If you cite inflation statistics these days you inevitably run into the same counterpoints from those who have long been predicting hyperinflation in the USA. And despite the fact that there are still no signs of hyperinflation (or even high inflation) in the US economy the hyperinflationists remain convinced that they will one day be… Read More
By now, we all know that QE2 wasn’t all that effective in helping the economy. And after extraordinary measures, ZIRP, bank bailouts, endless loans, etc, some are saying that the Fed is completely out of bullets. Still, like a group of masochists, we are looking to Jackson Hole and Bernanke’s speech to shed some… Read More
* This post was written in 2011 before Mr. Roche founded Monetary Realism, which was formed due to several disagreements Mr. Roche and many other former MMT proponents had with the school of thought. For more info on the difference in views please see here. For more on MR’s views please see here. Yesterday’s stock surge off… Read More
In a recent story I pointed out that Richard Koo said it was not significant that the USA has been faster to respond to the current balance sheet recession. Now, he was primarily referring to the ineffectiveness of monetary policy during a balance sheet recession and the fact that it doesn’t matter how quickly you… Read More
Looking back at the long history of the U.S. stock market it is clear that there are long periods when the trend is distinctly up or down. We call these long trend “secular” markets as opposed to the commonly-known cyclical market trends that last about four years on average. In our view we are currently in a secular bear market that began when the market peaked over 11 years ago in early 2000.
This may very well be the most important data point that we are currently receiving every quarter. Yesterday’s Z1 released by the Federal Reserve showed a continuing decline in household credit. The latest reading showed a -2% decline in total household debt growth versus last year. The Fed summarized the data: “Household debt declined… Read More
This past week, as I watched our recent predictions about economic weakness and a market correction
unfold in front of me, I ran across the James Altucher article entitled “Next Stop: Dow 20,000 –10 reasons why the market will soar.” I am always intrigued by the never ending optimism that abounds in most market journalists but James Altucher is no slouch so it really got my attention.
Joseph Schumpeter is famous for coining the phrase “creative destruction”. He described it as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” This is a necessary component of capitalism. The strong survive and the weak die. A new paper out… Read More