Facing Up to the Wreckage from the Past

Posted on January 5, 2024 by MN Gordon

The New Year brings both hope and optimism.  A chance to turn over a new leaf.  To pursue goals.  Work hard.  And make all your dreams come true.

The sentiment is admirable.  It is vital to attack challenges with renewed vigor.  However, the outcome, even for the most disciplined, can be a giant letdown.

January, named for the Roman god Janus, protector of gates and doorways, is depicted with two faces.  One looking into the past.  The other into the future.

The calendar year may have started anew.  But, as Janus reminds us, past actions – both good and bad – endure.  By this, there’s an abundance of wreckage from the past that still needs to be reconciled.

In the realm of money and politics there are mega amounts of leftover wreckage produced by central planners in Congress, at the U.S. Treasury, and the Federal Reserve.  Decades of deficit spending and currency debasement come with unpleasant effects.  The consequences of which dramatically impact your life and your livelihood. Continue reading →

Posted in Government Debt, MN Gordon | Tagged , , , , | Leave a comment

How to Outperform the Stock Market in 2024

Posted on December 29, 2023 by MN Gordon

“Sometimes nothin’ can be a real cool hand.”

– Lucas “Luke” Jackson, Cool Hand Luke

Very Good News?

Following the federal open market committee (FOMC) meeting on December 12 and 13, 2023, the Federal Reserve announced it would be holding the federal funds rate within a range of 5.25 to 5.5 percent.  The Fed, by way of its dot plot, also signaled there would be three 25-basis point rate cuts in 2024.

The Fed believes it has conquered the rampant consumer price inflation of its making.  Fed Chair Jerome Powell even took the opportunity at a news conference to toot his own horn:

“Inflation has eased from its highs, and this has come without a significant increase in unemployment.  That’s very good news.”

Wall Street celebrated the prospect of future rate cuts by boosting the S&P 500 by 3.6 percent over the following week.

Interest rate cuts are commonly recognized as being bullish for stocks and stimulative for the economy.  The rationale is that the burst of cheaper credit produces a borrowing and spending binge that drives stock market speculation and gross domestic product (GDP) growth. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | Leave a comment

How Bankers are Exploiting the Fed’s BTFP at Your Expense

Posted on December 22, 2023 by MN Gordon

American bank depositors sincerely trust the Federal Deposit Insurance Corporation (FDIC).  They are as certain as the sky is blue, that the FDIC will protect the money in their bank accounts.  Thus, they do not withdraw dollars from their accounts in a banking crisis.

This confidence has minimized the outbreak of full-blown bank runs at American banks since the FDIC was established in 1934.  But that doesn’t mean fractional reserve banking isn’t fundamentally flawed.

When you have an interest-bearing savings account at a bank, you’re the bank’s customer.  But you also supply the product.

In fact, the modern banking system is built on the lie that the bank will pay you interest by lending out your deposit, but that you can also get your money back at any time – wink, wink.  The FDIC serves to make this lie true.

The most common reason for a bank failure is that the bank has loaned money to purchasers of longer-term assets, such as real estate, which isn’t paid back for years, yet depositors have the right to withdraw money at any time.  The banks borrow short and lend long. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , , | 11 Comments

California Circles the Toilet Bowl

Posted on December 15, 2023 by MN Gordon

“I go with the word ‘serious.’  A serious budget problem.  I would stop short of calling it a crisis.”

– Legislative Analyst Gabriel Petek, on California’s $68 billion deficit

What Was It Like?

California, without question, is a great state to be from.  We lived there for nearly 45 years.  We made our California exodus in July 2022.  No regrets.

In fact, not living in California becomes a greater blessing with each passing day.  Moreover, depending on the time lived there, and the decades encompassed, plenty of insight can be found in the answers to three simple questions.

What was it like?  What happened?  What is it like now?

The answer to the first question comes with warm reminiscence.  A fond nostalgia for a California that long ago faded from existence.

In the early 20th century, before the mania to splatter every square foot of the LA Basin’s surface with concrete took hold of the local spirits, the place was a magnet for eccentrics and madmen.  On any average day, Howard Hughes, a total lunatic, would crash test his latest flying machine into Beverly Hills. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , | 22 Comments