Investment/Trends

America’s Energy Boom and the Rising U.S. Dollar

"The petrodollar regime--that oil is bought and sold globally in U.S. dollars--is easy to understand. It boils down to these two principles: 1. Petroleum is the lifeblood of the global economy. 2. Any nation that can print its own currency and trade the conjured money for oil has an extraordinary advantage over nations that cannot trade freshly created money for oil. This is why many analysts trace much of America's foreign policy back to defending the petrodollar regime. In the normal course of things, anyone printing money in quantity would soon find the conjured currency bought fewer and fewer barrels of oil." Continue reading →

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Bill Bonner: It’s a dangerous time of year

"A stream of income – either from a stock or a bond – is a promise. The value of it depends on how much you trust the promisor and his money. That is the problem. As much as we like Ben Bernanke as a human being, we find grave fault in him as a god. Only a god could know more than the sum of all the knowledge held by all people who are active in the world economy. Only a god could select an interest rate better than the one they select for themselves. And only a god-awful economist could claim to do such a thing with a straight face. The galling thing is that he may be able to keep the whole shebang going for many years more." Continue reading →

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Jack Lew: Debt Ceiling Drama To Return in October

"Oh, debt ceiling battles… what wonderful political theater you are. The next battle is coming this fall, although no one seems quite sure when. Regardless, it will have an impact on markets, as before, and could send gold shooting skyward. Both parties are expected to dig their trenches even deeper this time… making the fireworks even more explosive than usual. Since the gridlock in Congress seems unlikely to change, expect this to become a new annual national pastime… something like D.C.’s version of the Super Bowl. Get out your popcorn… and don’t forget to keep an eye on gold prices. Remember this chart." Continue reading →

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Bloody Scenes from the Next Episode of Economic Crisis

"Stand by for round two of the global economic crisis, coming soon to a screen near you. It’s going to be as bloody and chaotic as the scenes on your TV from Cairo and Damascus. Yet, as ever, the chorus on Wall Street manages to keep a straight face and sing the same tune while robbing investors blind. Just listen to them on Bloomberg or CNBC and you would think the Fed has this all under control and the U.S. economy is recovering. Now, admittedly, economists are all facing the wrong way too. There is hardly a man or woman willing to stick their neck out and say the inflation-distorted figures that purport to show a recovery are turning in the opposite direction." Continue reading →

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Near the Debt Ceiling, No One Can Hear You Scream

"Let’s put these clues together. We have another fiscal crisis imminent with a looming debt ceiling drama. We have a Federal Reserve that is already doing a huge and unsustainable amount of 'stimulus' buying. And we have an economy far weaker than it’s been in more than a decade despite the bluster over GDP. The bigger concern is that the market doesn’t have any of this priced in at all. It’s true that August was the worst month for stocks since May 2012. Yet the market fell just 3.1% and is only 4.5% off its all-time high. That’s barely a scratch." Continue reading →

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If You Want To Know Why Things Are Falling Apart, Look at Total Debt

"It's easy to confuse trends and cycles. The Keynesian Cargo Cultists believe that we're in a cyclical downturn that can be 'cured' with more debt-based spending, i.e. worshiping their false god of aggregate demand. They cannot comprehend that we're not in a business-cycle recession, we are in a long-term trend where additional debt undermines the system as the positive returns on that debt turn negative." Continue reading →

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Hopeless Savers: 0.26% on Money Markets

"The plight of savers in America is hopeless. We know that price inflation is over 2% per year. What do investors get in a money market fund? A pathetic 0.26%. Then they pay income taxes on this 0.26%. What if they do not want to tie up their money for a year? Then they get 0.12%. Before taxes. What about interest-bearing checking accounts in an FDIC-insured bank? These pay 0.05%. Let’s be honest. Let’s round it off (after taxes) to zero. The saver is falling behind. The rate of price inflation is eating into the saver’s net worth by at least 2.9% per year. How much money is deposited in money market accounts. About $2.6 trillion. This is up by $2.6 billion this week. This is a recovery?" Continue reading →

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Investors (Suckers) Say They Have Things Under Control

"Today, 56% say they are confident about the future. This means that 44% aren’t confident. Today, 42% say they have increased their tax-deferred retirement savings. This means that 58% haven’t. Today, 55% say they are better prepared for retirement than in 2007. This means that 45% don’t think they are. Today, 42% have increased the size of their emergency fund. This means that 58% haven’t. We are asked to believe that people’s personal savings rate is up since November 2007, the month before the recession is said to have begun. Yes, it is — by a percentage so tiny that it is barely visible." Continue reading →

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Maybe This Is Why We Now Have a Serial-Bubble Economy

"If there is any one strikingly obvious feature of the U.S. economy in the past 15 years, it's the serial asset bubbles, one after another. Take a look at this chart. Why did our economy become dependent on asset bubbles for 'growth'? One way to find an answer is to ask: cui bono, to whose benefit? Correspondent Jeff W. has the answer: the financial sector and the central government." Continue reading →

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