One Heck of a Reality Television Fight

The world’s a better and brighter place when your portfolio’s growing like spore bearing mushroom fungus.  Horizons are expanded.  Perceptions are broadened.  And the secrets of the universe are all within reach.

Life takes on new meaning when you’re getting financially loaded.  The decade long bull market in U.S. stocks has brought clarity, purpose, and accomplishment in ways that are both agreeable and reassuring.  Namely, these matters have been delivered in the form of budding portfolio statements.

A simple investment in a low-cost S&P 500 Index fund has delivered 4X returns over the last decade.  John Bogle, no doubt, is smiling from his grave.  He was right.  Your broker at Edward Jones – the one that put you in an actively managed mutual fund with the high fees – was wrong.

Do you think the S&P 500 “might could” quadruple again over the next decade?  Stranger things have happened.  For example, Alan Shepard wet his spacesuit in the Mercury capsule prior to launch without consequences.  Who’d a thunk it?

The more important question, however, is: Would another 4X stock market run from here be a good thing? Continue reading

Posted in MN Gordon, Politics | Tagged , , , , | 14 Comments

The Three Stages of Modern Monetary Theory

Stage One: Yielding to Dreamers

Some ideas are so bad they’re best ignored.  Like resentments – or stray cats – if you don’t feed them, they’ll go away.  Before long, they’re forgotten altogether.

That has been our approach to Modern Monetary Theory (MMT).  The idea’s so obviously foolish, reckless, and outright suicidal.  Why feed this dorkus maximus of economic thought?

Alas, there are times when promises of social utopia prove too intoxicating to pass up.  It doesn’t matter if the promises are absolute fantasy.  When hopes are diminished beyond redemption, any old falsehood will warm the hearts and soften the minds of otherwise intelligent people to ideas of pure madness.

After a decade of increasing wealth inequality, the masses have reached a moment of certain hopelessness.  Maybe the $1.6 trillion student loan crisis has something to do with the despair.  Maybe the 102 million Americans who do not currently have jobs are contributing to the angst. Continue reading

Posted in Inflation, MN Gordon | Tagged , , , , , | 17 Comments

Why Fed Chair Powell’s a Laughingstock

Clarity.  Simplicity.  Elegance.  These fundamentals are all in short supply.  But are they in high demand?

As far as we can tell, hardly a soul among us gives much of a rip about any of them.  Instead, nearly everyone wants things to be more muddled, more complicated, and more crude with each passing day.  That’s where the high demand is.

For example, executing and delivering work in accordance with the terms and conditions of a professional services contract these days is utterly dreadful.  The real work is secondary to fake work, trivialities, and minutia.  Superfluous paperwork and an encumbrance of mandatory web-based tools are immense time and capital sucks.

While each T & C may have been developed for one good reason or another.  Over time, they’ve piled up into something that’s an unworkable mess.  But like tax law, or local zoning codes, they must be followed with arduous rigor.

What’s more, many livelihoods depend on all the fake work that’s now built into what should be a simple contract.  Auditors, contract administrators, accountants, MBAs, spreadsheet jockeys, risk managers, and many other fake professionals, run about with rank importance.  What would happen to these plate spinners if the fake work disappeared? Continue reading

Posted in Economy, MN Gordon | Tagged , , , , | 4 Comments

Why a Chernobyl-like Financial Disaster is Inescapable

In the early morning hours of April 26, 1986 – roughly 33 years ago – things went horribly wrong in the town of Pripyat, in northern Soviet Ukraine.  Reactor No. 4 at the V. I. Lenin Nuclear Power Plant, also known as the Chernobyl Nuclear Power Plant, was overwhelmed by an uncontrolled reaction.  There was no stopping it.

Two initial explosions blew the top off the reactor.  Once exposed, plumes of fission matter were wafted into the atmosphere by an open-air graphite fire.  Before long, this radioactive material precipitated onto Western Europe and the Western USSR.

Nine days later the fire was finally contained.  But not before an estimated 400 times more radioactive material was released than from the atomic bombing of Hiroshima and Nagasaki.  Twenty-eight firemen and operators died from acute radiation syndrome in the following days and months.

What exactly caused the Chernobyl disaster is still a matter of disagreement.  The first official explanation of the accident was later acknowledged to be erroneous.  But there is agreement on the fact that the nuclear disaster would not have happened when it did if the workers had played hooky and gone fishing. Continue reading

Posted in Economy, MN Gordon | Tagged , , , , | 1 Comment