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Someone is going to get killed. Unbeknownst to Dimon, his daughter was trading Bitcoin: I wish I had a Bitcoin for every time somebody asked me about it. Cryptos and goldbugs share a common interest in escaping the gaze of the authorities. My ignorance of blockchain technology is profound, but I suspect that is true for many who talk the talk. I wonder if somehow blockchain might play a role in bypassing the SWIFT check-clearing system used by Western powers to shake down opposition Russia.
My failure to jump on Bitcoin leaves no remorse: I offer my current view of cryptos from a position of total technical ignorance guided by an only slightly more refined understanding of history and markets. Please forgive me, crypto friends. I know you are tired of hearing the counter arguments and the cat calling.
I am restrained by the words of a famous philosopher:. Exponential gains, even wildly bent on a semi-log plot, have few analogs in history, all of which led to legendary busts Figure They all had a story that convinced many.
I have a friend—a very smart former Wall Street guy—who swears by it and is up , percent. You do not need to size your position correctly with that kind of gain. But then there is the clutch of camp followers emblematic of all manias. We have grad students speculating in Bitcoin. A year-old bought his first Bitcoin in May with a gift from his grandmother. This is the opportunity of a lifetime. Finance is getting its Internet. A Bitcoin competitor issued by Stratis soared to more than , percent since its initial coin offering ICO this past summer.
A site called Deadcoins shows that some already have. Massive corrections followed by ferocious rallies akin to a teenager on driving on black ice would have convinced me it was too crazy for my style. Corrections last seconds to hours, with wildly enthusiastic buyers poised to BTFD. Isaac Newton got into the South Sea bubble, was smart enough to get out, and then reentered in time to go bankrupt. I am decidedly dumber than Isaac.
For Bitcoin to become a currency in its current form, out of reach of sovereigns, seems to require a society-upheaving revolution, which is a rare event that usually gives way to new, equally ham-fisted regimes. The chances seem slim to none for several reasons. I am doubtless that central banks and sovereign states will never endorse Bitcoin in its current form. They have their own digital currencies and a monopoly on the power to create more, and they commandeer our assets through taxation.
Existential risk will bring on the power of the State. When sovereigns decide to do battle, the cryptos will be brought to heel or forced underground. Digital currencies are showing digital instabilities that could just be growing pains or evidence of more systemic problems. How software buffs who know that software is duct tape and bailing wire could think that a software-dependent currency is invincible is beyond me.
Ethereum dropped 20 percent in a heartbeat when a hacker theft was reported. Nobody will use a currency to pay for groceries if prices move 10 percent a day or even 5 percent as you move from the frozen food to the vegetable aisle.
If up against the wall, sovereigns will use arguments about fighting crime, stemming ransomware, or controlling monetary policy and declare a War on Cryptos akin to the potential War on Cash.
China has already blown shots across the Bitcoin bow by shutting down exchanges as well as ICOs as they struggle with excessive sovereign debt and capital outflows.
The average blokes may smoke pot and drive too fast, but they seem less likely to risk a spat with the State on this stuff. Others have unshakeable faith even in the more obscure cryptocurrencies. Credit is fungible, so the flood of capital can come from anywhere and migrate to anywhere it finds an inflating asset. Prices in London are now collapsing. I will focus, however, on only two countries—the U. A survey of 20 cities reveals 5. More than 40 percent of year olds, a group historically en route to home ownership, have nothing set aside for a down payment.
We lack low- cost houses. And the Fed says inflation is good. Median new home sales price in the U. California housing seems to be interminably overvalued, possibly owing to the draw of droughts, mudslides, crowds, and, fires.
Despite modest 6 percent population growth since , housing units have shown an only 2. There could be a supply—demand problem, especially when the fires subside.
Florida is rumored to have eager post-hurricane sellers—those with something left to sell, that is. In New York City, rising rates seem to be nudging commercial and residential real estate down and foreclosures up to levels not seen since the crisis 79 percent year-over-year in Q3.
Their regulators have authorized them to once again engage in unchecked, reckless lending, prompting some to begin estimating the cost of the next bailout. What happened to all that inventory from the colossal boom leading to the Great Recession? Some fell into the foundations, but a lot found its way into private equity firms.
Mind you, single-family rentals are a low- or no-profit-margin business under normal circumstances. As long as rates stay low—Where have I heard that one before? Private equity guys are already frantically boxing and shipping. HCG is, by all reckoning, the piece of crap Cahodes claims it is. The plot thickened as a story leaked that Buffett met with Justin Trudeau on a tarmac. The impending pension crisis is global and monumental with no obvious way out.
A friend—a corporate executive no less—retired with 10 multiples; he could be broke within a decade much sooner if markets regress to historical means. The problem began as worker compensation became reliant on future promises—IOUs planted in pension plans—often assuming the future was far, far away. Retirement risk depends on the source of your retirement funds. Federal employees are backstopped by the printing press, although defaults cannot be ruled out if you read the fine print.
Defined-benefit corporate plans can be topped off by digging into cash flows provided that the cash flows and even the corporation exist. The depletion of corporate earnings to top off the deficits, however, will erode equity performance, which will wash back on all pension funds. The multitude of defined-contribution plans such as k s and IRAs managed by individuals are totally on their own and suffer from a profound lack of savings. Corporate and municipal defined-benefit plans assumed added risks by falling behind in pension contributions motivated by efforts to balance the books and, in the corporate world, create the illusion of profits.
The moment organizations began reducing the requisite payments by applying flawed assumptions about prospective returns, pensions shifted to Ponzi finance.
My uncanny ability to oversimplify anything is illustrated by the imitation semi-log plot in Figure The red line reflects the assumed average compounded balance sheet from both contributions and market gains.
The blue squiggle reflects the vicissitudes of the market wobbling above and below the projection. If the projections are too optimistic—the commonly reported 7—8 percent market returns certainly are—the slope is too high, and the plan will fall short. If the projected returns are reasonable but management stops contributing during good times—embezzling the returns above the norm to boost profits—the plan will fall below projection again.
Of course, once the plan falls behind, nobody wants to dump precious capital into making up the difference when you can simply goose projected returns with new and improved assumptions.
In a rational world, pensions would be overfunded during booms and underfunded during busts. Using prevailing treasury yields for starters. Bill Gross—the former Bond King—says that if we get only 4.
Notice that despite being at the peak of an investment cycle, none are overfunded Figure Large and quite unpopular 30 percent hikes in employee contributions are suggested.
The alternative of taking on more municipal debt to top off pension funds is a common stop-gap measure of little merit long term; somebody still has to pay.
The largest U. During the recent market cycle that burned bright on just fumes, the companies gained only 6 percent above the 80 percent funding at the end of When are serious problems supposed to start, and what will they look like?
CalPERS intends to cut payouts owing to low returns and inadequate contributions during a boom, I remind you. Half the boomers have no money set aside for retirement. A survey shows that a significant majority of boomers are finding their adult children to be a financial hardship. Almost half of Gen Xers agreed with this statement: The Fed cowers at the thought of a recession with good reason: Laurence Kotlikoff warned us; we are about to find out.
My sense is that we are on the cusp of a phase change. Stresses are too large to ignore and are beginning to cause failures and welched promises. Runs on pension funds akin to runs on banks would be deadly: At this late stage in the cycle, you simply cannot make it up with higher returns.
Enormous appreciation has been pulled forward; somebody is going to get hosed. Bankruptcy laws exist to bring order to the division of limited assets. We got into this mess one flawed assumption at a time. On a final note, there is a move afoot to massively reduce contributions to sheltered retirement accounts.
This seems precisely wrong. I have routinely sheltered 25—30 percent of my gross income as a point of reference. Congress is also pondering new contributions be forced into Roth-like accounts rather than regular IRAs.
I have put a bat to the Roth IRA both in print and in a half-hour talk. Fourth grade math shows that Roth and regular IRAs, if compounded at the same rate and taxed at the same rate, provide the same cash for retirement.
Roth IRAs are taxed at the highest tax bracket—the marginal rate—whereas regular IRAs are taxed integrated over all brackets—the effective tax rate. This synopsis of a Harvard study has two fundamental errors: Can you find them?
If the k is a Roth, the full balance is available for retirement spending. If the k is a traditional one, taxes are due on the balance.
It merely diminishes their monetary value, which is why their present owners go bankrupt. Thus, deflation by and large boils down to a redistribution of productive assets from old owners to new owners. The net impact on production is likely to be zero.
Barring major swings in the value of the dollar? What kind of circular reasoning is that? The Fed tells us inflation is too low relative to their arbitrary 2 percent target. I say they are lying—through their teeth—and I have company.
John Williams of ShadowStats has been ringing the alarm for decades, currently putting inflation at 6 percent compared with official numbers of less than 2 percent Figure I hammered this in and repeat it here. The BPP is statistically flawed, ironically, because its sample size is too large. There is no way to statistically weight a billion prices.
Ask the creator Roberto Rigobon how he does it. Many cite fantastic product improvements to justify low inflation numbers. The price of front-edge tech is always dropping.
Having a supercomputer in your pocket is cool and getting cheaper on a performance-adjusted basis. Nonetheless, every one of those rug rats you sired necessarily owns one along with the bigger laptop version and requisite Internet connection fees.
The digital world is not making paychecks go further. More to the point, however, no savings on your tech tools and toys can possibly offset the soaring tuition, food, healthcare, and rent that account for a vast percentage of a lifetime consumption. The divergences of the CPI from alternative measures began decades ago and have gotten progressively worse.
The fraud is motivated by cost-of-living adjustments in government payouts that would soar if tethered by reality. The fudge also causes the reported inflation-corrected GDP to be grossly overestimated Figure 29 , which makes politicians and central bankers look good.
The GDP has its own goofy fudge factors, too, like payments by you to you for mowing your lawn. There is, of course, the fact that every interest-bearing asset requires the system have more money at the end of the year to pay the interest in lieu of offsetting losses elsewhere.
The miracle of compound interest requires a compounding money supply. Read that one again. Take the time to watch physicist Albert Bartlett discuss exponential functions.
Inflation also creates an insidious taxation that confounds most investors. Consider two hypothetical scenarios in a year investment:. B Six percent nominal annualized loss negated by —6 percent annualized inflation 6 percent deflation. The inflationary 80 percent nominal gain in Model A feels a lot better than the deflationary —48 percent nominal loss in Model B.
But that is not really true. In the inflationary case, your 80 percent nominal gain gets tagged with a 20 percent capital gains tax, bringing your real return over the decade to —16 percent! By contrast, the dreaded deflationary nominal loss leaves you with the same buying power zero percent loss , no taxes, and a potential tax write-off against future gains.
By contrast, the inflationary environment causes you to forfeit 16 percent of your assets to the State. Gains resulting from the inflation component are not just zero, but net losses after taxes.
The windfall profit for the State from printing money for free and the taxes on the inflationary gains leaves little wonder that the State likes inflation. The Phillips curve—the relationship between low unemployment and high inflation and vice versa Figure 30 —appears to be flummoxing the Fed governors. Why is inflation low concurrent with low unemployment? This is yet another conundrum resolvable with low-level neural activity. Both inflation and employment stats are unsuitable for wrapping fish.
Moreover, claims of a tight labor market are really employers being unable to pay new employees the going wage. If you create wealth at the same rate you consume it, depreciate it, or destroy it, wealth will not compound.
Any apparent compounding is in the metric of wealth—inflation. That said, the garbage I buy depreciates very quickly. My house and its contents are depreciating assets on a tear. What used to last 20 years lasts one-tenth of that.
Consequently, any adjustment for inflation must include depreciation. That is, some of this just means higher prices for fine art and Hamptons real estate, not standard of living gains. The velocity of money is, in simple terms, the sum of financial transactions divided by the money supply. It stands to reason that if you jam money into the system the denominator via quantitative easing and other dubious monetary policies, the velocity of money will necessarily drop, particularly if you saturate the financial system, as shown in Figure This figure also shows what the Fed chooses to ignore—asset inflation.
We'll see that again in the section on bonds. The Fed and markets seem to interpret low velocity as a low inflation risk. The money velocity in Weimar Germany also plummeted—twice even—but then it took off like a discharging monetary capacitor or smacking the bottom of a ketchup bottle. Department of the Treasury shows that inflation risk and contagion risk are very, very low.
On a final humorous note, workers at the Bank of England may strike for a pay raise to counter rising prices. These blokes are unable to hedonically adjust their lifestyles.
One was the difference between mere feverish activity, which did certainly exist, and real prosperity, which appeared, but only appeared, to be the same thing. There was no unemployment, but there was vast spurious employment—activity in unproductive or useless pursuits.
The ratio of office and administrative workers to production workers rose out of all control. Paperwork and paperworkers proliferated. Government workers abounded, and heavy restraints against layoffs and discharges kept multitudes of redundant employees ostensibly employed.
The incessant labor disputes and collective bargaining consumed great amounts of time and effort. Whole industries of fringe activities, chains of middlemen, and an undergrowth of general economic hangers-on sprang up. Almost any kind of business could make money.
Business failures and bankruptcies became few. The boom suspended the normal processes of natural selection by which the nonessential and ineffective otherwise would have been culled out. Practically all of this vanished after the inflation blew itself out. In the wrong circumstances, such a doctrine is a formula for asset bubbles and deranged financial cycles, and that is precisely what events have conspired to produce.
It is difficult to cordon off bonds, debt, banks, pensions, etc. This section focuses on some of the zanier aspects of dumb creditors. Bonds are like stocks: As a rule of thumb, the nominal return on bonds is approximated by the interest rates. That estimate is the upper limit, however, because defaults become large as rates rise. The paradox of the new-era bond market is that monetary inflation, rather than scaring the credit markets and driving up yields, has charged into bonds to drive the yields down.
Once rates start rising, banks tighten lending, which causes high-risk creditors to roll over their debts at higher cost. Delinquencies beget delinquencies, and the edifice begins to crumble.
When the year secular bond bull market finally ends, duck, because it's gonna get fugly. The idiocy of negative rates was concocted by men and women attempting to be important.
As we ponder some bond anecdotes, ask yourself whether bonds have adequate risk premia to protect against their two arch nemeses: Are you counting on selling your bonds to someone who is even more gullible than you, possibly even a sovereign state in a bailout? We begin with the gold standard—the U. Wonky folks often extol the virtues of low rates, noting that the U. We as a nation can sell year bonds at less than 3 percent yield. Would you lock in less than 3 percent for 30 years?
Economists estimate the rate on a year U. The Fed took control of the bond market to force us to look elsewhere for returns. Staying in the U. Amazon—that wonderful juggernaut—offers year bonds that pay less than 1 percent over treasuries. Hartford municipal bonds are already junk. Inflation in Germany is heading for 2 percent with year bonds around 30 basis points 0. There was a fledgling bond rout in Japan, prompting the Bank of Japan to put a bid under its year bonds to keep rates at 0.
The Japanese bond market is so dysfunctional that there are days in which not a single bond trades. Irish 5-year paper paid 17 percent six years ago and now has negative yields. Quality European corporate bonds have, by proxy, become way overpriced too: Nestle now has negative-yielding bonds and chocolate bars with negative calories.
A Nigerian year series sold at 7. Argentina has issued a MOAB mother of all bonds —a year bond that yields 8 percent. Venezuelan year bonds are currently returning 32 percent with inflation at percent. Our last stop is Puerto Rican municipal bonds.
We are sending your dollars directly to the banks that are on the hook. This is cronyism of a higher order, not free-market capitalism. Once the hurricane hit Puerto Rico, The Donald chimed in:. My read says he is telling the banks to swallow it. One could imagine that the Trumpster has few if any warm memories of bankers from his multiple bankruptcies. His utterances caused a rout in Puerto Rican bond prices. A bill in Congress allocated billions of hurricane aid and bailed out the highly subsidized and fully insolvent National Flood Insurance Program , but it does not appear to have explicit debt bailout.
You may find that risk you are looking for and then some. Unwinding risk parity funds will add some serious fuel to the inferno. Bridgewater Associates will probably apply for bank status late some Sunday night. James Grant made some pointed assertions that Ray Dalio is doing some very quirky and even dubious things of late, which no doubt pissed off Ray. Mark Yusko claims that Ray retained enough marbles to exit his risk parity trade, leaving others to wonder what happened when the bond rout arrives.
Junk bond funds are now buying equities. There will be another financial crisis. And it will pop out. More than scandals in any other industry, banking scandals follow the business cycle, which means they are currently in a period of relative calm. Reserves for legal costs are in the many billions. Speaking of non-criminal behavior, the U. Supreme Court ruled that a municipality can sue banks under the Fair Housing Act of for preying on people of color and saddling them with high-risk loans.
The investigation of the infamous London Whale who lost billions of dollars for JPM got dropped—vaporized, to use an MF Global term—without explanation. Prosecutors claim that he was hiding offshore and refused to come when summoned. The entire Italian banking system is a hot mess. Bailouts are following the usual playbook: On the bright side, Vietnam gave the death penalty to bank frauds. Despite favorable borrowing rates and end-of-cycle booms, stresses in the banking system can be detected.
Banks are not that profitable owing to central bank policies. Chris Whalen notes that Citigroup has picked up the synthetic collateralized debt obligation CDO pipe once again in what is likely an epic reach for yield.
The bank derivative positions Figure 33 are huge. Deutsche Bank continues to struggle and seems likely to be at the heart of the next banking crisis. If you would like an incisive description of what the money markets looked like from inside the system during the last crisis, check out this link. The shenanigans of corporate America are always a source of considerable entertainment.
Some are hunormous, posing existential risk, whereas others simply make you wonder who is driving that cab like when the CEO of Uber got in a kerfuffle with an Uber driver on camera. Airlines became frequent flyers in the mile-high club. United booted two women for wearing yoga pants. EasyJet bumped a kid off a flight and abandoned him unsupervised. The plot within the plot is that the free market was subverted. If the flight attendants had the authority to up the bid—they did not—or if the airlines sold cheaper tickets to passengers willing to risk getting booted, both parties would have parted ways satisfied.
Once passengers got grumpy, all hell broke loose. American Airlines got sued by a passenger who claims to have been crushed between two obese passengers. You want to be a political pundit? Politics crept into the boardroom, often with no obvious gain and dubious results. Walmart was forced to apologize for a sign marketing a rack of guns as back-to-school supplies. Youtube filled with scenes of creative destruction smashing Keurig coffee makers. Poland Spring got in hot water for selling bottled tap water.
By the way, anybody who is buying bottled water while not fully funding their k and paying off all debts public and private is more than a few quarts short. Kobe Steel got caught faking quality standards for the last 50 years. Amazon got grief for its searches being biased toward placing more expensively priced products as top links. Over at Equifax, million accounts got hacked—a little ironic for a company that monitors credit records and protects against identity theft.
Few may recall that the LifeLock CEO posted his social security number on a truck to demonstrate his conviction in his own product and then got his identity stolen 13 times. The brazenness of the effort shows how far afield central bankers have roamed from their traditional remit of monetary policy. You have to ignore history to believe that regulators are suddenly so wise that they know the current regulatory regime will prevent the next crisis.
The Fed governors—including a few ex-Fed governors—seemed particularly rudderless this year. The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared. The current perilous state of the global financial system is evident to anyone who scrapes at the cheap veneer of normality.
The Yellen Fed is no longer data dependent, but is instead thinking of its legacy. Louis tacitly admitting they target equity prices. The cognitive dissonance between what the job requires and what any thinking human being observes must be crippling. Or are they bumbling ex-academics whose ramblings are over interpreted by investors besotted with their brilliance? I have all but given up trying to understand the hubris—the Hayekian fatal conceit—the Fed suffers to conclude that it can and should control the economy.
The best economic analyses draw strong analogies from Darwinism, wherein repeated trial and error nudges markets in a relentless quest toward equilibrium.
The notion of QE is anathema to free market thinkers, but not new. Tiberius called for it in 33 AD to stem a panic, and just as we have witnessed of late, it worked for a while. It is reminiscent of WWI failing to correct the imbalances—and actually generating new ones—which made the conflagration in WWII inevitable.
The next recession should make my point. The markets are buoyed by unprecedented QE, also known as batshit-crazy money printing. In case you are tempted to say the Fed is on the sidelines with the cash, apparently , money is fungible: All this money has done a lot of long-lasting damage to the economy. Wage inflation, by contrast, is stupendously under control. The Fed gave bankers gobs of money to use during the next crisis and then, by paying interest on reserves at the Fed, compensated the banks for not lending it except to companies for share buybacks.
They should not exist. Bernanke may have, by his own assertion, a huge IQ, but he is dead wrong: Past Fed heads have been criticized for causing recessions through Fed-induced monetary contraction. This current gaggle of governors is a cowardly one. The Greenspan—Bernanke—Yellen-era Fed developed a neurodegenerative aversion to the natural restorative forces that corrections have on markets and recessions have on economies.
Mind you, this notion has been around a long time, but it leaves some yawning unresolved issues. First, it presumes that inflation is some kind of smart bomb. Right now, the inflationary tractor beam is financial assets. The Fed must know this. Second, money is created by creating debt:. Inflating away debt is an Escherian paradox unless you do so by loss of confidence in the money itself. Third, an oft-stated tenet of the inflate-it-away model is that the inflation must be unexpected.
Once the markets and society at large subliminally sniff out the inflation, they begin to adjust. It is no longer unexpected, and the pushback becomes an overwhelming force of nature that can run uncontrollably.
The tide is going out. I believe the Fed governors are terrified of recessions because of the awareness—yes, I believe they have some left—that a recession will cause pensions, municipal budgets, and economically sensitive social structures to break. Nobody else believes this. They are going to ruin us all. Many share the belief that the Fed was offered opportunities to lift the rates over the last eight years but stood with the bat on its shoulders, frozen in fear of a like downturn.
It is now forced to raise rates into an economy that is weakening. The Fed is also wrestling with what to do about its balance sheet in the aftermath of QE. A chat with Jim Kunstler got me thinking too. I must confess that the transmission mechanism through which a bloated Fed balance sheet causes future economic problems is not in my wheelhouse.
That aside, the governors have pondered reducing it very slowly by letting the assets expire, but how? By statute, all interest payments minus expenses are remitted back to the Treasury.
In essence, the interest paid by the Treasury to the Fed gets returned to the Treasury: The Fed monetized Treasury debt free money. When a bond expires, the Treasury pays the principal to the Fed. So here is the big question: Alternatively, the Fed could pass the principal back to the Treasury, making it a permanent fixture of the monetary base. I asked some smart people about this: Louis, was confident the money would be extinguished. Given that remittance back to the Treasury would be inflationary, I'll take the other side of David's bet; the Fed will choose the inflationary path.
No offense, but you are clueless. Unfazed by my opinion, Bernanke chimed in with a paradigm-shifting new theory on inflation targeting. The cleverness of that solution is impossible to underestimate.
The Fed took money from the savers and gave it to the debtors, who then took out more debt. The patients have now all been bled. Both groups are broke and wages are stagnant. Is it any wonder the economy is stuck? Neel Kashkari wrote an essay explaining why the Fed protects financial institutions during a crisis, but he fails to detect the circular reasoning: I leave you with a few more words from some veterans:. A great industrial nation is controlled by its system of credit.
Given that a bad year for Europe is when the entire continent is a raging inferno, life was good. Secession movements moved from Britain to Spain. Catalonians began seceding from Spain, whose measured response included beating voters senseless and hurling death threats at the Catalonian leader. Catalonians voted 90 percent in favor of secession. Catalonia will be governed from Madrid by a party that got 8. Spain sure looked like a failed state to me, with an insolvent banking system, precisely zero euros in its pension fund, and heading into anarchy and chaos.
Millions of teddy-bear-clutching immigrants from North Africa and the Middle East face challenges settling into their new digs in Europe. There are sovereign battles over how many refugees each country should take. Seems that only Poland has a target number of zero. The situation in countries like Sweden and the Netherlands appears dire, with cultural clashes commonplace.
Sweden is a superpower of humanitarianism: Those who speak out are called racists or Islamophobes. In one Swedish city, apartments were commandeered by local officials for immigrants while existing residents have been placed on a three-year waiting list. Sweden has 55 no-go zones at last count. In high-density neighborhoods, modest garb is being demanded of non-Muslim residents. Could get a little rank in there. The Swedes response is a little odd: Hamburg authorities took possession of six residential units and are now renovating the properties for immigrants.
At some point, everything will collapse. The big story south of the border is Venezuela. Nonetheless, the wounds are largely self-inflicted. As an aside, Overthrow is a much better look at the U. Hyperinflation reached more than 4, percent by November while the bolivar headed to zero Figure You lose half your spending power in a week at that rate.
The country degraded into anarchy and defaulted on its sovereign debt. In the unlikely event the U. Venezuela is a case study in life during the zombie apocalypse. Angry mobs— quite literally millions of people—rioted in the streets. Although citizens in the U.
Of course, he is a bad dude—demonizing him is trivial—but the volume and frequency was the tell. Two apparently white women swiped Nam with nerve-gas-impregnated ointment and then claimed they thought it was a spoof.
The message was similar to the message sent when a Roosky got offed using plutonium. Seems a little unnerving. These rather elaborate shows are where the U. One theory is that we have wars to teach ourselves geography. Maxine Waters confused Crimea with North Korea.
I would expect nothing less. An online survey showed that few could identify North Korea on a map Figure China is approaching superpower status if it is not already there. Trump played a game of chicken with China over North Korean strategy. The world was too busy criticizing The Donald to notice that China blinked: The dollar has been the global reserve currency since the fateful Bretton Woods Conference in Reserve currency status is a suicide mission in which you get the 72 virgins up front.
China seems positioned to take on the burden, as evidenced by aggressive gold purchases see Figure 17 and increasing numbers of bilateral trade agreements and exchanges. It buys oil from the Saudis, oil and other resources from the Russians maybe uranium with help from the Clintons? A few obstacles stand between China and global domination. It has expanded credit at an annualized rate of 25 percent for years, causing huge distortions in its banking system. It has the same kind of record-breaking streaks as US markets without corrections.
Admittedly, all equity and bond markets are state sponsored, but misery will not love company; it never really does. Then we begin to probe the durability of its banking and social structures under stress. It has a truly gargantuan percent debt-to-GDP ratio. If you think big change will occur seamlessly, you might be optimistic. In retrospect, it seems like a diplomatically strategic move. What an odd mix of cultures.
Portions of the Middle East are 21st century on steroids, whereas other parts remain unchanged since the Crusades. We should just stay the hell out, but somehow our oil ended up under their sand. Millions have died, and much of the death and dismemberment traces to U.
We want to buy your oil at market price. Have a nice day. Weird things are happening in the Middle East even by Middle East standards. Saudi power shifts were supposedly evident in , but chess pieces started moving around the board quickly this year. The prime minister of Lebanon wussed out—resigned out of fear of assassination.
I'm not sure where this fits in, but we dropped the MOAB mother of all bombs with a kill radius of a mile to remove 36 terrorists in what seemed like overkill in the most literal sense. It would be totally self-defeating as shown by the results. Assad is not mad. Of course, the war in Syria is a bloodbath that has left an estimated , dead and millions displaced into Turkey and Europe.
The demonization of Assad continued to focus on gas attacks that nobody seems to believe happened. None of this makes sense to me. Given its length, we've had to break this report in half so as not to crash your browser. Looking for a financial adviser who sees the world through a similar lens as we do?
A big thank you! But no such shade of gray is allowed in the USA right now. This is one of my favorite annual gifts and an eagerly awaited, multi-layered present that is fun to unwrap chapter by chapter. Thank you David, and Adam and Chris! Thank you PP for including this year-end tome on David's analysis of our species sybaritic predicament. The analogy of Rome burning is appropriate given our current state.
Smoldering may be the more apt term. As long as we humans continue to shape our environment to meet our needs, we will live beyond this planet's capacity to meet those needs. As David points out". PP's emphasis on preserving wealth and living resiliently is admirable, but only highlight's our inability to achieve a meaningful existence while preoccupied with the mundane exigencies of life.
Ironically, the Christmas message of salvation from ourselves seems well timed with David's observations. Merry Christmas; and "peace on earth and good will toward men". I would agree that he and others like him should have the freedom to express these points of view openly. I lean liberal on most issues, but if I want to debate his points of view then I should do so with data, facts, and honest discussion rather than silencing him through some kind of faux-liberalism that ignores one of the fundamental tenets of the Enlightenment: I'm not sure how my fellow liberals have forgotten what liberalism means, but I suppose that ranks right up there with people who thought Obama was going to make us socialist; a perspective that ignores history - we've been socialist since the s, it's just a question of degree of socialist.
Ignorance abounds, I suppose. Is there any chance you can post the PDF version with embedded links preserved? It would be oh-so-much more useful.
I agree that one way or another this central bank induced fiasco will end badly but has the stock market ever been manipulated by central banks before as it is now? Even the FED mentioned that stock purchases might be necessary in the future. The Guardian has an article about New York's vanishing shops and storefronts: I was reminded of Niall Ferguson's "The Ascent of Money" where he looks down on Manhattan and realizes how it's just like Venice, only without the gondolas.
It's never different, anytime. He used to give his personal return in these tomes, but it's strangely absent in this one; another year of under-performance is the most likely culprit. Going back over his old reviews, Dave's annualized return since the end of ? Feel free to correct me. Dave rode the gold wave for a decade and thought he was smart.
The smart investor would re-evaluate his thesis after getting crushed the way Dave has; instead he dives deeper down the rabbit hole. I'm just trying to help him get healthy. I am always happy when I read stuff like this. It is a very true, and b probably marks the low for us long-suffering goldbugs. I was buying oil stocks back in Boy was that an unhappy trade. I was too early. As a result, my returns also looked terrible. Fortunately I don't publish an annual message, so nobody makes fun of me.
This year, they are much improved. If and when "oil really comes back" I'm going to do well, but in the intervening period - waiting for the market to come back around - can be really annoying. Still, a useful observation is that when markets get extended as gold was in , its probably a good idea to take some money off the table. At the same time, getting off the train before it arrives at the station is no fun too.
Selling your dotcom in , for instance, leaves you 3 years of regret. Bitcoin owners who "sold the top" at in are probably not so happy right now. It is really a hard question to answer: Lots and lots of smart people thought money printing would lead to inflation - so did the Fed - but it turns out the only inflation we saw was asset price inflation, due to the reach for yield.
But as a result of our experience, we now know the equation: How will that differ from what the Fed did?
The tax cut should be inflationary. The government will be taking less money out of normal people's paychecks and borrowing the difference. That's a stimulus package - even more so because its semi permanent rather than a one-time money drop.
It is possible we will get a mini boom that will kick in right before the midterms - assuming the EU doesn't blow up because of the Italian elections. I'm also watching bitcoin keenly, so I can learn lessons for when gold does its big move. I, too, don't want to think I'm dreadfully smart, and hold all the way up - and then all the way back down again.
Nor do I want to sell my telecom in I'll give you extra style points if you can show how we can un-hijack what-liberalism-has-become away from the moneyed interests inhabiting the swamp.
Gray helped me gain a perspective on the meaning of liberalism and why it is a problem. John Gray is Nassim Taleb's favorite philosopher. And gold bottoming here would not make these novel-like "Year-in-Reviews" any better. Random chance would say he should have a good year here or there. I am saying he should probably just buy a simple life-cycle fund and forget about investing. Ironically, whatever gains he had this year were likely from his employer forcing him out of his more esoteric holdings and into a life-cycle fund.
It's like the Investment gods themselves are trying to get his attention but he can't see it. Yes we are definitely having a communication issue then. You certainly seemed to be making fun of him. Me, if I wanted to make fun of someone, I'd be happy to own it. Even if all the man did was stay in gold, he'd still have beaten one of those index funds. Do you have a "life cycle fund" example we could look at? I know its incredibly cool at other sites to just make fun of people without showing your work, but So here's your chance.
What life-cycle fund would have beaten gold ? Maybe I'll give one a try. The man didn't just stay in gold; he mixed in some poor stock selection and large cash allocations as well!
Did your gold number include losses from physical gold stolen from the dealer? That can put a damper on returns. Are you trying to sell me a FIA? Sure the SPX dividends are worth something.
With dividends included, does it beat gold's return? Likewise, I'm still waiting for the year returns on the lifecycle fund you suggested. If you provide me a symbol I can look it up myself. But I see you've moved onto Berkshire Hathaway. I confess, I like Buffet's general view on how to buy things: So maybe we should all just buy Berkshire and forget about everything else. He's very well connected. Buffet beats gold by quite a lot. And it crushes SPX, and I suspect your hypothetical lifecycle fund.
Is now the time to buy straw hats? Honestly, it doesn't feel like it to me. So I'm not in the market for straw hats. In fact, it sounds like you might be suggesting that we buy straw hats during the summer - right at the tail end of an 8 year "expansion". Definitely, people waiting for cheaper prices have not done well in recent years. Even Buffet's own metrics calculated before the age of money printing are screaming "right now is really expensive.
I can absolutely try! So, the early liberals were those who embraced the Enlightenment, but more broadly speaking the definition can be elucidated as the desire to bring more equal and fair treatment to more people, as well as allow more people to participate in the political, economic, and social systems.
Most broadly speaking, liberalism is the idea of changing to something new, usually rapidly, while conservativism advocates tradition or at least slower rates of change; both are definitions I find too obtuse and generic for my tastes. Plus, I need to think on it! I feel like I just got an entire semester's worth of humanities lectures distilled down to five paragraphs. Way back then, the religious wars were a really big deal. As I recall anyway. I agree with Dave. You got a thumbs-up from me.
It is more or less a matter of degrees. The point about freedom from governmental interference in the economy by opposing mercantilism doesn't quite make sense to me. I looked up the definition of mercantilism to see if there is a minor definition that would help. What was it about mercantilism that had to be opposed? Is that point still espoused by modern day liberals? More of a modern conservative strong point from my view.
The bolded sentence pretty much explains why I had such a hard time defining what liberalism means. It is a moving target. I'm really looking forward to your response to un-hijacking liberalism from the moneyed interest. The Fast and Furious star shared a Facebook Live video outside the church as he got emotional standing beside his 'true family member'. While Nicky - real name Nick Rivera Caminero - was calm and collected, Vin appeared to have butterflies.
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