Economics

Bill Bonner: Debunking the Fed’s Credit Propaganda

"We have no choice but to go ahead. But to where? And how? Hold on. One question at a time, please. To where? Japan! How? By using the same policy tools the Japanese used. It worked there, didn’t it? The Fed is fully committed to staying the course. If credit deflation returns to the US, it will have to be over Janet Yellen’s dead body. Which is not a bad idea. But Yellen is not likely to let it happen… not if she can prevent it. But there’s the rub. If credit is going to keep expanding, someone has to borrow more – a lot more." Continue reading →

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Cheap Printing vs. Expensive Drilling

"Yellen explained that the Fed helps people secure employment 'by influencing interest rates.' She followed, 'Although we work through financial markets, our goal is to help Main Street, not Wall Street.' Her predecessor used the same rhetoric in 2012. 'This is a Main Street policy. Many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.' Oil, unlike the Fed’s fiat dollars, can’t be created out of nothing. And, job or no job, people are driving. Mrs. Yellen tells crowds, Don’t worry be happy, your job will be printed anytime now. Let’s just say, for those with a job to go to, getting there will not be getting easier." Continue reading →

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Incredible confusions: Why ‘austerity’ if we can just print the money?

"Debt can either be repaid or be defaulted on. Destroying the purchasing power of money through inflation is one way to default on the debt. Simply not paying the debt is the other option. In both cases, savers, ‘thrifty pensioners’, and the customers of banks, insurance companies, and pension funds will suffer, and in the inflationary scenario everybody will suffer greatly. Sadly, the massive printing of money and accumulation of debt that has occurred since the termination of the gold standard and the adoption of limitless state fiat money and pro-growth central banking has now brought us to a point where defaults appear to be unavoidable. This is not some great reset. It is a man-made catastrophe." Continue reading →

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Bill Bonner: The Massive Problem Threatening the Global Recovery

"Debt is an obligation laid upon the future by the past. The larger it gets, the harder it is for the future to happen. There is a correlation between extreme levels of public debt and low economic growth. High levels of debt-to-GDP have been historically associated with low levels of economic growth. That is what has been happening in Japan for the last 23 years… and in Europe and the US for the last seven. These economies are still fighting deleveraging, resisting debt deflation and pretending that they can continue to add debt forever… and that somehow this will get them out of their debt traps. But they are doomed. Without growth they can’t pay the debt. With so much debt, they can’t grow." Continue reading →

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Stefan Molyneux, Bitcoin: The Psychology of Money

"What does psychological research reveal about people's perception of money and value? What mental barriers do Bitcoin adoptees need to overcome to help others welcome the new paradigm? Stefan Molyneux, host of Freedomain Radio, brings the latest scientific insights into the psychology of money and value to bear on the challenges of evangelizing Bitcoin to the masses!" Continue reading →

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Bill Bonner: The Coming Bull Market in Gold Stocks Is Going to Be BIG

"Most empires were financed on the loot captured from their conquered opponents. But the US Empire depends not on generals, but on bankers. Bernanke – the 'Hero of ’08' – kept the credit flowing at a crucial moment… He kept the empire on schedule… and on target… for its rendezvous with disaster. [..] Debt has its lifecycle. So do empires. Both expand. Then both… without exception… contract. An empire funded by debt is an especially ungainly, grotesque thing. It lurches from one disaster to another – going deeper and deeper into debt each time. But it is not the debt that kills empires. Debt is just a razor conveniently left on the side of the tub." Continue reading →

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Truth and Consequences of Fed Money Printing

"Don’t be persuaded by the theory that the dollar is invulnerable … that inflation is dead … or that none of this really matters. Above all, don’t let anyone talk you out of protective investments. Indeed, the same investments that can help shield you from the consequences of the Fed’s folly also have the potential to deliver some of the greatest profit bonanzas of this era. Our editors are continually scouring the globe for the best opportunities at the best time. Today, I want to set the stage by taking you on a tour through time — to help you experience the consequences of central bank money printing … and to see the fortunes that can be lost, or made, as a result." Continue reading →

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Bill Bonner: Why the Crowd Is About to Get Destroyed in US Stocks

"In the US, as in Japan, QE does not help stimulate a real recovery. But it does help simulate one. House prices are up (thanks, in part, to ultra-low mortgage rates). The middle class has more 'wealth' (albeit the paper kind) due to gains in their stock market portfolios. The rich are feeling fat and sassy, too. The Fed can continue modest tapering. But this is likely to produce a selloff in the stock market. Then the Fed will stop tapering. But it will be too late to reverse the damage to equities. They will go down for many years… bringing us even closer to the Japanese model. Our guess now is that this situation will persist for a few years." Continue reading →

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Bill Bonner: An Important Update on Our New ‘Trade of the Decade’

"The Nikkei 225 rose 57% for the year – the best year for the index since 1972. Meanwhile, Japanese prime minister, Shinzo Abe… aided and abetted by new Bank of Japan governor Haruhiko Kuroda… goosed the annual inflation rate up to 1%. This had the effect of sending the yen down 15% against the dollar. Great for Japan’s exporters. Terrible for Japan’s fixed-income securities. So, we made good money on both sides of the trade last year. By our rough, back-of-the-envelope ciphering, our 'Trade of the Decade' is up about 50% so far… with seven more years to run. What will happen in those next seven years?" Continue reading →

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Austrian Economics, Central Bank Disasters and the Housing Bottom

"Business cycles are in a sense predictable because the entire economic environment is structured via central bank money printing. It is this artificiality that makes Austrian economic forecasting viable. What one can never predict, of course, is the timing of the 'turning.' Exactly where we are in the business cycle is uncertain, though again, one can certainly point out that we are in a precious metals bull market, even despite the recent difficulties of gold. This particular pro-metals market started early in the 2000s and may well continue until we reach a precious metals 'mania' of sorts as we saw in the 1970s. The only way to puncture something like that in the short term is to raise interest rates." Continue reading →

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