How Capital is Allocated in 2016

Posted on June 10, 2016 by MN Gordon

Distilling down and projecting out the economy’s limitless spectrum of interrelationships is near impossible to do with any regular accuracy.  The inputs are too vast.  The relationships are too erratic.

Quite frankly, keeping tabs on it all is beyond human capacity.  This also goes for the federal government.  Even with all their data gatherers and number crunchers they’re incapable of stitching together an exact understanding of where the economy’s really at, let alone where it’s going.

What’s more, the economy’s always evolving and changing in ways that are hardly discernable in advance.  Cause and effect do not correlate with the simple precision of a balance scale.  When one input decreases, its apparent equivalent can somehow increase.

For example, when incomes go down apartment rents should also go down.  Lower incomes should result in lower price competition for apartment rents and, thus, lower rents.  Logic would support the inherent truth of this premise.

Yet, in Sacramento California, and many other places, the exact opposite has happened. Continue reading →

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Guided By Nonsense

Posted on June 3, 2016 by MN Gordon

“Read the directions and directly you will be directed in the right direction.” — Lewis Carroll

U.S. consumers are at it again.  After a seven year hiatus they’re once again doing what they do best.  They’re buying stuff.

According to the Commerce Department, personal consumption expenditures (PCE), which is the primary measure of consumer spending on goods and services in the U.S. economy, increased $119.2 billion in April.  That marks an increase of 1 percent, and is the biggest one month increase since August 2009…nearly seven years ago.  Indeed, this is quite an achievement.

The consumer, you know, is the primary engine of U.S. economic growth.  Without consumption GDP doesn’t go up; rather, it goes down.  Moreover, in a debt based money system, when GDP goes down the whole financial debt structure breaks down.

We don’t condone it.  Certainly we’d prefer an honest hard money system where savings and investment drives growth as opposed to borrowing and spending.  But our preference has no bearing on reality in this matter. Continue reading →

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How Elon Musk Empowers Fools to Part Ways with Their Money

Posted on May 27, 2016 by MN Gordon

Tesla Motors is up to something remarkable.  But what it is, exactly, is unclear.  According to the Tesla Motors website, the company’s mission is: to accelerate the world’s transition to sustainable transport.

This all sounds quite brilliant, indeed.  Though we must admit, we’re not really sure what sustainable transport is…or why the world’s transition to it should be accelerated.  Nonetheless, we’ll assume this is a noble cause.

Tesla’s bold CEO, Elon Musk, certainly thinks it is.  In fact, the twelve billion dollar man’s so sure of the endeavor he keeps upping the ante.  The company’s now on the hook to expand production of its electric vehicles to 500,000 a year by 2018.

No doubt they’ve got their work cut out for them.  Production of 500,000 Tesla’s per year represents an increase of nearly 1,000 percent from the 50,580 electric vehicles delivered last year.  Is this even remotely achievable? Continue reading →

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How to Maximize Economic Potential

Posted on May 20, 2016 by MN Gordon

Problems, as people commonly perceive them, require solutions.  Broken shoelaces must get fixed.  Regrettably, in today’s democracy this means the candidate who offers the most fixes – in the form of goodies – to the most people wins the election.

The Gallop poll reported earlier this week that 18 percent of U.S. adults believe the “economy in general” is the most important problem facing the country.  This was followed by 13 percent who believe “dissatisfaction with government” is the top problem.  Rounding out the third highest response were the 9 percent that believe “unemployment and jobs” is of highest concern.

As far as we can tell, these top three responses are one in the same.  When the economy is growing, and well-paying jobs are prevalent, the government gets a pass on its failures.  But a sagging economy, and a dearth of jobs, brings out the torches and pitchforks.

Scratching the surface a bit more, in search of clarity beneath, we consider whether the Gallop poll is providing the wrong response choices.  In particular, how can the “economy in general” be a response to the question of what is the most important problem facing the country today? Continue reading →

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