Grantham’s ‘Real McCoy’ Bubble in a World Gone Mad

Right now happens to be an attractive time to do something stupid.  What’s more, everyone’s doing it.  Maybe you are too.

Stock valuations and corporate earnings growth no longer appear to matter.  Why not buy an S&P 500 index fund and let it ride?  Or, better yet, why not buy shares of Nvidia?

The semiconductor company’s up more than 170 percent over the last 9-months.  Perhaps it’ll double again from here.

Of course, there’s nothing like an epic stock market bubble that warms the hearts and softens the minds of men to ideas that would otherwise be impossible.  One idea du jour, for example, is that low interest rates justify high valuations.  Another is that the Fed can permanently inflate stocks using its seemingly unlimited supply of credit.

These ideas, and many others, are nearing their expiration date.  As they turn from ripe to rot, investors that are counting on there always being a greater fool will discover what happens when you overpay for a stream of future cash flows.  In short, future returns stink. Continue reading

Posted in MN Gordon, Stock Market | Tagged , , , , | 7 Comments

The Viral Assault On Small Businesses

This year, fear of a deadly pandemic triggered the ruling class to spread authoritarian lockdown orders.  The god of science, like a burning bush, told them to remove their sandals and deliver policies of regression.  A paranoid public was quick to comply.

Humans have been battling viruses since well before the wheel was invented.  According to archaeologists, a fast moving epidemic roughly 5,000 years ago wiped out a prehistoric village in what is today northeastern China.  Dead bodies were stuffed inside a dwelling – the Hamin Mangha – that was later burned down.

Another mass burial, the Miaozigou site, took place about the same time and in the same general area.  Together these discoveries suggest there was a rapid outbreak of an acute infectious disease.  An epidemic ravaged the entire region.

The viral spread of submicroscopic pathogens has the potential to alter the flow of history.  Soldiers returning to the Roman Empire after war against Parthia in 165 AD brought back more than the spoils of conquest. Continue reading

Posted in Economy, MN Gordon | Tagged , , , , , , | 24 Comments

Janet Yellen: Too Dumb To Stop

The United States Secretary of the Treasury bears a shameful job duty.  They must place their autograph on the face of the Federal Reserve’s legal tender notes.  Here, for the whole world to witness, the Treasury Secretary provides signature endorsement; their personal ratification of unconstitutional money.

If you recall, Article I, Section 8, of the U.S. Constitution empowers Congress to coin money and regulate its value.  What’s more, Article I, Section 10, specifies that money be coined of gold and silver and cannot be bills of credit.

Indeed, paper dollars are illegal money per the U.S. Constitution on two counts.  First, they’re issued by the Federal Reserve.  Second, they’re bills of credit with no ties to gold or silver.

This critical defect does not register even a passing concern for most Americans.  But it should.  Because illegal money – like paper dollars – has its deficiencies.  Mainly, it’s prone to gross over issuance for political means.  Thus, as it funds the unlimited growth of government, its payment quality grows evermore suspect. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , | 19 Comments

The Sisyphean Folly of Printing Press Money

Something remarkable happened on Tuesday.  The Dow Jones Industrial Average (DJIA) broke the 30,000 point barrier for the first time ever.  President Trump commemorated the feat by calling the number “sacred.”

Some Americans were especially grateful as they said their Thanksgiving Day grace.  These generally include wealthy owners of stocks and other financial assets.  Forty years of inflationary monetary policies have elevated their prosperity to holiness.

The remaining Americans, through no fault of their own, missed out on these sanctified blessings.  Perhaps they’ll get some leftover table scraps for Christmas.  These, indeed, are the questions being asked.

Will Washington make this a Merry Christmas for cash strapped Americans?  Will the Treasury send out a second round of $1,200 stimulus checks for the yuletide?  Will Congress be Ebenezer Scrooge or Mr. Fezziwig?

These are important questions as 2020 approaches its twilight. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , | 13 Comments