How Quantitative Tightening Ends

Posted on June 3, 2022 by MN Gordon

The pursuit of decadence is always met with the painful reality that stopping the excess is much more difficult than starting.  This realization, like a killer in the night, lies in wait until just after the point of no return.  When the certain destruction cannot be undone.

John Maynard Keynes, Fabian socialist and the godfather of modern day economic planning, in his 1935 work, The General Theory of Employment, Interest and Money, wrote:

“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

In late November 2008, then Federal Reserve Chairman Ben Bernanke committed a fait accompli.  Though he may not have realized it at the time; he was blinded by his scholarly prejudices.

Bernanke, a smug Great Depression history buff of the highest academic pedigree, gazed back 80-years, observed several credit market parallels, and then made a preconceived diagnosis. Continue reading →

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Countdown To World Famine

Posted on May 27, 2022 by MN Gordon

The latest iteration of the Russia-Ukraine war recently surpassed the 90 day marker.  And there’s no foreseeable end in sight.

Henry Kissinger’s counsel at the World Economic Forum this week that Ukraine give up territory to Russia is a nonstarter for Volodymyr Zelenskyy.  This war has only just beginning.

Do you remember what the fighting is for?  If so, you’re one of few.

President Biden – the big guy – is entirely flummoxed.  This week, at the Quad summit in Japan, Biden remarked that the Russian war against Ukraine was “unprovoked.”  Once again, a firm grasp of the facts is not one of Biden’s strong suits.

Vladimir Putin, the invader, has over two decades of provocations he can point to.  According to declassified U.S., Soviet, German, British, and French documents posted on December 12, 2017, by the National Security Archive at George Washington University, the U.S. promised to not expand the North Atlantic Treaty Organization (NATO): Continue reading →

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What’s Up With Gold?

Posted on May 20, 2022 by MN Gordon

Amidst a backdrop of raging consumer price inflation something strange and unexpected is going on.  The U.S. dollar has become more valuable.  Not against goods and services.  But against foreign currencies.

For example, the U.S. dollar index, which is a measure of the value of the dollar relative to a basket of foreign currencies, recently crossed the 105 level.  This marks its highest level since December 2002.  Not since tech stocks were in full meltdown in 2002 has the dollar been so strong.

Without questions, the dollar’s had quite a run.  The dollar index increased over 6 percent in 2021.  So far in 2022, it has already gained over 7 percent.  And, for the time being, and despite shortsighted dollar weaponization policies, the dollar is preserving its reserve currency status.

This week, the dollar index did retreat slightly…at market close Thursday (May 19) it stood at 102.91.  Maybe the dollar has peaked.  Or maybe this is just a period of consolidation before its springs upward. Continue reading →

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

Finding Opportunities in a Bear Market

Posted on May 13, 2022 by MN Gordon

“I can calculate the motion of heavenly bodies, but not the madness of people.”

The remark was made by Sir Isaac Newton in 1720 upon losing £20,000 – a substantial sum at the time – speculating on South Sea Company stock.

The madness of people, as Newton painfully found, is incalculable.  It defies logic.  Runs on emotion.  And is best observed from a safe distance.

Newton may have been a brilliant mathematician and physicist.  But he was still an animal, just like the rest of us.  When it came to matters of money his actions were not governed by logic and calculation.  They were governed by fear and greed.

The madness of people – or crowds – may not be calculable.  However, it is most certainly measurable and observable…especially in the hindsight view of a stock price chart.

The South Sea bubble of 1720, like all good bubbles, was a fabrication of government.  Where an act of British parliament granted the South Sea Company a monopoly on new world trade so that, in return, it could finance the national debt…and at low interest rates to boot. Continue reading →

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