset prices to leave most investors with the Hobbesian choice of greatly overvalued stock and bond markets, or going with the money market opportunities […]
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US Debt Increase: Without it must we default?
05 Oct 2021
One of the continuing tropes we see around every debt limit extension is: 1) if we don’t extend the debt we force the government into default, and 2) the U.S. has never defaulted on its debt, and finally 3) that would force the U.S. to pay much higher interest rates in the future. So let […]
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Or alternatively, who will rescue us from the American Rescue Plan Act? We are ever so close to the Democrats completing their $1.9T blowout to reinvigorate the economy. Undoubtedly the House will pass it quickly (likely today) and Mr. Biden will sign it. Key features include extending the child tax credit, direct payments to citizens, […]
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This is the day…
20 Jan 2021
Yes, Joe Biden will become the U.S. President in a few hours. For some, this is the end of a nightmare, for others, it’s only the beginning. And yet for others, it’s a different kind of nightmare. But as I started our intro headline, I couldn’t help but remember that jingle that we used to […]
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The Cleanest Dirty Shirt Is Still A Dirty Shirt
31 Dec 2020
Dr. Haymond referred to the dollar as, “The cleanest dirty shirt,” in a comment on my last post (note the shameless plug). I think he is correct, and I have heard him use similar terminology before to refer to a variety of policies and institutions in our imperfect world. We may not have the best […]
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Low interest rates….forever?
10 Sep 2020
That’s my prediction. Yes I know, he who lives by the crystal ball eats lots of broken glass. Yet our national debt is exploding, and the deficit is only going to get bigger this year and subsequently (above and beyond the previously bad projections). So why wouldn’t interest rates rise with all this borrowing? Doesn’t […]
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Standard financial analysis suggests the value of any stock is equal to the present discounted value of its future earnings. Thus an increase in the price of any stock is due to either an increase in expected future earnings, or a reduction in expected future interest rates, or some combination thereof. With today’s close at […]
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Fed’s Monetary Guns Keep Coming Up Empty
16 Mar 2020
S&P futures are limit (5%) down this morning, meaning no trade can occur pre-market opening that is not above the 5% down, and one ETF that tracks the S&P 500 is down 9%, indicating the bear market is still alive and well. This despite the Federal Reserve bringing out the big guns on Sunday by […]
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Coronavirus and Financial Markets
02 Mar 2020
As I write this morning, markets (Dow Futures) are trending downward to open today by about 300 points, after going into correction (>10% down) territory in last week’s wild action. Mr. Trump is (once again) asking for the Fed to ride to the rescue. “This is something I think they should’ve done even beyond this […]
Bert Wheeler
Jeff Haymond
Marc Clauson
Mark Caleb Smith
Tom Mach