Keep Your Eyes on the Road

Posted on October 3, 2025 by MN Gordon

The stock market, as measured by the S&P 500, continues to inflate. But this isn’t a sign of economic health. In fact, a scratch below the surface reveals an economy that is much weaker than advertised.

Several decades ago, the stock market was viewed as a forward-looking animal. A place where investors considered expectations about future earnings and performance to make decisions affecting share prices. Those days are long gone.

These days the stock market is purely speculative. There’s a large cohort of workers who blindly pour money into index funds every two weeks through their company sponsored retirement accounts. Others, under the spell of AI hype, believe we’re in the early stages of the greatest economic boom since the railroad. They trip over themselves to grab a piece of the mirage.

Thus, share prices and index levels do not provide much meaningful information about the state of the economy. Warning signs are no longer found on Wall Street. To understand what’s happening and what’s coming next you must look elsewhere. Continue reading →

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Where’s the Beef?

Posted on September 26, 2025 by MN Gordon

The year was 1984. The fast-food landscape was dominated by two giants: McDonald’s and Burger King. But a third player, Wendy’s, was making its mark with a new advertising campaign. This would not only boost its sales but also embed a simple, three-word phrase into the American lexicon:

“Where’s the beef?”

The campaign, created by the ad agency Dancer Fitzgerald Sample, centered on three elderly women. These old ladies were discerning fast-food critics. The star of the commercial was the feisty, bespectacled Clara Peller.

In the now-classic commercial, the women are presented with a giant, pillowy bun from a fictional competitor. They ooh and aah over the size of the bun, but then, Clara, with her gravelly, no-nonsense voice, peers under the lid and exclaims in exasperation, “Where’s the beef?”

Obviously, the question was aimed at Wendy’s competitors. It suggested their burgers were all fluff and no substance. Wendy’s, in contrast, boasted of its larger, square patties that hung over the bun, proving they had plenty of beef. Continue reading →

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On Black Swans and White Lies

Posted on September 19, 2025 by MN Gordon

“If you hear a ‘prominent’ economist using the word ‘equilibrium,’ or ‘normal distribution,’ do not argue with him; just ignore him, or try to put a rat down his shirt.”

– Nassim Taleb, The Black Swan

Facing the Unexpected

There was an old European belief that persisted for centuries. People were convinced that all swans were white. Their reasoning was founded in logic and supported by empirical evidence.

Every single swan they’d ever seen was white. It was a universal truth. A rock-solid assumption based on all the available evidence.

But then, in the late 17th century, a Dutch explorer found black swans in Australia. The one-time truth that all swans were white was instantly shattered. The existence of black swans showed how fragile knowledge and assumptions can be when faced with the unexpected.

Nearly 20 years ago, in his book The Black Swan, author and options trader Nassim Taleb described a Black Swan as an event that comes as a complete and utter shock. Something that nobody saw coming, which has a massive, widespread impact. What’s more, after it happens, we look back and convince ourselves that it was totally predictable all along. Continue reading →

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The Unvirtuous Cycle of Rate Cuts

Posted on September 12, 2025 by MN Gordon

Economic Prism Articles | Insights on Gold, Stocks, Inflation & FOMCPresident Trump wants rate cuts. Stock market investors do too. As do home buyers.

Their reasons are slightly different. But they all generally believe rate cuts to be the path to greater riches and glory.

Trump wants cheaper credit for several reasons. First, he wants cheaper credit so the Treasury can better finance the U.S. government’s massive $37.5 trillion pile of debt.

The 2025 fiscal year ends September 30. Through August, the federal government has run a budget deficit of $1.97 trillion. About half of this – $933 billion – was merely to cover the interest on the debt.

If interest rates were to drop by a percentage point or two the annual debt interest could fall by several hundred billion. This may buy a little time for the U.S. government’s fiscal reckoning. But it really wouldn’t change anything.

The U.S. government is on target to run a budget deficit of $2.2 trillion for FY 2025. Lower interest rates, and thus a lower net interest payment, would only reduce the deficit to around $2 trillion – a difference of just over a half percent of the total $37.5 trillion of outstanding debt. In other words, it would do exactly diddly-squat for the nation’s finances. Continue reading →

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