Why Jim Grant Thinks It’s Time to Abolish The Fed

By Rick Ackerman – Re-Blogged From Gold Eagle

[Jim Grant is an old-school observer of this economic age and one of its most brilliant commentators. Following is the speech he gave in accepting the 2019 Bradley Prize, which recognizes those who have helped further the principles and institutions of American exceptionalism. RA]

Ladies and gentlemen, it’s a blemish on the age that so many of us know the name of the Federal Reserve chairman. In a better world, that government functionary would be as obscure as what’s-his-name, the home plate umpire who got no arguments calling balls and strikes at Yankee Stadium the other night. Who elected the Greenspans, Bernankes, and Powells to be the arbiters of interest rates, asset prices, the rate of inflation and who knows what else? It wasn’t Alexander Hamilton. Nor was it the Fed’s own founders. If the authors of the 1913 Federal Reserve Act could return to earth to inspect their handiwork, the shock might kill them all over again.

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A River of Denial Floods Markets Everywhere

US GDP Not All It Was Cracked Up To Be

You may be worried my prediction that a recession will start sometime this summer is not looking too good. So was I after first-quarter corporate earnings started coming in better than what economists expected. Except that barely “beating expectations” is kind of pathetic when expectations are dumbed down as far as they were.

(Note that I have also stated each time I repeat this prediction that we won’t know until half a year beyond summer whether or not it happened, because initial GDP reports are often revised down after the next quarter (perhaps in order to make the next quarter look better quarter on quarter) as facts come in more clearly and because no recession is officially declared until a month after two full quarters have seen total GDP decline — not a decline in the growth rate, but an actual drop in GDP.)

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Gold – Preparing For The Next Move

By Alasdair Macleod – Re-Blogged From Gold Money

The global economic outlook is deteriorating. Government borrowing in the deficit countries will therefore escalate. US Treasury TIC data confirms foreigners have already begun to liquidate dollar assets, adding to the US Government’s future funding difficulties. The next wave of monetary inflation, required to fund budget deficits and keep banks solvent, will not prevent financial assets suffering a severe bear market, because the scale of monetary dilution will be so large that the purchasing power of the dollar and other currencies will be undermined. Failing fiat currencies suggest the dollar-based financial order is coming to an end. But with few exceptions, investors own nothing but fiat-currency dependent investments. The only portfolio protection from these potential dangers is to embrace sound money – gold.

The global economy is at a cross-road, with international trade stalling and undermining domestic economies. Some central banks, notably the European Central Bank, the Bank of Japan and the Bank of England were still reflating their economies by supressing interest rates, and the ECB had only stopped quantitative easing in December. The Fed and the Peoples’ Bank of China had been tightening in 2018. The PBOC quickly went into stimulation mode in November, and the Fed has put monetary tightening and interest rates on hold, pending further developments.

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On Board Keynes Express To Ruin

By Keith Weiner – Re-Blogged From Gold Eagle

Last week, I ranted about the problem with our monetary system and trajectory: falling interest rates is Keynes’ evil genius plan to destroy civilization. This week, I continue the theme—if in a more measured tone—addressing the ideas predominant among the groups who are most likely to fight against Keynes’ destructionism. They are: the capitalists, the gold bugs, and the otherwise-free-marketers. I do not write this to attack any particular people, nor indeed as an attack at all. My purpose comes from my belief that to fix a problem, one must understand the nature of the problem.

I highlight these groups because, if there is ever to be a real movement to reform our monetary system, it would come from one of these groups, or ideally an alliance among all three. However, that is not in the cards today. Let’s look at why not.

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Looking At Market Capitalization

By Mark J Lundeen – Re-Blogged From Gold Eagle

Another week of nothing much happening with the Dow Jones; since last Friday it has advanced by only 42.44 points.  What’s to make of that?  After the impressive advance that began after December 24th the market is taking a break.  Don’t be surprised should the coming weeks bring more of the same.

However I remain short-term bullish, expecting the Dow Jones to make additional BEV Zeros in the BEV chart below come this spring or summer.  These anticipated (but not guaranteed) new all-time highs will be the last hurrah of a monster bull market that began in August 1982.  Following them come the deluge; a deflationary bear market that will claw back most of the inflationary gains seen since Ronald Reagan was president.

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Who Knows the Right Interest Rate

By Keith Weiner -Re-Blogged From Gold Eagle

On January 6, we wrote the Surest Way to Overthrow Capitalism. We said:

“In a future article, we will expand on why these two statements are true principles: (1) there is no way a central planner could set the right rate, even if he knew and (2) only a free market can know the right rate.”

Today’s article is part I that promised article.

Let’s consider how to know the right rate, first. It should not be controversial to say that if the government sets a price cap, say on a loaf of bread, that this harms bakers. So the bakers will seek every possible way out of it. First, they may try shrinking the loaf. But, gotcha! The government regulator anticipated that, and there is a heap of rules dictating the minimum size of a loaf, weight, length, width, depth, density, etc. Next, the bakery industry changes the name. They don’t sell loaves of bread any more, they call them bread cakes. And so on.

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