Long-term trends grow from short term trends. We attampt to determine the short term trends and where they are pointing.
It seems pretty obvious that when the economy is weak individual’s earnings go down, and unemployment goes up, consequently tax revenues go down. After all, if people aren’t making any money they can’t give it to the government. So, it seems logical to ask about falling tax revenues and rising deficits. In today’s article, Ryan McMaken looks at the current situation.
If the Economy Is So Great, Why Are Tax Revenues So Weak? Read More »
According to a recent article by Bloomberg entitled, Wider War in Middle East Could Tip the World Economy Into Recession, it is a distinct possibility. The article presents 3 possible scenarios, i.e., Confined War, Proxy War, and Direct War. Confined War Scenario In the confined war scenario conflict is limited to Gaza, Israel, and the Palestinian
Could a Hamas vs. Israel War Trigger a Worldwide Recession? Read More »
Despite elevated inflation, the United States government is spending more than ever, which means consuming more units of issued currency. Tim Congdon at the Institute of International Monetary Research shows how the inflationary burst was directly linked to broad money growth due to rising government deficit spending. Market participants and economists like to believe that the central bank will manage the economy as if it were a car. The current optimism about the U.S. economy reminds us of the same sentiment in 2007 when no one seemed to worry about rising imbalances.
The Dangerous Myth of a “Soft Landing” Read More »
China is risking more than a real estate collapse. China has turned its back on what created the Chinese Economic Miracle in the first place. Everyone is pontificating about China’s real estate bubble and whether Chairman Xi will do enough to stimulate the economy. Even though the media admits that so far a loose monetary policy hasn’t helped, they still believe that more of the magic cure-all monetary elixir will somehow eventually work.
The Crux of China’s Problems Read More »
At their 2023 summit in South Africa, BRICS countries committed to study the feasibility of a new common currency. Russia is especially interested in alternatives to the Dollar since his invasion of the Ukraine resulted in the Dollar, SWIFT, and international finance was used as a weapon against Russia. In today’s article Daniel Lascalle looks at the viability of an alternative BRICS currency.
Will a New BRICS Currency Dethrone the U.S. Dollar? Read More »
Unfortunately, the European Union bureaucrats declared the end of the energy crisis as if it were the result of decisive policy action, but the reality is that the energy problem in the EU was only diminished by purely external factors: a very mild winter and the decline in global commodity prices due to the central bank rate hikes. Thus, the energy crisis remains, and the problems of security of supply and affordability of the system persist.
The European Energy Crisis May Be Back Soon Read More »
Mark Thornton and Ryan McMaken discuss the current yield curve inversion. The U.S. Treasury funds deficit spending by issuing debt instruments with a range of maturities. Treasury Bills have maturities from one month to one year. Treasury Notes have maturities from two to ten years. And long-term debt is issued as Treasury Bonds with 20- and 30-year maturities. The yield curve is created by comparing interest rates between ten-year debt to 3-month debt. Logically, long-term debt should require a higher interest rate than short-term debt simply because a lot can happen in ten years so there is more uncertainty, i.e., risk.
Deepest Yield Curve Inversion Since 1981 Read More »
Modern money, having now become a key tool of government economic policy and a source of massive tax revenues, has strayed far from its original purpose. This is doubly regrettable, as the better money functions at an individual level in satisfying demand for quality, the better it is for economic prosperity and freedom.
This book presents how modern money works both in the domestic economy and globally, outlining the essence of what makes good money. How does modern money differ from this ideal?
A Guide to Good Money Read More »
The for many years telephone services and electricity were considered “natural monopolies” and competition was prohibited by the government or you could say the dominant player was protected by the government. But then in January of 1982, the government reversed its longstanding protection of Bell Industries and broke it up into a bunch of “Baby Bells” that could compete against each other. And along came cell phones and the rest is history.
There is No Such Thing as a “Natural” Monopoly Read More »
The stock market appears to be approaching an “inflection point.” Mr. Market is going to have to make up his mind… whether this is going to turn into a bullish or bearish market. At this point, it could still go either way, but the big caveat is that when it moves, the move will probably be dramatic. Looking at the following chart, we can see the two blue short-term support and resistance lines are forming a “pennant” formation. Generally, when that happens, it is like a spring being coiled up as the index gets compressed into the two lines. When it finally breaks free in one direction or the other, it is often explosive.
Big Move Coming in Stocks Read More »
