Work is for Idiots

Posted on June 30, 2017 by MN Gordon

The International Monetary Fund reported an unpleasant outlook for the U.S. economy on Wednesday.  The IMF, as part of its annual review, believes the U.S. economic model isn’t working as well as it could to generate shared income growth.

On the same day, in an unrelated interview on PBS Newshour, billionaire investor Warren Buffett offered a similar outlook:

“The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people.

“If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion.  They now have $2.4 trillion, [a multiple of] 25 for one.  This has been a prosperity that’s been disproportionately rewarding to the people on top.”

No doubt, U.S. wealth has become exceedingly concentrated into a very small number of hands over the last 40 years.  At the same time the middle class has been hollowed out into a shell of its former self.  Wages have stagnated.  Well-paying jobs that could support a family on a single income have disappeared. Continue reading →

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An Open Letter to William Dudley

Posted on June 23, 2017 by MN Gordon

Dear Mr. Dudley,

Your recent remarks in the wake of last week’s FOMC statement were notably unhelpful.

In particular, your excuses for further rate hikes to prevent crashing unemployment and rising inflation stunk of rotten eggs.

Crashing Unemployment

Quite frankly, crashing unemployment is a construct that’s new to popular economic discourse, and a suspect one at that.

Years ago, prior to the nirvana of globalization, the potential for wage inflation stemming from full employment was the going concern.  Now that the official unemployment rate’s just 4.3 percent, and wages are still down in the dumps, it appears the Fed has fabricated a new bugaboo to rally around.  What to make of it?

For starters, the Fed’s unconventional monetary policy has successfully pushed the financial order completely out of the economy’s orbit.  The once impossible is now commonplace. Continue reading →

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Monetary Madness and Rabbit Consumption

Posted on June 16, 2017 by MN Gordon

“The hurrier I go, the behinder I get,” is oft attributed to the White Rabbit from Lewis Carroll’s, Alice in Wonderland.  Where this axiom appears within the text of the story is a mystery.  But we suspect the White Rabbit must utter it about the time Alice follows him down the rabbit hole.

No doubt, today’s wage earner knows what it means to work harder, faster, and better, while slip sliding behind.  However, for many wage earners the reasons why may be somewhat mysterious.  At first glance, they may look around and quickly scapegoat their economic reversion on foreigners.

Yet like Wonderland, things are often not as they first appear.  When it comes to today’s financial markets, there’s hardly a connection to the real economy at all.  Stock markets are just off record highs, yet 6 in 10 Americans don’t have $500 to cover an unexpected bill. Continue reading →

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The Three Headed Debt Monster That’s Going to Rampage the Economy

Posted on June 9, 2017 by MN Gordon

“The bank is something more than men, I tell you.  It’s the monster.  Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath

Mass Infusions of New Credit

Something strange and somewhat senseless happened this week.  On Tuesday, the price of gold jumped over $13 per ounce.  This, in itself, is nothing too remarkable.  However, at precisely the same time gold was jumping, the yield on the 10-Year Treasury note was slip sliding down to 2.15 percent.

In short, investors were simultaneously anticipating inflation and deflation.  Naturally, this is a gross oversimplification.  But it does make the point that something peculiar is going on with these markets.

Clear thinking and simple logic won’t make heads or tails of things.  For example, late Wednesday and then into Thursday the reverse happened.  Gold gave back practically all $13 per ounce it had gained on Tuesday, while the yield on the 10-Year Treasury note climbed back up to 2.19 percent.  What to make of it? Continue reading →

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