Thanks for the kind words. We use writing as a means of analysis - first and foremost we are traders interested in making money, and communicate to clarify our own thinking. The presence of this synergy is what drove our decision to publish in the first place. Pleased to hear it's working (in terms of providing benefit to others too)...
Yep. The view that Jimmy Rogers and others promote is that Bernanke and co. are simply stupid. But this seems illogical. Are these guys really that dumb, or are they morally compromised instead? Good question. It really doesn't make any sense. Especially because, if Bernanke is worried about a do-nothing congress, then he should be extra worried that the Fed doing too much will provide cover for congress to continue doing nothing. If the Fed acknowledges that congress must facilitate real change, then the Fed must also acknowledge that its own palliative policies are a negative to the extent they allow congress to pass the buck and sit on its ass because the Fed juice is in the punchbowl. Again, one seems forced to conclude that Bernanke is either a complete moron or is driven by hidden motives. The second makes more sense... The irony is that the Fed's actions have actually increased the likelihood of a disastrous deflationary outcome in our view. Will write more on this later. I don't know which is scarier, the notion that 1) the Fed and pretty much all of Washington are so corrupt and deviantly motivated they would steal the dimes off a dead man's eyes or 2) the whole academic crew running the Fed is so fucking stupid they would barely qualify to manage a McDonald's in the real world. But it seems to be one or the other. Liars or fools, take your pick...
What happens after infinity? All told, we actually find it a less frightening notion to see the Federal Reserve as epically corrupt versus epically stupid or epically in thrall to their own "bet the farm" Jim Jones kool-aid notions. An organization that is corrupt but intelligent can at least be counted on to consider the merits of pulling itself back from the brink. An organization run by out-to-lunch academic kool-aid drinkers is a threat to destroy both itself and the world for the sake of institutionalized idiocy. What the Federal Reserve is doing has been properly labeled the greatest mad science monetary experiment of all time, and the risks of blowing up the laboratory have just increased dramatically. Read more: http://www.mercenarytrader.com/2012/09/what-happens-after-infinity/
What Happens After Infinity? http://www.mercenarytrader.com/2012/09/what-happens-after-infinity/ There were two references (saying the same thing actually) to inflation forcing savings: "...forcing savers to save more..." "...are forced to save and retrench..." and further "...consumer spending could actually DROP." I remember stagflation of the middle through late 1970's. The popular saying at the time conveyed the message to spend NOW because items will only "cost more later." It was particularly compelling with large purchases like automobiles. Also, "get your money out of the bank...damn, high inflation will make it worth LESS each month." My excuse is "I was doing something else then" that did not have me very plugged into the economics then (except something about wage-price spiral). I just don't think I was plugged in or maybe I just don't remember all the displacements, symptoms, and classic economic elements prevalent at the time. But... .... how does one resolve the conflict between "spend now because it will cost you more later" and "quit saving money that will be worth less" versus the above quoted excerpts from the After Infinity essay ? (Not to confuse things, but to be fair, I do recall provocatively high rates given on CD's, and coupon rates and yields on bonds, and nice returns on Zero Coupon Bonds as somewhat of a mitigation haven against inflation. But I don't think that neutralizes my question totally: much of those were not "forced savings" but discretionary savings.)
We don't have a 70s-style backdrop in which monetary velocity is increasing and wages are being negotiated higher. Baby boomer credit is also much closer to tapped out in the present environment. You can't binge purchase if you are upside down on your house and living in fear of being laid off even as your gas and grocery bills are going up.
Funny money at your 12 (bernanke); Funny money from all other clock positions(counterfeit). Bogey alert: Keep your head on a swivel stick. Approaching you out of the 12 o'clock, high sun (frontal attack !) or from your blind sides (little, nimble pepetrators of printing funny money and apparently very good at it, too.) http://news.yahoo.com/video/fake-bill-walmart-costs-family-193000244.html Call sign: "Funny money." Varying degrees of caliber. On your 12 is a declaration of war on you from the Red Barron, last week Thursday, with THE weapon, cruelest tax of all, peppering your ability to stay aloft over time with inflationary strikes like strings of machine gun bullets incessantly compromising your platform: part of your wing; part of your vertical and horizontal stabilizers; your engine, for cryin' out loud ! All other clock positions vulnerable from sneak attacks of counterfeit that impact your platform with a bigger hole at one time, at any unknown time. Hey ! ....what about sabotage with contaminated fuel ? ..... put there ostensibly by your own leader, destroying your ground support ? What the Hay ?! Not airborne and not taking off but surviving on MRE's (meals ready to eat) are your wingmen, grounded. Entire squadrons ! Countless numbers of them ! What a way to run a railroad. Or am I mixing my metaphors ?
Fantasy Island From a chart perspective, the aftermath of the Fed's action is defined by a surprising number of island tops. Bernanke created his very own archipelago fantasy chain, causing multiple vehicles to gap higher and immediately turn tail. Read more: http://www.mercenarytrader.com/2012/09/fantasy-island/
Is China the Biggest Malinvestment Case of All Time? If there is a credible counter-case as to how China will evade all the lessons of history, slip past its egregious mistakes unscathed, mimic the worst sins of the West while paying no penalties, and turn the essential tenets of free market economics upside down in doing so, we would love to hear what it is. Read more: http://www.mercenarytrader.com/2012/09/is-china-the-biggest-malinvestment-case-of-all-time/
Ok, so try this link. Counterfeit money. http://www.huffingtonpost.com/2012/09/18/leann-ward-michigan-mom-r_n_1893119.html