Rise of the Japanese Androids

Posted on April 13, 2018 by MN Gordon

One of the unspoken delights in life is the rich satisfaction that comes with bearing witness to the spectacular failure of an offensive and unjust system.  This week served up a lavish plate of delicious appetizers with both a style and refinement that’s ordinarily reserved for a competitive speed eating contest.  What a remarkable time to be alive.

Many thrilling stories of doom and gloom were published across the tops of the finest digital news sites.  The main object of our satisfaction, however, was buried further down the pages, well below the latest Trump tweets and relentless reports on the global war buildup.  Nonetheless, our focus is not without merit.

Today’s foil is played by Bank of Japan (BoJ) Governor, Haruhiko Kuroda.  If you’re ignorant of Mr. Kuroda, we apologize.  What follows shall forever end your bliss.

You see, Kuroda and his cohorts at the BoJ have been surfing the razor’s edge, executing policies of mass money debasement, for several decades.  In fact, their forward thinking ways – and good intentions – have become a source of national pride.  There’s not a deranged monetary policy idea the Japanese brain trust hasn’t pioneered in the name of saving the nation from itself. Continue reading →

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Trade War Game On!

Posted on April 6, 2018 by MN Gordon

“Things sure are getting exciting again, ain’t they?”  The remark was made by a colleague on Tuesday morning, as we stepped off the elevator to grab a cup of coffee.

“One moment markets are gorging on financial slop like fat pigs in mud.  The next they’re collectively vomiting on themselves.

“I’ll tell you one thing.  President Trump’s trade war with China won’t end well.  I mean, come on.  China’s outplayed the U.S. at this game for over a quarter century.  They have the upper hand.

“Besides, what’s the point?  If we no longer buy stuff from China, then how will China buy Uncle Sam’s debt?  And the timing for all this couldn’t be worse.  Deficits are spiraling out of control.  We’re talking $1 trillion or more a year for the next decade.  I don’t see any way out of this quagmire, do you?

“Printing money to buy government debt is no solution at all.  And a trade war will just hasten America’s insolvency.  What is it that Trump thinks he’ll accomplish, anyway?

“I’ve also heard that China’s tickled the debt poodle way more than we have.  So they may be worse off at absorbing an economic shock than us.  But I wouldn’t bet my life on it. Continue reading →

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Searching for Tahquitz

Posted on March 30, 2018 by MN Gordon

Each generation is disposed to its own unique myths and legends.  Perhaps an absence of prior experience is what compels the younger generation to pick up the torch of popular delusion regardless of if it’s pure madness.  The older generation, on the other hand, may have garnered false expectations through a lifetime spent living in a world that no longer exists.

“Myths and legends die hard in America,” remarked Hunter S. Thompson in The Great Shark Hunt, nearly 40-years ago.  No doubt, Thompson’s insight holds true today.  There are an abundance of myths and legends in America today that are bound for a hard death.  A partial listing includes:

The myth that U.S. Treasuries are the safest – default-free – investment in the world.  The legend of American exceptionalism.  The myth that everyone can live off the expense of their neighbors.  The legend that it is the President whom leads the country.  The myth that packaging up a sausage of prime and subprime loans into a collateralized debt obligation and rating them triple-A somehow vanishes risk.  And so on and so on, including… Continue reading →

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

What Fed Chair Powell Forgot to Mention

Posted on March 23, 2018 by MN Gordon

What are the chances of Federal Reserve Chairman Jerome Powell being wrong?  The chances he’ll be wrong on the economy’s growth prospects, the direction of the federal funds rate, and inflation itself?  Our guess is his chances of being wrong are quite high.

What you see, unfolding before your very eyes, is a great exercise in futility.  To this endeavor, the Federal Reserve has claimed central authority of the command center.  The federal funds rate, the Fed’s balance sheet, economic stagnation, massive asset bubbles, and the limits of central planners are the topics of focus.  Where to begin?

Powell got into the central banking business through uncommon means.  To his credit, he’s not an economist.  This is a great improvement over former Fed Chair, and intellectual ditherer, Janet Yellen.  Like President Trump, we didn’t have the patience for her egghead PhD economist act.

Powell, on the other hand, is a lawyer turned investment banker. Continue reading →

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