Bet Against the House at Your Peril

Posted on March 13, 2015 by MN Gordon

The stock market’s on edge.  After dropping 278 points last Friday and climbing back 139 points on Monday…the DOW purged 332 points on Tuesday.  Wednesday the DOW gave back another 27.  By yesterday the storm had past.  Sunny skies were out…the DOW bounced back 259 points.

From what we gather, signs of an improving economy are considered bad for stocks.  The initial selloff, which began last Friday, was triggered by the Bureau of Labor Statistics February jobs report.  According to the government bean counters, 295,000 jobs were added for the month.  All the new jobs pushed the official unemployment rate to 5.5 percent.

Speculators understood this good news for the economy to be the rationale the Federal Reserve needs to finally raise its federal funds rate from practically zero.  If you recall, the federal funds rate has been pushed down to the floor for six plus years.  Not by coincidence, the current big bad bull market run just turned six years old on Monday. Continue reading →

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The Beginning of the End for the European Union

Posted on March 10, 2015 by MN Gordon

The European Central Bank initiated a new mass money debasement scheme yesterday.  If you recall, this involves buying €60 billion ($66 billion) a month of European government bonds.  Somehow this is supposed to improve the economy.

No doubt, the European Union is absurd for many reasons.  According to J.P. Morgan, the differences of its member countries are greater than a reconstruction of the territories of the former Ottoman Empire, all countries on Earth five degrees north of the Equator, and all countries beginning with the letter “M.”  Conveniently, the ECBs effort to cheapen the currency merely holds the absurdities up for ridicule.  Here are several questions that come to mind…

Where does the ECB get the money to buy government bonds?  Does the ECB get it from the same place the Federal Reserve gets its money?  Like the Fed, does the ECB make a ledger notation and borrow it into existence?

To whom will the ECB give the money to?  Will they buy German bunds?  Will they buy French OATs?  Will they buy Italian BTPs?  What about Greece government bonds?  Or Spanish? Continue reading →

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The Die is Cast

Posted on March 6, 2015 by MN Gordon

“Alea iacta est” – Julius Ceasar

The NASDAQ crossed the 5,000 mark for the first time since the year 2000 on Monday.  What a journey it has been.  The world hardly resembles itself just fifteen years later.  Practically everything has changed.

Back then, pre-9/11, the world was still our oyster.  We just knew we’d attain whatever we dreamed with a little hard work and determination.  But we never could’ve imagined how hard it would actually be just to scratch for our scraps.  Naturally, with this latest NASDAQ milestone, we have some questions…

What does NASDAQ 5,000 really mean, anyway?  Does it stand for something?  Does what’s standing behind it have the strength to hold things up this time?  Or will it roll over and crash by 80 percent again?

No one really knows.  But here at the Economic Prism we have a hunch the NASDAQ will have a significant correction sometime soon.  Perhaps it will fall by 20 percent…or possibly 40 percent, or even more. Continue reading →

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Dillweed Economics

Posted on March 3, 2015 by MN Gordon

After more than a decade of studying, documenting and cautioning on the great fraud of our time we’re as shocked as we’ve ever been.  In the year 2015, the entire essence of economic and financial management the world over has been reduced to a single policy…

Thou shalt degrade money and expand debt in perpetuity.

Here in the United States, as in Europe, Japan, China, and most everywhere else, this policy is carried out with earnest zeal.  No limitations are holding back policy makers and politicians.  Consequences have disappeared from practical prudence or consideration.

New credits are borrowed into existence by the Federal Reserve and spent by the Treasury.  All the while the old debts are never paid down.  The interest is merely serviced and the old debts are rolled over by issuing new debts…which are purchased by borrowing new credits into existence.

How does this wonderful scheme continue in broad daylight?  Are people just not aware of it?  Or is the broad population completely apathetic? Continue reading →

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