Why the Fed Destroyed the Market Economy

Posted on September 16, 2016 by MN Gordon

Swing voters are a fickle bunch.  One election they vote Democrat.  The next they vote Republican.

For they have no particular ideology or political philosophy to base their judgement upon.  They don’t give a rip about questions of small government or big government.  Nor do they have any druthers about the welfare or warfare state.

In effect, they really don’t care.  What’s important to the swing voter is much simpler.  In fact, it can be boiled down to the following essential question.  What have you done for me lately?

The answer to this question, of course, comes back to money.  As far as the swing voter’s concerned, if their brokerage account’s growing they vote the incumbent party.  If it’s shrinking, they vote the challenger party.

It doesn’t matter if the source of the stock market inflation is a fraud.  Nor does it matter that a stock market correction will help reestablish financial markets on a firmer foundation. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | 17 Comments

Hanjin Marooning in San Pedro Bay

Posted on September 9, 2016 by MN Gordon

hanjinExpansions and contractions in global trade have played out over long secular trends for thousands of years.  The Silk Road, for example, was established by the Han Dynasty of China in 130 BC, and allowed for continuous trade between east and west for nearly 1,600 years.  In addition to economic trade, the Silk Road was also a conduit for culture and knowledge among its network of civilizations.

However, this trade route eventually came to an end.  When the Byzantine Empire fell to the Turks in 1453 AD, the Ottoman Empire closed the Silk Road and cut all ties with the west.  Geopolitical trends turned inward towards isolation.

In more modern times, global trade has been conducted by shipping cargo across the international waters of the high seas.  Over the last 200 years trade cycles have often expanded for such lengthy periods that several generations will come and go while only knowing this half of the trend.  During these episodes people come to believe increased global trade is a linear phenomenon. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , , , | 2 Comments

Shrewd Financial Analysis in the Year 2016

Posted on September 2, 2016 by MN Gordon

Shrewd Financial Analysis in the Year 2016“Markets make opinions,” says the old Wall Street adage.  Perhaps what this means is that when stocks are going up, many consider the economy to be going great.  Conversely, when stocks tank it must be because the economic sky is falling.

For both scenarios the opinions range far and wide.  A rising NASDAQ may compel a tech aficionado to proclaim we’re on the cusp of a new digital revolution.  Falling manufacturing stocks may compel a protectionist to proclaim it is NAFTA’s fault.

So if markets make opinions, do opinions make markets?

Over the last decade or so, Fed dithering has midwifed a new opinion based form of market forecasting.  From what we can tell, it involves taking economic data reports, interpreting how this will impact Fed policy, and then projecting out how this will influence the stock market.  If we’ve pieced it all together correctly, the relationship between economic reports and markets goes something like this:

Good news is bad news.  So, too, bad news is good news. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | 1 Comment

The Number One Factor Influencing Fed Monetary Policy

Posted on August 26, 2016 by MN Gordon

A brief scan of the financial and economic landscape – both in the U.S. and abroad – offers ample confirmation that we are in the midst of a great reset.  From a feint tickle at the turn of the new millennium to a persistent itch a decade ago, the preponderance of evidence in this regard is now much too painful to ignore.  There’s no denying that things ain’t right.

Debt is increasing while GDP’s stagnating.  Stocks are rising while earnings are declining.  Incomes are flat-lining for the majority of workers while growing by leaps and bounds for the 1 percent.  Plus there’s over $13 trillion of negative-yielding debt.

With all this going on, what’s become lucidly clear is the frank understanding that there’s nothing that can really be done to reverse it.  No executive order.  No monetary policy adjustment.  No congressional stimulus package.  No presidential candidate.

None of these, or any other conceivable command and control options, can really do a thing about it.  In fact, at this point, even the most well-intentioned of government programs will likely make the ultimate breakdown and dissolution much, much worse.  The hole’s already been dug far too deep to climb out of. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 8 Comments