MAGA And Government Myths

By Gary Christenson – Re-Blogged From Silver Phoenix

We know the acronym MAGA – Make America Great Again. A different description of MAGA is MYTHS ASSOCIATED with GOVERNMENT ACTIONS.

WHAT MYTHS?

THE MYTH OF GOVERNMENT SHUTDOWN. Some parts of the U.S. government close. The employees are not paid and hardship blankets the land. Well, NO! The government employees are paid retroactively and most business continues as usual. It is good political theater. The D.C. circus never stops.

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The Dollar Works Just Fine

By Keith Weiner – Re-Blogged From Gold Eagle

Last week, we joked that we don’t challenge beliefs. Here’s one that we want to challenge today: the dollar doesn’t work as a currency, because it’s losing value. Even the dollar’s proponents, admit it loses value. The Fed itself states that its mandate is price stability—which it admits means relentless two percent annual debasement (Orwell would be proud). So there is no question that the dollar loses value. The only mainstream debate is whether this is good or bad.

Our focus today is whether this is why the dollar doesn’t work, why it’s failing.

Prices have been rising for 100 years. There is no reason why they couldn’t go on rising for another 100. Or 1000. The inflation argument, as we call it, does not reach anyone other than those who already think the dollar is failing. The rest shrug it off. Most people really care only if their income goes up slower than prices go up.

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Liquidity, Money Supply And Insolvency

By Andy Sutton – Re-Blogged From Silver Phoenix

Liquidity is becoming of central importance once again. It is frequently mentioned in mainstream media articles, interviews, and ‘educational’ programs.  It was a central point of discussion during the financial market blowout in 2008.

The killing off of a little-known (until it was dead!) data series earlier this year by the not-so-USFed has gotten the beehive buzzing once again about a liquidity crisis – or the possible aversion of one in the short term. It has also gotten things buzzing about the longer term as well.

What Happened

Late in 2017, the St. Louis Fed stopped publishing interbank loan data. Period. Just prior to that, the amount of interbank loans on a weekly basis dropped to zero:

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‘Big Mac Index’ Shows US Dollar Strongest in 30 Years

Re-Blogged From Newsmax

The U.S. currency is at its strongest level in 30 years, according to the Economist newspaper’s January 2019 “Big Mac Index.”

The newspaper’s “lighthearted guide to exchange rates” measures the purchasing power of currencies against each other. The gauge also compares the prices of McDonald’s flagship hamburger, the Big Mac, in different countries with the actual exchange rate between the currencies to determine whether a currency is over- or undervalued.

For example, “a Big Mac costs 3.19 pounds in Britain and $5.58 in the United States. The implied exchange rate is 0.57 [pound per dollar]. The difference between this and the actual exchange rate, 0.78, which suggests the British pound is 27% undervalued,” the Economist said.

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Are Stocks Overvalued?

By Keith Weiner – Re-Blogged From Silver Phoenix

We could also have entitled this essay How to Measure Your Own Capital Destruction. But this headline would not have set expectations correctly. As always, when looking at the phenomenon of a credit-fueled boom, the destruction does not occur when prices crash. It occurs while they’re rising. But people don’t realize it, then, because rising prices are a lot of fun. They don’t realize their losses until the crash. So we want to look at stocks when they’re high, before people realize what’s happened to them.

How do you value a stock? The classic methodology, proposed by Benjamin Graham and Warren Buffet, is to discount future free cash flows. Let’s leave aside the problem of how to predict future revenues much less cash flows in our crazy resonant system with positive feedback. For purposes of this discussion, we will just assume that a stock generates a known and constant cash flow of, say, $1 per year, in perpetuity.

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Gold – A Perfect Storm For 2019

By Alasdair Macleod – Re-Blogged From GoldMoney

This article is an overview of the principal factors likely to drive the gold price in 2019. It looks at the global factors that have developed in 2018 for both gold and the dollar, how geopolitics are likely to evolve, the economic outlook and how it is worsened for the dollar by President Trump’s tariff war against China, the availability and likely demand for bullion, and the technical position in paper markets. Taken together, the outlook is bullish for gold.

2018 reprise

For gold bulls, 2018 was disappointing. From 11 December 2017, when gold made a significant bottom against the dollar at $1243, it has ended virtually unchanged today, after being 4.2% up. Gold had to struggle against a rising dollar, whose trade-weighted index rose a net 3.7% over the same period, and as much as 9.4% from its mid-February low.

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Don’t Worry About The Gold Price…China’s Got Your Back

By Jeff Clark – Re-Blogged From Gold Eagle

I read a mainstream report about a decline in gold imports into Hong Kong, with the journalist concluding that gold demand in China is therefore down.

The interesting thing about the article is that the figures stated were accurate; Hong Kong imports into China are down. But here’s the thing: the message is wrong. It’s incomplete, misleading, and as I show below, misses the forest for the trees on what’s really happening with gold inside China. If an investor makes a decision because of that article, they may not be basing it on false raw information, but on an entirely faulty conclusion.

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