Are You Prepared for the End of Fake Money?

Today we begin with a fundamental question: What is money?

This, no doubt, is an important question.  And we ask it with clear intent and purpose.  Namely, we want to better understand how it’s possible for America to rack up such a massive trade deficit with China.

America’s trade deficit with China, in 2017 alone, was $375 billion.  That’s a gap of over $31 billion a month – or $1 billion a day.  We believe having a better grasp on what money is will bring clarity to the nasty trade deficit that’s motivating today’s burgeoning trade war.

With respect to our initial inquiry we turn to Victorian economist William Stanley Jevons for edification.  In his 1875 work, Money and the Mechanism of Exchange, Jevons stated that money has four functions.  It’s a medium of exchange, a common measure of value, a standard of value, and a store of value.

Many deficiencies with today’s renditions of money, including the dollar, appear when applying these functions to the present system of floating exchange rates. Continue reading

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The True Sport of MAGA

One of the more extraordinary things that investors have seen in living memory is unfolding at this precise moment.  This goes for business leaders, money managers, veteran Wall Streeters, value investors, 401(k) holders, momentum traders, FX guys, gold bugs, technical gurus, chartists, pork belly speculators, quants, astrologists, Larry Summers, put option sellers, dweebs and geeks, millennial index fund enthusiasts, and everyone in between.

They’re all craning their necks in unison.  They can hardly believe their eyes.  Up on the world stage, and on a daily basis, President Donald Trump chest bumps international leaders with wanton abandon.

Donald Tusk, Justin Trudeau, Xi Jinping, Angela Merkel, and even the new leftist Mexican victor, Juan Trump, have President Trump posturing towards them as if they’re facing off at a weigh in for a heavyweight fight.  The sight is absolutely ludicrous, if one is in the mood for a reality TV show – or a practical joke. Continue reading

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Trouble in Paradise

Uncompromising independence, rugged individualism, and limitless personal freedom were once essential to the American character.  According to popular American folklore, they still are.  We have some reservations.

The principles that gave rise to the American character died long ago.  Freedom.  Liberty.  Independence.  Limited representative government.  Sound money.  Private property rights.  A humble and esteemable populace.  Avoidance of foreign entanglements.  Rafting down the Mississippi River.  Trim waist lines.

These concepts, in reality, faded away from daily life over the last century like stars in the morning light.  Nonetheless, a merry mob reaches for their lost American character as they head to the shore each July 4th to celebrate Independence.  These freedom lovers – descendants of none less than Davy Crockett, and users of gender neutral bathrooms – eat hotdogs and revel in their ideals of an America that no longer exists.  Their zeal is impressive. Continue reading

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Confronting the Dragon with Peter Navarro

A young man might go to business school believing he’s obtaining some sort of academic training that will enable him to make a comfortable living.  His degree may gain him entry into a large corporation, where he can work his way up to a good income.  This may even put him on the fast track to what he envisions as success.

But his academic training won’t likely be of any real use.  He won’t be prepared to create new products or deliver new services or technologies.  He won’t possess a special knowledge that will improve the wellbeing or satisfaction of others.  He won’t have the skills to bring in new business or grow the bottom line.

Rather, his academic training will have prepared him to use spreadsheet entries to forecast quarterly revenue and margin targets.  What’s more, if the numbers show a disagreeable trajectory, he won’t have the skills or slightest inkling as to what to do about it.  He’ll merely ride the wave down until it crashes on the rocky reef.

But if he’s in a position of leadership, he’ll likely panic.  Out of his element, he’ll chase one idiotic solution after another.  He’ll package up and sell off a segment of the business.  He’ll invest in a new company branding initiative or fancy computer based system tools. Continue reading

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