How to Tackle the Depression Head On

“I want to see people get money.” – Donald J. Trump, U.S. President, September 17, 2020

“Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet.” – Steven Mnuchin, U.S. Secretary of the Treasury, September 14, 2020

Money for the People

The real viral contagion that has infected the American populace is not an illness of the body.  It’s something far worse than COVID-19.  The American populace is suffering from an illness of the mind.

The general malady, as we diagnose it, is the unwavering belief that the government has an endless supply of free money, and the expectation that everyone, except the stinking rich, has claim to it.  Why pursue self-reliance and independence when a series of stimulus acts promises the more abundant life?  This viral contagion’s really ripped through the population in 2020.

For example, just a year ago, the American populace thought they could all live off the forced philanthropy of their neighbors.  That to pay Paul you had to first rob Peter. Continue reading

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California’s Real Wildfire

Hot dry winds have returned to the land of fruits and nuts.  After baking away all summer long in the blistering sun, the dense sage and chaparral covering the coastal hillsides and canyons and the inland mountain forests are dry and toasty.  Vegetated areas are a giant tinderbox.

What happens next is as predictable as night follows day.  Just one spark – from a downed powerline or a backfiring semi-truck – and the whole thing conflagrates into a blistering windblown wildfire.  The Golden State goes up in smoke.  The sky turns to an orange haze; the sunsets are magnificent.  And ash sprinkles down and coats the pavement with residue.

Of course, this happens every year.  And every year is the worst year ever.  The fires rage until the mild winter weather arrives.  Then everyone seemingly forgets the fires ever happened…until the mudslides.

Indeed, California is a whacky and wild place.  The Governor’s an absolute loon who fancies himself a leading presidential candidate for the 2024 election. Continue reading

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How to Turn a Corporate Credit Crisis into a Currency Crisis

Surely, Thursday’s stock market selloff didn’t catch you by surprise…now did it?  Why would it?  After going nearly straight up for the last five months, it’s only natural for there to be a pullback.

This was particularly true for technology stocks.  They’d reached such dizzying heights it was just a matter of time before the thin air got to them.  And get to them it did.  Some of the mania’s favorites, like Apple, Tesla, and Nvida, fainted in unison…dropping 8 percent, 9 percent, and 9.3 percent, respectively.

A company called PagerDuty garnered the honor of the day’s biggest loser.  The San Francisco based company, which operates in the cloud, made a graceful 25.8 percent swan dive from its heavenly realm.

So, what should you do about it?  Should you buy the dip?

As far as we can tell, there’s currently no fundamental reason to buy stocks.  But like a pair of Yeezy sneakers or avocado toast, if buying expensive stocks makes you happy…go for it.  Just realize, we are in the midst of a reckoning.  A great catastrophe is upon us.  What’s more, stocks should be the least of your concern. Continue reading

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In The Long Run We Are All Alive

In 1976, economist Herbert Stein, father of Ben Stein, the economics professor in Ferris Bueller’s Day Off, observed that U.S. government debt was on an unsustainable trajectory.  He, thus, established Stein’s Law:

“If something cannot go on forever, it will stop.”

Stein may have been right in theory.  Yet the unsustainable trend of U.S. government debt outlasted his life.  Herbert Stein died in 1999, several decades before the crackup.  Those reading this may not be so lucky.

Sometimes the end of the world comes and goes, while some of us are still here.  We believe our present episode of debt, deficits, and state sponsored economic destruction, is one of these times.

We’ll have more on this in just a moment.  But first, let’s peer back several hundred years.  There we find context, edification, and instruction.

In 1696, William Whiston, a protégé of Isaac Newton, wrote a book.  It had the grandiose title, “A New Theory of the Earth from its Original to the Consummation of all Things.”  In it he proclaimed, among other things, that the global flood of Noah had been caused by a comet. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , | 19 Comments