Posts Tagged ‘ECONOMIC MYTHS’

Here Is Why the Fed Cannot Simply Continue to Inflate Its Way Out of Every Financial Crisis That It Creates

Here Is Why the Fed Cannot Simply Continue to Inflate Its Way Out of Every Financial Crisis That It Creates

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The return on each new dollar of US debt is plummeting to new lows according to figures from the Federal Reserve.

The chart below is from the essay, Not Just Another Greek Tragedy by Cornerstone.

I have been watching this chart for the past ten years, as part of the dynamic of the sustainability of the bond and the dollar as the limiting factor on the Fed’s ability to expand the money supply.

The ability to expand debt is contingent on the ability to service debt. If the cost of the debt rises over the net income of the country’s capital investment, or even gets close to it, the currency issuing entity is trapped in a debt spiral to default without a radical reform.

In other words, if each new dollar of debt costs ten percent in interest, largely paid to external entities, and it generates less than ten cents in domestic product, it is a difficult task to grow your way out of that debt without a default or dramatic restructuring.

So we are not quite there yet. But we are getting rather close on an historic basis. Without the implicit subsidy of the dollar as the world’s reserve currency it would be much closer.

As it is now, this chart indicates that stagflation at least, rather than a hyperinflation, is in the cards for the US. But the trend is not promising, and the lack of meaningful reform is devastating.

A ‘soft default’ through inflation is the choice of those countries that have the latitude to inflate their currencies. Greece, being part of the European Monetary Union, did not. The US is not so constrained, especially since it owns the world’s reserve currency.

The economy is out of balance, heavily weighted to a service sector, especially the financial sector which creates no new wealth, but merely transforms and transfers it. With stagnation in the median wage, and an historic imbalance in income distribution skewed to the top few percent, with the banks levying de facto taxation and inefficiency on the economy as a function of that income transfer, there should be little wonder that the growth of real GDP is sluggish in relation to new debt. 

Or as Joe Klein…
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Legal cannabis celebrates its first anniversary in Canada: What's next?

 

Legal cannabis celebrates its first anniversary in Canada: What's next?

Montrealers hold up a Canadian flag with a marijuana logo on it outside a government cannabis store in the city Oct. 17, 2018. THE CANADIAN PRESS/Graham Hughes

Courtesy of Michael J. Armstrong, Brock University

This week marks the first anniversary of Canada’s recreational cannabis legalization. It’s an appropriate time to review what happened last year and consider what’s coming next.

Legalization brought big changes for some folks. About 9,200 employees now work at cannabis producers, with ...



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Zero Hedge

Pork-Panic Sends China CPI To 6 Year Highs As Factory Deflation Deepens

Courtesy of ZeroHedge View original post here.

China's producer prices deflated for the 3rd straight month, slumping 1.2% YoY - the biggest deflationary impulse since July 2016 - but, thanks to the explosion in pork prices (as 'pig ebola' spreads), Chinese consumers are facing the worst inflation since 2013.

  • China Sept CPI +3.0% YoY (2.9% exp and 2.9% prior)

  • China Sept PPI -1.2% YoY (-1.2% exp and -0.8% prior)

...



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Chart School

Review of Andrew CardWell RSI with Wyckoff price waves

Courtesy of Read the Ticker

RSI measures relative strength of price action of a set period versus prior set periods. It helps review the price swings or waves, the power of each price thrust into new ground, or lack of it. Price thrust like many things relies on energy, and energy is not a constant, it has a birth, a life and a death and relative strength helps us see that cycle. 

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Kimble Charting Solutions

Banks Should Send Critical Message To Stocks This Week!

Courtesy of Chris Kimble

Bank earnings could go a long way to impacting the broad market in a big way this week. Wells Fargo, Goldman Sachs, Bank Of America, JP Morgan, Morgan Stanley all announce earning the next couple of days.

As these earning announcements are to take place, the Bank Index (BKX) finds itself facing a key breakout test.

The index remains inside of bullish rising channel (1), as it has created a series of higher lows and higher highs over the past 8-years.

The index has little to brag about over the past 20-months, as it has created a series of lower highs and lower lows inside of falling chan...



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The Technical Traders

Daily Market Analysis and Trade Setups

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Insider Scoop

22 Healthcare Stocks Moving In Tuesday's Pre-Market Session

Courtesy of Benzinga

Gainers
  • Reata Pharmaceuticals, Inc. (NASDAQ: RETA) stock surged 45.2% to $146.07 during Tuesday's pre-market session. The market value of their outstanding shares is at $2.8 billion. The most recent rating by Cantor Fitzgerald, on October 15, is at Overweight, with a price target of $180.00.
  • Aphria, Inc. (NYSE: APHA) stock increased by 18.6% to $5.16. The market value of their outstanding shares is at $1.8 billion. According to the most recent rating by CIBC, on July 26, the current rating is at Underperformer.
  • ...


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Digital Currencies

Zuck Delays Libra Launch Date Due To Issues "Sensitive To Society"

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed. 

“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But ...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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