California’s Real Wildfire

Posted on September 11, 2020 by MN Gordon

Hot dry winds have returned to the land of fruits and nuts.  After baking away all summer long in the blistering sun, the dense sage and chaparral covering the coastal hillsides and canyons and the inland mountain forests are dry and toasty.  Vegetated areas are a giant tinderbox.

What happens next is as predictable as night follows day.  Just one spark – from a downed powerline or a backfiring semi-truck – and the whole thing conflagrates into a blistering windblown wildfire.  The Golden State goes up in smoke.  The sky turns to an orange haze; the sunsets are magnificent.  And ash sprinkles down and coats the pavement with residue.

Of course, this happens every year.  And every year is the worst year ever.  The fires rage until the mild winter weather arrives.  Then everyone seemingly forgets the fires ever happened…until the mudslides.

Indeed, California is a whacky and wild place.  The Governor’s an absolute loon who fancies himself a leading presidential candidate for the 2024 election. Continue reading →

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

How to Turn a Corporate Credit Crisis into a Currency Crisis

Posted on September 4, 2020 by MN Gordon

Surely, Thursday’s stock market selloff didn’t catch you by surprise…now did it?  Why would it?  After going nearly straight up for the last five months, it’s only natural for there to be a pullback.

This was particularly true for technology stocks.  They’d reached such dizzying heights it was just a matter of time before the thin air got to them.  And get to them it did.  Some of the mania’s favorites, like Apple, Tesla, and Nvida, fainted in unison…dropping 8 percent, 9 percent, and 9.3 percent, respectively.

A company called PagerDuty garnered the honor of the day’s biggest loser.  The San Francisco based company, which operates in the cloud, made a graceful 25.8 percent swan dive from its heavenly realm.

So, what should you do about it?  Should you buy the dip?

As far as we can tell, there’s currently no fundamental reason to buy stocks.  But like a pair of Yeezy sneakers or avocado toast, if buying expensive stocks makes you happy…go for it.  Just realize, we are in the midst of a reckoning.  A great catastrophe is upon us.  What’s more, stocks should be the least of your concern. Continue reading →

Posted in Government Debt, MN Gordon | Tagged , , , , | 12 Comments

In The Long Run We Are All Alive

Posted on August 28, 2020 by MN Gordon

In 1976, economist Herbert Stein, father of Ben Stein, the economics professor in Ferris Bueller’s Day Off, observed that U.S. government debt was on an unsustainable trajectory.  He, thus, established Stein’s Law:

“If something cannot go on forever, it will stop.”

Stein may have been right in theory.  Yet the unsustainable trend of U.S. government debt outlasted his life.  Herbert Stein died in 1999, several decades before the crackup.  Those reading this may not be so lucky.

Sometimes the end of the world comes and goes, while some of us are still here.  We believe our present episode of debt, deficits, and state sponsored economic destruction, is one of these times.

We’ll have more on this in just a moment.  But first, let’s peer back several hundred years.  There we find context, edification, and instruction.

In 1696, William Whiston, a protégé of Isaac Newton, wrote a book.  It had the grandiose title, “A New Theory of the Earth from its Original to the Consummation of all Things.”  In it he proclaimed, among other things, that the global flood of Noah had been caused by a comet. Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | 19 Comments

Your Figuring Central Planners At Work

Posted on August 21, 2020 by MN Gordon

“Every man is a consumer, and ought to be a producer,” observed 19th century philosopher Ralph Waldo Emerson.  “He is by constitution expensive, and needs to be rich.”

These days Emerson’s critical insight is being taken to its extreme.  Consumers, many whom lost their jobs due to government lockdown orders, no longer produce.  Yet they still consume.  They’re expensive.  Not rich.

What’s more, this consumption is not funded through personal savings.  Nor is it funded through government transfer payments.  Rather, it’s funded via the printing press.

Emerson, no doubt, was lacking in the unique perspective we’re presently granted.  He didn’t have the special opportunity to watch his government destroy the economy in short order.  Perhaps if he had, he would have penned a neat axiom to distill the essence of what has happened.

The world today looks nothing like Emerson’s day.  The 19th century was an age of honest money.  Central bankers did not roam the land. Continue reading →

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