Hold On To Your Gold

Posted on November 18, 2014 by MN Gordon

Something befuddling’s going on.  It is quite the brain twister.  As night follows day and day follows night, should not price inflation follow the massive $4 trillion Fed balance sheet expansion that’s happened over the last 6-years?

Simply connecting the dots quickly leads one to a ‘yes’ conclusion.  More money chasing a static number of goods and services should result in price inflation.  For prices must rise to balance out all the new money.

This, of course, makes good practical sense.  In fact, it might even lead someone to sell dollars and buy gold.  Certainly they’d have a bullet proof rationale guiding their decision.

Yet the world isn’t always a practical place.  Often time things happen that don’t make sense.  Sometimes the exact opposite of what should logically occur ends up happening.

Gold’s price peaked around $1,900 an ounce in 2011.  Gold’s currently at about $1,180.  That’s over 37 percent off its high.  What is going on? Continue reading →

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How to Kill a City Financially

Posted on November 14, 2014 by MN Gordon

There are pleasant hamlets where the radiant warmth of sunshine smiles down and sprinkles daily blessings and abundance.  There are other places where the sun no longer shines.  Remnants of past jollies cast shadows of decay.  Sources of prosperity have rusted over like an old tin garbage can.

Scranton, Pennsylvania, hitched its wagon to the wrong horse nearly a century ago.  But it took nearly 50-years for this to become apparent.  Sometimes the source of an economic boon is ultimately the cause of demise.

For Scranton, the blessing of an abundance of anthracite coal brought unhindered growth and prosperity to the city from the turn of the 20th century until about the end of World War II.  By the mid-1930s, the city’s population had expanded to over 140,000.  Nearly double today’s population.

But, alas for Scranton, the world is dynamic.  It is ever changing.  Too much of a good thing leads to over dependence.  Or, as Hyman Minsky observed, stability leads to instability. Continue reading →

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Putin Signs Secret Pact to Crush NATO

Posted on November 11, 2014 by MN Gordon

Putin Signs Secret Pact to Crush NATO
By Marin Katusa, Chief Energy Investment Strategist

Back on September 11 and 12, there was a summit meeting in a city that involved an organization that most Americans have never heard of.  Mainstream media coverage was all but nonexistent.

The place was Dushanbe, the capital of Tajikistan, a country few Westerners could correctly place on a map.

But you can bet your last ruble that Vladimir Putin knows exactly where Tajikistan is.  Because the group that met there is the Russian president’s baby.  It’s the Shanghai Cooperation Organization (SCO), consisting of six member states: Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.

The SCO was founded in 2001, ostensibly to collectively oppose extremism and enhance border security.  But its real reason for being is larger.  Putin sees it in a broad context, as a counterweight to NATO (a position that the SCO doesn’t deny, by the way). Continue reading →

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Experience the Magic of Unconventional Instruments

Posted on November 7, 2014 by MN Gordon

One of the pleasures of living in a postmodern world is witnessing the incoherent monetary policy efforts of central bankers.  It’s like watching a child chase seagulls at the beach.  There’s a lot of movement with no purpose or accomplishment.

Nonetheless, observing the central bankers of the world go about their business makes one unsettling thing clear.  They are making it up as they go.  They have no intelligible principle…except to recklessly inflate the money supply to fight off the economic boogeymen of unemployment, deflation, and falling asset prices.

Just think of all the fun you’d be missing out on if you were born at practically any other period of human history?  Zero interest rate policy.  Operation twist.  Quantitative easing – the equivalent of using adhesive tape to control diarrhea.

Certainly, these frauds are galling.  Yet they are also instructive.  They serve as examples that our leaders are liars and grifters. Continue reading →

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