Living the Lie

Posted on February 10, 2023 by MN Gordon

“It is significant that the nationalization of thought has proceeded everywhere pari passu with the nationalization of industry.” – EH Carr

Denying the Truth

Central planners face an impossible task.  They must compel people to behave in ways that go contrary to freedom of choice.  Only those full of conceit and having an outsized ego would make a career out of this line of work.  You know the types…

Thou shalt only take public transportation.  Thou shalt pay income taxes.  Thou shalt consume bugs.  Thou shalt use electric leaf blowers.  Thou shalt own nothing and be happy.  Thou shalt have a permit to sell lemonade.  Thou shalt do as I say not as I do.

Yet, even when the plebs go along, the plans of central planners never work out as intended.  They’re costly.  They create unnecessary work.  They can also be extraordinarily destructive.

Rather than accepting their limitations, however, central planners redouble their efforts.  They create complicated incentive programs.  They reward one industry at the expense of another. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 21 Comments

Mission Accomplished?

Posted on February 3, 2023 by MN Gordon

About the time the most trusted man in America, Walter Cronkite, signed off from the CBS Evening News for the last time, something momentous happened in the U.S. credit market.  Few people, apart from Bill Gross and A. Gary Shilling, understood what was going on.

Hindsight is always 20/20.  And looking at a chart of U.S. interest rates several decades later it all seems so obvious.  Specifically, that the rising part of the interest rate cycle peaked out in 1981.

This one thing, in essence, changed everything.  Over the next 39 years interest rates fell as mega-asset bubbles were puffed up and floated across the land.

The relationship between interest rates and asset prices isn’t complicated.  Tight credit generally produces lower asset prices.  Loose credit generally produces higher asset prices.

When credit is cheap and plentiful, individuals and businesses increase their borrowing to buy assets they otherwise couldn’t afford.  As cheap credit flows into various assets, it balloons their prices in kind. Continue reading →

Posted in MN Gordon, Politics | Tagged , , , , | 23 Comments

Are You the Collateral Damage of Central Planners?

Posted on January 27, 2023 by MN Gordon

The Conference Board – a nonprofit think tank that delivers cutting edge research – recently published its latest Leading Economic Index (LEI) for the United States.  The findings were a giant bummer.  In December, the LEI dropped for the tenth consecutive month.

The LEI, if you’re unfamiliar with it, consolidates various measures of economic activity, including credit, interest rate spreads, consumer expectations, building permits, new orders of goods and materials, and several other items, to assess which way the economic winds are blowing.  Over the past six months, the LEI has fallen by 4.2 percent.  This is the fastest six-month decline since the great coronavirus panic.

This week, the Bureau of Economic Analysis provided its advance estimate of Q4 U.S. gross domestic product (GDP).  For the final quarter of 2022, real GDP increased at an annual rate of 2.9 percent.

How could it be that GDP is expanding while the LEI is contracting? Continue reading →

Posted in MN Gordon, Politics | Tagged , , , , | 25 Comments

Debt Ceilings are for Idiots

Posted on January 20, 2023 by MN Gordon

Clear thinking.  Logical assumptions.  Well-reasoned conclusions.  Such principles are in low supply these days.  But are they in high demand?

Readers who have suffered the financial pinch and frustration of a large project gone sideways know that professional life is rarely neat and almost never tidy.  One team member’s obsessive focus on minutia can quickly burn through the budget.  A zealous regulator or supply chain breakdown can wreak havoc on the schedule.

There are, however, special benefits that are earned when taking a run through the meat grinder.  For one, there are countless opportunities to build character, regardless of if one desires a slice of humble pie.

We worked as a project manager for an international consulting firm for over two decades.  Bidding, winning (and losing), contracting, delivering, and billing work was our daily focus.

Anyone who’s ever earned their living in this game can testify that it’s a terrible business.  Still, the character-building experiences are priceless. Continue reading →

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