How the Global Trade Contraction Begins

Posted on August 10, 2018 by MN Gordon

The world grows increasingly at odds with itself, with each passing day.  Divided special elections.  Speech censorship by Silicon Valley social media companies.  Increased shrieking from Anderson Cooper.  You name it, a great pileup’s upon us.

From our perch overlooking San Pedro Bay, the main port of entry for Chinese made goods into the USA, facets of the mounting economic catastrophe come into focus.  These elements, even for the most untrained of eyes, are impossible to miss.

To meet the relentless expansion of international trade, berths have been widened, and channels have been deepened to accommodate the definitive absurdity of perpetual credit creation: The CMA CGM Benjamin Franklin.  This mega container ship, if you’re unfamiliar with it, is over 20 stories tall, the width of a 12 lane freeway, and longer than four football fields.  It has enough cargo space to hold 90 million pairs of ‘Made In China’ shoes.

The secondary distortions of this mammoth – next generation – cargo ship will provide historical evidence to future generations of a political economy that went seriously awry. Continue reading →

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

When the Freaks Run Wild

Posted on August 3, 2018 by MN Gordon

The unpleasant sight of a physical absurdity is both grotesque and interesting.  Only the most disciplined individual can resist an extra peek at a three-legged hunch back with face tattoos.  The disfigurement has the odd effect of turning the stomach and twisting the mind in unison.

After repeated exposure, however, the shock of an absurdity is reduced to that of vanilla ice cream.  Somehow, even the extremely preposterous becomes commonplace after a while.  For example, a panhandling Batman doesn’t get a second look in Hollywood.  That persona comes a dime a dozen.

Yet just because an absurdity’s been watered down to the seemingly ordinary, doesn’t mean it has become any less ridiculous.  Rather, the viewer has become conditioned to the absurdity.  The abnormal has been calibrated to a feigning normal.

Extreme market intervention by central planners has been going on for so long that the distorted conditions it produces are considered normal.  The Cyclically Adjusted Price Earnings Ratio (CAPE Ratio) of the S&P 500 is currently more than double its historic average.  But no one, save a few grumpy old farts, are alarmed by this.  Like a freak at a freak show, it all seems perfectly normal. Continue reading →

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

All the Makings of a Major Economic Fiasco

Posted on July 27, 2018 by MN Gordon

About 6,940 miles west of Washington DC, and at roughly the same latitude, sits Beijing.  Within China’s massive capital city, sits the Country’s paramount leader, Xi Jinping.  According to Forbes, Xi is currently the most powerful and influential person in the world.

Xi, no doubt, is one savvy fellow.  He always knows the right things to say.  He offers his nation’s citizens the “Chinese Dream.”  They consume it like boysenberry funnel cakes at the county fair.

So, too, Xi always knows the right things to do.  He elaborates his vision for securing world dominance through something called the Belt and Road Initiative.  His people get behind it without question.

But all is not bliss for Xi…

After decades of hard work, dedication, and loyalty to the Communist Party of China, Xi finally rose to the top of the trash heap in 2016.  That’s when the party gave him the elite title of core leader.  What a disappointment it must have been to first look out across the geopolitical landscape and see a boorish New York blowhard like President Trump snarling back at him. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 5 Comments

Are You Prepared for the End of Fake Money?

Posted on July 20, 2018 by MN Gordon

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 →

Posted in Economy, MN Gordon | Tagged , , , , | 9 Comments