Liquidity At Any Cost

Posted on May 1, 2026 by MN Gordon

Over the last few years, it appeared that the Federal Reserve was finally attempting to get its house in order. After the insane pandemic-era peaks, where its balance sheet ballooned to over $8.9 trillion, the central bank spent years on a steady program of balance sheet reduction.

Through a process called Quantitative Tightening (QT), the Fed allowed bonds to roll off the books without replacing them. It successfully shrank its balance sheet to about $6.5 trillion by December 2025.

But if you’ve been watching the Fed’s balance sheet lately, the trend has pulled a U-turn. As of April 2026, that number has crept back up to over $6.7 trillion. The great contraction is over. The era of balance sheet expansion has returned.

So, why is the Fed’s balance sheet growing again? What does this mean for the value of the dollar in your pocket? And how does billionaire Treasury Secretary Scott Bessent – and his defense of swap lines to the Middle East – fit into this puzzle?

To understand why the Fed is expanding its balance sheet again, you must understand the mechanics of the financial system. Banks, as you know, no longer keep cash in a vault. Instead, they hold reserves at the Fed to ensure they can handle daily transactions and meet regulatory requirements. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | Leave a comment

Barbarians Inside the Gate

Posted on April 28, 2026 by MN Gordon

Have you noticed the curious stage of history we’ve reached where freedom has become a dirty word? The preferred spirit of the age is a contrived, top-down collective hug that feels increasingly like a chokehold.

From the ivory towers to the local coffee shop, a new generation of thinkers is dusting off the failed scripts of the 20th century, adding a fresh coat of anti-human paint, and wondering why the engine is smoking. Whether it’s the cult of the State or the new-age prophets who view human life as a planetary glitch, the target is always the same: The Individual.

What’s up, really, with the grand, tragic human tradition of trading our birthright of liberty for a bowl of government-subsidized thin gruel?

It’s as if we’ve collectively forgotten that every utopian shortcut in history eventually leads to a dead end, usually guarded by men in uniforms. So goes the ongoing collision between high-minded idealism and the cold, hard pavement of reality, where common sense is treated like a contraband luxury. Continue reading →

Posted in MN Gordon, Politics | Tagged , , , , | Leave a comment

Priced for Perfection in an Imperfect World

Posted on April 24, 2026 by MN Gordon

Investors, having seen the light, race towards it with great expectations. The S&P 500 and the NASDAQ are, once again, near all-time highs. By the look of the lofty stock market indexes, the American economy must be operating at full tilt.

But what if the light investors are racing towards is not the promise of riches they’re expecting? What if it’s the headlight of a freight train locomotive that’s headed right towards them?

The Cyclically Adjusted Price-to-Earnings (CAPE) ratio, which was developed by Nobel laureate Robert Shiller, looks at real per-share earnings over a 10-year period to measure valuation. Right now, the S&P 500’s CAPE ratio is above 40. To give you some perspective, the historical mean is around 17.

There is only one other time in the history of the United States stock market that the CAPE ratio has been higher than it is today. That was December 1999 – at the peak of the dot-com bubble. When that bubble burst, it destroyed trillions of dollars in wealth.

Today, we are approaching those same manic levels of overvaluation. Yet investors don’t seem to be appreciating the risks they are taking. They’re assuming a quick peace in the Middle East, low inflation, falling interest rates, and rising earnings decades into the future. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | Leave a comment

The Digital Noose Tightens

Posted on April 17, 2026 by MN Gordon

“They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

– Benjamin Franklin

“Ultimately, arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.”

– Edward Snowden

GENIUS Act Update

In January, as part of our 2026 outlook, we detailed how the GENIUS Act, which was signed into law by President Trump on July 18, 2025, would bring about the next shift in American money. The GENIUS Act, if you recall, requires stablecoins to be backed one-for-one by U.S. dollars or short-term U.S. Treasuries.

This is a topic we don’t like writing about. In fact, we’d rather ignore it. But by doing so we’d be in dereliction of duty. So, today, begrudgingly, we offer an update on the latest efforts to tokenize the U.S. dollar – including the dollars in your bank account.

On April 8, 2026, less than 10 days ago, while most people were distracted with bomb dropping on Iran, the U.S. Treasury, its Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) issued a joint proposed rule to implement provisions of the GENIUS Act. This rule formally integrates stablecoins into the Bank Secrecy Act (BSA). Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | 1 Comment