Do You Hear a Bell Ringing?

Posted on August 2, 2019 by MN Gordon

The sun shines brightest across the North American continent as we enter summer’s dog days.  Cold sweet lemonade is the refreshment of choice at ballparks and swimming holes alike.  Many people drink it after cutting the grass, or whenever else a respite from the heat and some thirst quenching satisfaction is needed.

The economy, after 10 years of growth, appears to be heading for a respite too.  Second quarter earnings, currently being reported by S&P 500 companies, have been a mixed bag thus far.  But in sectors that actually make stuff, like materials and industrials, earnings are suffering double digit declines.

From a practical standpoint, earnings are declining in these sectors because manufacturing is contracting.  For example, this week it was reported that the Chicago Purchase Mangers’ Index (PMI) collapsed in July to 44.4.  That’s the second weakest Chicago PMI reading since the Great Financial Crisis. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , , , | 1 Comment

Realizing the Full Implications of the Forthcoming Catastrophe

Posted on July 26, 2019 by MN Gordon

“Facilis descensus Averno.” – Virgil

Delivering Tomorrow’s Curses

Roman poet Virgil penned these words in his epic, The Aeneid, roughly a generation before the birth of Jesus of Nazareth.  They can be loosely translated to, “the descent to hell is easy.”  Those who’ve traversed this passage can attest to the veracity of this axiom.

Though not apparent in the milieu of Virgil’s poem, for our purposes today, we’ll extend its application to the insidious progression of currency debasement.  What short utterance more aptly characterizes the steady degradation, as currently practiced by today’s church of state?

Yesterday [Thursday], for example, the House acted with untroubled ease to further America’s descent to hell.  With little resistance, federal spending was increased and the debt ceiling was suspended for two years.  Having delivered tomorrow’s curses, the nation’s Representatives can skip town without missing a moment of summer recess. Continue reading →

Posted in Government Debt, MN Gordon | Tagged , , , , | 18 Comments

Tending Towards Maximum Perversity

Posted on July 19, 2019 by MN Gordon

According to Finagle’s corollary to Murphy’s law, “Anything that can go wrong, will—at the worst possible moment.”  Taken a degree further, per O’Toole’s corollary of Finagle’s law, and the second law of thermodynamics, “The perversity of the Universe tends towards a maximum.”

No doubt, the perverse effect of central planning on the economy is tending towards a maximum.  This tendency can be traced back well over a century, with the advent of the Fed and the federal income tax in 1913.  Our purpose today, however, is to look back a mere decade.  This offers an adequate sampling of O’Toole’s corollary of Finagle’s law in action.

For example, on June 1, 2009, General Motors filed for Chapter 11 bankruptcy protection; the fourth largest bankruptcy in U.S. history.  Of course, GM didn’t vanish from the face of the earth.  Instead, Washington took 60 percent ownership and nationalized the company with a $50 billion taxpayer bailout.  President Obama remarked at the time:

“We are acting as reluctant shareholders because that is the only way to help GM succeed.” Continue reading →

Posted in Government Debt, MN Gordon | Tagged , , , , | 1 Comment

The Four Dimensions of the Fake Money Order

Posted on July 12, 2019 by MN Gordon

“If you don’t know where you’re going, any road will get you there,” is a quote that’s oft misattributed to Lewis Carrol.  The fact that there’s ambiguity about who’s behind this quote on ambiguity seems fitting.

For our purposes today, the spirit of the quote is what we’re after.  We think it may help elucidate the strange and confusing world of fake money in which we all travel.

For example, the monetary policy outlook immediately following last month’s FOMC meeting was as clear as a flawless (FL grade) diamond.  The principal message, if you recall, was that inflation was muted and the Fed, after suffering an overt beating from President Trump, would soon be shaving basis points off the federal funds rate.  You could darn near take it to the bank.

Wall Street took the news and acted upon it with conviction.  Investors piled into stocks and bonds without pausing to take a closer look for imperfections.  Why worry when fortune favors the bold? Continue reading →

Posted in Inflation, MN Gordon | Tagged , , , , | 3 Comments