Don’t Fight the FED
There is an old stock market saying that says, “don’t fight the FED” and that turns out to be pretty good advice. The FED can access trillions of dollars to influence the market direction.
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Non-Fungible Tokens (NFTs): Another Financial “Fumble”
Over the years, we’ve discussed various iterations of the “blockchain” and some of the possibilities it has for finance, industry, and even gaming. We looked at What are NFTs and Why are They Going Crazy?, How Blockchain’s Unique Innovations Can Prevent Money Remittance Scams, How Is Technology Affecting Global Trading Markets, and Metaverse vs. Multiverse- What are They? And Where are They Leading? Over at InflationData, we covered Cryptocurrencies and Inflation, and Can Crypto Solve Venezuela’s Hyperinflation Problem?, which we followed up with How has Venezuela’s Bitcoin experiment Fared? So we’ve looked at Crypto quite a bit. Today we are going to take another look at NFTs, which looked a lot like a crazy bubble right from the start.
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Will Loan Forgiveness Raise College Costs?
For years we’ve been tracking college costs and adjusting them for inflation. See Education and Tuition Inflation for more information. During that time, I’ve repeatedly said that one of the primary drivers of increased education costs was the ease of getting a loan. Unfortunately, the vast majority of college freshmen see a loan as “free money” and don’t seem to understand the difference between a “Loan” and a “Grant”. And apparently, this past week, many college loans effectively became grants.
Looking at it from a different perspective, we might wonder what lessons former college students will learn from this largess. Will they determine that debt is good? Or perhaps, they will surmise that no matter how stupid their decisions are, the government will always bail them out. Today’s article comes from the halls of Academia but doesn’t praise the government’s philanthropy as you might expect. ~Tim McMahon, editor
Biden’s College Loan Forgiveness Program Will Raise College Costs
When I interviewed for a teaching job at private college in Alabama more than twenty years ago, the recently elected governor had won partly on a platform in which the state would install a lottery system that would give students a $3,000 grant for college. As the provost and I discussed the prospects of this new program, he smiled and said, “We hope this lottery passes. Then we can raise tuition by $3,000.”
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How Long Will This Recession Last?
The most important question for asset prices right now, from stocks to houses to Bitcoin, is whether we’re due for a recession. Last week we got confirmation that according to the traditional definition of a recession – 2 quarters of negative growth – we are already in a recession.
The response from this administration has been denial and word games rather than actually trying to stop the slide. At which point the betting shifts to whether it’ll be a shallow 1991-style recession or a big, 2008-style one, perhaps with a financial crisis to spice things up.
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Is The U.S. A Powerful “Empire” In Decline?
Recently I’ve been giving a lot of thought to the idea of global “empires”. Back in the 1970s one of my teachers discussed the parallels between the U.S. and the Roman empire and those parallels are even more striking today. A simple search on the term, “Parallels Between the U.S. and the Roman Empire” will generate pages and pages of results on this topic from such esteemed writers as Doug Casey, Seeking Alpha and even Salon.
In the U.S. we tend to bristle at the idea that we are an “empire” but a recent YouTube Video by Ray Dalio got me thinking about this subject once again. The characteristics of an “Empire” are fairly consistent and specific. Truth in History lists 36 characteristics of an empire. These include:
Being the “World’s Policeman”.
Meddling in the political affairs of foreign nations.
Original citizenry becomes rich, lazy, fat and demands “bread and circuses”.
Has an expanded immigration policy.
Accepts foreigners into its realm as unskilled laborers.
Ray Dalio’s video explains how the ascendency to Empire status occurs and he focuses on three recent “empires” including the Dutch, British, and the U.S. He calls this “the Big Cycle” and focuses primarily on the financial aspects of Empire.
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How Low Can the S&P 500 Go?
So far in 2022, the S&P 500 peaked at 4,818.62 on January 4th and reached a low of 3,674.84 on June 17th. That is a -1,143.78 point loss or -23.74% in 5 months. If that is the end of it, it will be considered a “mild correction”. Only 3 of the seven previous corrections lasted 5 months or less, while the other four lasted much longer.
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France’s War on Terror Uses Eagles to Catch Drones
When you think of drones, you think of harmless toys or maybe Amazon package delivery systems. But with terrorism on the rise, terrorists might turn to drones to deliver a different kind of package. And dealing with that threat might be difficult for law enforcement, after all, how do you shoot a drone out of the sky without injuring bystanders? Although no one was injured, at the time, the French began becoming concerned about drone attacks in early 2015, when drones flew over the presidential palace and a restricted military site.
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The Fed’s New “Tightening” Plan Is Too Little, Too Late
We’ve been saying for a while that the FED’s been “behind the curve”. First they said inflation was “transitory” and nothing to worry about (while we said to start worrying). Then they said they would start tightening “later”. And finally it begins, but it should have begun months ago, the inflation “genie” is out of the bottle and the FED is going to have a difficult time getting it back in. In today’s article, Ryan McMaken tells us how the FED’s actions are “too little too late”
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Keynesians and Market Monetarists Didn’t See Inflation Coming
The following article by Robert Murphy looks at the different views of inflation from the various economist’s camps. It also addresses the issue of why early Quantitative Easing (QE) didn’t produce the expected inflation. As I’ve said before the primary reason is that the deflationary forces of a contracting stock and housing market were great enough to counteract the massive money creation by QE.
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Elon Musk Ambushes Twitter
In the ongoing saga of Musk vs. Twitter, we first heard that the iconic billionaire founder of X.com aka. Paypal, Tesla, SpaceX, Hyperloop, etc. started acquiring significant quantities of shares of Twitter. On March 14, 2022, he had a 5% stake in the company. By April 1, he had 9.13% of the total outstanding shares, valued at the time at $2.64 billion, making him the largest shareholder in the company.
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