What You Must Know About Global Currency Debasement

Posted on November 25, 2014 by MN Gordon

After six years of heavy handed market intervention the financial system has been pushed to the extremes.  Scientific management of the economy has twisted and contorted it in ways that would’ve otherwise been impossible.  Rather than moderating the business cycle it has exacerbated it…the booms are bigger, the busts are more pronounced.

What we mean is the yin and the yang of inflation and deflation have never pulled harder.  Stock prices rise to record highs yet real wages decline.  Obviously, this doesn’t compute.  Something has got to give.

Like the subduction zone where the Pacific Plate pushes underneath the North American Plate, the pressure builds.  No outward instability is apparent on the surface for years…or even decades.  In fact, the peace and tranquility extends for so long people forget the hidden danger.  They build houses directly on top of the fault.

But this doesn’t mean something big isn’t coming.  There’s no if to the matter, just when.  Moreover, when the San Andreas Fault ruptures, structure foundations will rapidly crack and cave across the Golden State. Continue reading →

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Here Comes the Flood

Posted on November 21, 2014 by MN Gordon

The United States’ economy is flying high.  In fact, when compared to Japan and Europe, the state of the union is strong and prosperous.  What’s more, it’s only getting better.

The unemployment rate continues its slow soft slide downward.  It was at just 5.8 percent the last we checked.  Meanwhile, consumer prices are rising at a benign 1.7 percent.  At the same time, annual GDP is increasing at a healthy 3.5 percent clip.  On top of that, the stock market continues to make everyone rich.

There are occasional moments of idyllic perfection where one must pinch themselves to know if they are really happening.  These are the green flash instances…like when Teddy Kennedy up and died.  Out of nowhere the stars align and the good spirits reign.

Sometimes these moments are compelled by careful planning and exacting fortitude.  Other times their harmonic convergence is the result of sheer dumb luck.  We don’t make too much of the how or why…we’ll take what we can get.

At the end of the day it really doesn’t matter what the triggers were. Continue reading →

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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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