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Cheap Oil, the U.S. Dollar and the Deep State
Cheap Oil, the U.S. Dollar and the Deep State March 9, 2016 All this is to suggest that those expecting a major weakening in the USD to push oil higher shouldn’t hold their breath awaiting this outcome. That oil fell off a cliff once the U.S. dollar (USD) began its liftoff in mid-2014 is, well, […]
America’s Ruling Classes: No Fear, No Caution, No Prudence
America’s Ruling Classes: No Fear, No Caution, No Prudence Could it be that America’s ruling classes, its Imperial state and the Federal Reserve, no longer rule their own destiny? America’s smug ruling classes are supremely confident: they feel no fear, no caution, and exhibit no prudence. I outlined the five ruling classes in America’s Nine Classes: The […]
America’s Ruling Classes: No Fear, No Caution, No Prudence
America’s Ruling Classes: No Fear, No Caution, No Prudence Could it be that America’s ruling classes, its Imperial state and the Federal Reserve, no longer rule their own destiny? America’s smug ruling classes are supremely confident: they feel no fear, no caution, and exhibit no prudence. I outlined the five ruling classes in America’s Nine Classes: The […]
When Currency Pegs Break, Global Dominoes Fall
When Currency Pegs Break, Global Dominoes Fall When a currency peg breaks, it unleashes shock waves of uncertainty and repricing that hit the global financial system like a tsunami. The U.S. dollar has risen by more than 35% against other major trading currencies since mid-2014: If all currencies floated freely on the global foreign exchange […]
The System Has Failed
The System Has Failed No wonder we’re devolving into a society of a few privileged haves and a vast populace of marginalized have-nots. American culture contextualizes failure in individualistic terms: the system didn’t fail–you failed. Never mind the system is set up to fail many (if not most) participants: the cultural narrative is that failure to […]
Think Another Crash Is “Impossible”? Think Again
Think Another Crash Is “Impossible”? Think Again The confidence that risk can be quantified and mitigated is misplaced. If there are limits on what we can know of the future–and clearly there are–this sets limits on our ability to quantify and mitigate risk. Longtime correspondent Lew G. submitted this thought-provoking riff on the system’s intrinsic capacity […]
If Zero Interest Rates Fixed What’s Broken, We’d Be in Paradise
If Zero Interest Rates Fixed What’s Broken, We’d Be in Paradise Rather than fix what’s broken with the real economy, ZIRP/NIRP has added problems that only collapse can solve. The fundamental premise of global central bank policy is simple: whatever’s broken in the economy can be fixed with zero interest rates (ZIRP). And the linear extension […]
2016: The Year Wishful Thinking Fails
2016: The Year Wishful Thinking Fails If we collectively choose wishful thinking, catastrophic consequences are guaranteed. Wishful thinking has been an integral driver of the “recovery” 2009-2015:asset bubbles aren’t bubbles, central bank policies are brilliantly successful, unemployment has dropped to levels of full employment, and so on. The problems with wishful thinking that I describe in […]
Why NIRP (Negative Interest Rates) Will Fail Miserably
Why NIRP (Negative Interest Rates) Will Fail Miserably What NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals. The last hurrah of central banks is the negative interest rate policy–NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled […]
If Knowledge Is Power, Is It Also Wealth?
If Knowledge Is Power, Is It Also Wealth? Ironically perhaps, the ideas that are scarce are those that disrupt “business as usual” by automating what has not yet been automated. Let’s consider a syllogism: Knowledge is power, power equals wealth, so knowledge equals wealth. Is this true? Author George Gilder thinks so. His book Knowledge and Power: […]
The Increasingly Fragile Upper-Middle Class
The Increasingly Fragile Upper-Middle Class Many of these apparently high incomes are completely absorbed by high-cost upper middle class expenses. Since the top 10% takes home 50% of all household income, it follows that this top slice has most of the discretionary cash, i.e. net income left after taxes, servicing debt and paying for essentials […]
The Chart of Doom: When Private Credit Stops Expanding…
The Chart of Doom: When Private Credit Stops Expanding… Once private credit rolls over in China and the U.S., the global recession will start its rapid slide down the Seneca Cliff. Few question the importance of private credit in the global economy. When households and businesses are borrowing to expand production and buy homes, vehicles, etc., […]
The Opaque Process of Collapse
The Opaque Process of Collapse The ultimate cost of protecting the privileges of the few at the expense of the many is the dissolution of the social order that enabled the rule of the privileged few. When I write about the demise of unsustainable systems, readers often ask me to describe the collapse I see […]
Why We Won’t Have a “Lehman Moment” in the 2016 Crash
Why We Won’t Have a “Lehman Moment” in the 2016 Crash What the central banks cannot do is create productive places to invest the credit they’ve generated in such excess, or force qualified borrowers to swallow more unproductive debt. One way to lose a war is to focus on preparing to fight the last war. Preparing […]
The Global Economy Could Fall Farther and Faster Than Pundits Expect
The Global Economy Could Fall Farther and Faster Than Pundits Expect Systemic fragility doesn’t respond to central bank jawboning or Keynesian claptrap; unlike those “policy tools,” fragility is real. The core narrative of central bank/cartel capitalism is centralized agencies have the power to limit downturns and extend credit-based “good times” almost indefinitely. The centralized power bag […]
