Money For Nothing

‘The Fed Is Trying Like Crazy, But Nothing It’s Doing Can Save The Economy’

"David Rosenberg, the veteran Wall Street economist and bearish strategist at Gluskin Sheff, gave an intense presentation on Friday at John Mauldin's Strategic Investment Conference. Titled 'Bernanke: The Wizard Of Potemkin,' this presentation offers a sobering look at the anemic U.S. economy, the labor market mess, and the Federal Reserve's controversial efforts to get everything back on track. Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg's presentation." Continue reading →

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An Important History Lesson: Hyperinflation in the Weimar Republic

"Why did the German government not act to halt the inflation? It was a shaky, fragile government…More than inflation, the Germans feared unemployment. In 1919 the Communists had tried to take over, and severe unemployment might give the Communists another chance. The great German industrial combines — Krupp, Thysen, Farben, Stinnes — condoned the inflation and survived it well. A cheaper mark, they reasoned, would make German goods cheap and easy to export, and they needed the export earnings to buy raw materials abroad. Inflation kept everyone working. So the printing presses ran, and once they began to run, they were hard to stop." Continue reading →

Continue ReadingAn Important History Lesson: Hyperinflation in the Weimar Republic

Housing Recovery Mirage Over; Bernanke Hoping to Retire Before It’s Noticed

"At the end of 2010, the interest rate on a 30-year mortgage was just under 5 percent… 4.97% to be more precise. Over the next 28 months actions taken by the Fed pushed that rate down as low as 3.42%. So… wonders of wonders… miracles of miracles… soon we were witnessing the inexplicable recovery of our previously decimated and hopelessly underwater housing markets from coast-to-coast. Stories of streets being paved with the gold of home equity and sprawling rental empires were being passed along from Realtor to mortgage broker throughout our apparent Land of Opportunity… the worst was finally over… everyone said so… even on T.V. so it simply had to be true." Continue reading →

Continue ReadingHousing Recovery Mirage Over; Bernanke Hoping to Retire Before It’s Noticed

The Danger of an All-Powerful Federal Reserve

"How will home builders react if the Fed decides their investments are bubbly and restricts their credit? How will bankers who followed all the rules feel when the Fed decrees their actions a 'systemic' threat? How will financial entrepreneurs in the shadow banking system, peer-to-peer lending innovators, etc., feel when the Fed quashes their efforts to compete with banks? Will not all of these people call their lobbyists, congressmen and administration contacts, and demand change? Will not people who profit from Fed interventions do the same? Willy-nilly financial dirigisme will inevitably lead to politicization, cronyism, a sclerotic, uncompetitive financial system and political oversight." Continue reading →

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IMF’s Lagarde Pleads: Fed Tapering Will Be ‘Arduous’ on Global Economy

"The head of the International Monetary Fund cautioned the world's major central banks Friday not to withdraw their unconventional support for weak economies too soon, according to numerous wire service reports. IMF Managing Director Christine Lagarde said stimulative policies are still needed in key regions, especially Europe and Japan, which have struggled with prolonged weakness. 'Even if managed well,' Lagarde said of a central bank’s exit from easy-money policies, that could still present an 'arduous obstacle course' for other countries. Lagarde said what’s needed is greater policy coordination and cooperation for the sake of the entire globe." Continue reading →

Continue ReadingIMF’s Lagarde Pleads: Fed Tapering Will Be ‘Arduous’ on Global Economy

Taper Is Coming. Stock Market Rises.

"Yesterday, the stock market rallied a little. The explanation, according to a Reuters story, is that there are signs that the Federal Reserve will begin tapering in September. As you will recall, for six consecutive days, the stock market tanked. The explanation for the tanking was this: the expectation was that the Federal Reserve will begin tapering in September. This expectation was based on a careful reading of the minutes, which said the FED will not change its present policy." Continue reading →

Continue ReadingTaper Is Coming. Stock Market Rises.

Debt of One Quadrillion Yen? Not a Problem

"Haruhiko Kuroda doesn’t wear a wizard’s hat when he arrives at Bank of Japan headquarters each morning. Kuroda has done something truly supernatural in his five months as governor of the central bank. The more yen he conjures up to produce inflation, the more he mesmerizes markets. Yet a week after Japan’s IOUs reached the 1 quadrillion yen ($10.28 trillion) mark, yields have actually declined. What is Kuroda’s secret? The first is what economists call 'financial repression' -- essentially transferring money via monetary policy from citizens to the government. The second is outright monetization of public debt." Continue reading →

Continue ReadingDebt of One Quadrillion Yen? Not a Problem

Fund manager Ned Goodman ditches bank stocks for gold

"Ned Goodman, founder and chief executive officer of holding company Dundee Corp., shed the last of his bank shares after forecasting global inflation will make investments such as gold stocks and organic beef more rewarding. Goodman, who oversees about C$10 billion ($9.6 billion) for Dundee and its investments in real estate, precious metals, energy and infrastructure, sold the last of the company’s Bank of Nova Scotia shares earlier this quarter. With the U.S. Federal Reserve and other central banks printing money, it’s only a matter of time before currencies lose value and inflation rises, Goodman said." Continue reading →

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Bernanke’s Bust: Median Household Income Is Lower Today Than in 2009

"Median household income is a good test of a household’s economic well-being. Half of households earn more. Half earn less. With mean average income, the incomes of the rich skew the figure upward. Not with median income. After four years of the Federal Reserve’s tripling of the monetary base, Americans are worse off today. What’s that? Worse than in the supposed bottom of the recession? Yes. This report tells the story. Household income is down 4.4%." Continue reading →

Continue ReadingBernanke’s Bust: Median Household Income Is Lower Today Than in 2009

Bernanke’s Bust: Median Household Income Is Lower Today Than in 2009

"Median household income is a good test of a household’s economic well-being. Half of households earn more. Half earn less. With mean average income, the incomes of the rich skew the figure upward. Not with median income. After four years of the Federal Reserve’s tripling of the monetary base, Americans are worse off today. What’s that? Worse than in the supposed bottom of the recession? Yes. This report tells the story. Household income is down 4.4%." Continue reading →

Continue ReadingBernanke’s Bust: Median Household Income Is Lower Today Than in 2009