It was suggested 1.5 years ago that the next stock market crash might be one orchestrated by the Fed to create interest from historic buyers of US debt. The scenario went like this: you let the stock market collapse (i.e. no interference by the infamous “Plunge Protection Team”) to generate a “flight to safety” environment which would push billions, if not hundreds of billions, of dollars into U.S. Treasuries, soaking up its increasing debt issuance and roll-over with little difficulty thereby flooding the bond market with much needed demand. Were the recent dramatic declines in the U.S. stock markets so engineered by the Fed? Words: 852
July 31st, 2011 | Posted in Debts/Deficits,Economy | Read More »
In the face of lackluster economic growth and no hopes for new stimulus anytime in the near future, the global tightening cycle may force the market back into a deflation scare. Either way, caution remains warranted in such an environment. [Let me explain further.] Words: 568
June 8th, 2011 | Posted in Investing,Stock Indices | Read More »
Real yields on TIPS are very good indicators of the bond market’s growth and inflation expectations. Currently they are telling us that the bond market expects sub-par growth and no significant increase in inflation. Words: 401
April 24th, 2010 | Posted in Economy,Inflation/Deflation | Read More »
The big question on everybody’s mind these days is whether or not the end is near for the bond market. The answer is – not imminently. Nevertheless, we clearly see signs that long-term interest rates will be heading higher eventually given the massive federal deficits in the U.S. and our country’s reliance on foreign lenders. As such, it makes prudent sense to begin taking steps to help protect your portfolio against rising interest rates when they occur and this really boils down to TIMING. It’s important to understand how, when and where to make the right moves with your fixed-income holdings. Words: 975
April 18th, 2010 | Posted in Economy | Read More »
A weaker dollar poses tremendous complications for Americans. For one, it makes imports more expensive, which is effectively inflation. Ultimately, this means a standard of living lower than what we have come to expect. If confidence in the dollar totally erodes, then things will really get ugly. Words: 1011
March 29th, 2010 | Posted in Economy | Read More »
The bond market is signaling that rising prices are just ahead and you should be worried. Don’t be deluded into thinking that inflation “might be coming” in the future and that once you see the signs you can protect yourself. If you wait too long to take precautions, this silent thief will most certainly steal your wealth and savings. Words: 853
March 1st, 2010 | Posted in Inflation/Deflation | Read More »
I would welcome a public debate of my thesis that risk-free bond speculation suppresses the rate of interest and destroys capital in the process. I have challenged neo-classical economists who still consider the open-market operations of the Fed as a ‘refined tool to manage the national economy’. I want them, instead, to see in open-market operations the cancer of the economy responsible for the withering of the world’s prosperity. So far my challenge has fallen upon deaf ears. Words: 2854
February 8th, 2010 | Posted in Economy | Read More »
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