Interest on our national debt has crossed $1 trillion a year and is headed up. I believe the basic reason the Fed is cutting interest rates is to reduce interest cost on the debt. Obviously, that doesn’t solve the problem- it just makes it get worse at a slightly slower rate.
Chart: Interest On Our National Debt Read More »
“When nations can trade directly via blockchain platforms, settle in their own currency, and store value in physically-backed gold contracts, the dollar becomes increasingly optional.” Tariffs and the uncertainty of an irrational trade war, the weaponization of the U. S. Dollar, seizure of Russia’s dollar reserves, the impact of debt, the general historical cycle of
Changing Role of the U.S. Dollar: Why, How? With a Whimper- Not a Bang. Read More »
Liquidity in our financial system refers to the overall amount of readily available money and credit in the financial system that can be used for spending, lending, or investment. It includes cash, bank reserves, money market balances, and short-term funding available to financial institutions and markets. You’ve heard about the Fed increasing or decreasing liquidity.
Where Do We Stand on Liquidity? Read More »
In August of 2007, then Federal Reserve Chairman Ben Bernanke told Congress that the subprime crisis would be contained. We went on to have the Great Financial Crisis GFC), of which the subprime crisis was just one cockroach. Now we’re facing another financial crisis- potentially worse than the GFC- caused by another 15 years or
It started in May of 1984 when Continental Illinois Bank failed. And was rescued. People were saved from having made a bad investment. So much for moral hazard- the idea that investing is a risk, which has evolved to be not the case in “too big to fail” companies. We know what happened. More and
On October 31, I posted an article called “What’s Wrong with Capitalism?” After a couple of paragraphs of me ranting and raving there was a link to an article that described what Ben Hunt calls the “financialization of Texas Instruments. It was disturbing to a few people I heard from and, I hope, to some
The Disaster of Negative Interest Rates Read More »
Well, uh, nothing actually. Okay, not nothing. Some things- sure. There’s no perfect system. But the real problem is that what we actually have is less and less like real capitalism. Adam Smith’s invisible hand and Schumpeter’s idea of creative destruction have both taken it on the chin. Quantitative easing, low to negative interest rates,
What’s Wrong with Capitalism? Read More »
Last Wednesday Shopko, a general merchandise retailer with 333 stores, filed for chapter 11 bankruptcy. On January 17th, SGB Media published an article on Shopko and the filing by Thomas J. Ryan with the title, “Shopko Becomes Latest Casualty Of Online Disruption.” I took umbrage at the suggestion that online disruption was the primary cause
What Caused Shopko to File for Bankruptcy? Two Parts to the Puzzle. Read More »
The concept of the European Community and a common currency worked okay (though with massive misallocation of capital) as long as long as there was lots of growth and lots of money and lots of subsidies for poorer countries and low interest rates. For a long time, what you could earn on a German bond wasn’t
What’s Going on in Greece and Why You Might Care Read More »
Once upon a time, way back in 2003, an investment bank could only have leverage of up to twelve to one. In 2004, the Security and Exchange Commission gave five investment banks, and only five, the ability to leverage up to 30 or 40 times or so. Guess which five they were? I almost don’t want to bother
A Little Random Perspective on the Financial/Market/Credit crisis Read More »