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Showing posts from July, 2016

Does Neo-Fisherian Economics Cause Fed to Bark Up the Wrong Tree?

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/economics--politics-education/does-neo-fisherian-economics-cause-fed-to-bark-up-the-wrong-tree?post=95888&uid=4798

Could it be that Neo-Fisherian economics causes the Fed to bark up the wrong tree. Neo-Fisherian economics is also tied to New Monetarism. I have said before that New Monetarism has captured the thinking of the Fed. I discuss the current Fed situation and get back to the implications of Neo-Fisherian economics through Scott Sumner's insights, and my opinion at the end of the article.

So, here are issues facing the Fed:

If the Fed raises interest rates, the banks will receive the interest payments that should be remitted to the treasury, to the taxpayers! That will be a serious problem. I wrote that the Fed is predisposed to keep interest rates low. One of the reasons is this very problem, that the Fed cannot afford to pay the treasury if rates are raised. That interest wil…

Does Vladimir Putin Own Donald Trump?

Does Vladimir Putin own Donald Trump? Upfront I want to say three things:

1. I don't have a problem with a US president being friends with Vlad Putin. But that is not the same as being financially entangled with him.And there is no proof as this article is written that Trump owes money to any Russian business or to the Russian government as far as I can tell.

2. I am uncomfortable with Hillary Clinton's Neocon efforts to destabilize Russia, and the Ukraine, similar to what Richard Cheney did by inflaming Georgia against Russia. Regime change can take the form of military action, NGO influence, or just plain money to the opposition. Regime change has caused chaos in the middle east, with many innocent women and children dying  and suffering hardship with no escape, except those who have become refugees due to our unfortunate policy. Regime change has been, simply put, a very bad idea.

3. I would even go so far as to say that my country, the United States of America, is more empi…

Is Japan Falling Back Into Deflation? Only One Monetary Solution Left

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This article was first published by me on Talkmarkets:  http://www.talkmarkets.com/content/global-markets/is-japan-falling-back-into-deflation-only-one-monetary-solution-left?post=95649&uid=4798

One has to ask if Japan is falling back into deflation. Certainly the dollar failed to strengthen as promised, and that would have helped the BOJ. The Fed is probably going to try to raise rates to help Japan. That could cause a devaluation in China, and that would be a shock. The fragility of the world economy is pretty evident right now. Japan needs a stronger dollar and China could use a weaker dollar.

Here is a Japanese inflation chart:





source: tradingeconomics.com


The policy of creating inflation is slipping. Inflation is becoming something longed for, not something clearly attainable. Japanese risky bets are an indication that banks are expecting inflation, taking the inflation side of bets, while investors are still expecting deflation, taking the floating, low rate side of the be…

Japan Is Practicing Tranche Warfare. Abe is Frightened!

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/currenciesforex/japan-is-practicing-tranche-warfare-abe-is-frightened?post=95599&uid=4798

Japan is the perfect example that shows  the real economy does not matter anymore. Japanese Prime Minister Shinzo Abe likened the current crisis of low commodity prices to that of the 2008 crisis that took down Lehman.

Japan's banks are playing the worldwide casino in a big way. It appears that these banks are just too big for the Japanese economy and they are reckless in their investing practices. Really reckless! When was the last time some of you heard about tranches? More on that at the end of the article.



So, we have to understand that Japan imports raw materials and processes them into finished goods. As of the article publication these were the major imports procured by Japan:

Primary imports - commodities: petroleum (15.5 percent of all imports); liquid natural gas (5.7 percent); clothing (…

Donald Trump Cannot Make America Great Again But He Could Destroy It

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I posted this article to my personal blog at Talkmarkets: http://www.talkmarkets.com/contributor/gary-anderson/blog/economics--politics-education/donald-trump-cannot-make-america-great-again-but-he-could-destroy-it?post=100434&uid=4798

Donald Trump is all over the place when it comes to his economic plan to make America great again. But he has made some statements that we can show would not make America great again. The story is not given to Americans in full as to why his plans could be disastrous.  He has two plans, that are shared here. I encourage people to read the entire article because the issues speak to the economic problems of our time.


The closest explanation as to why Trump's plan would fail is the article found in Business Insider, dated May 6, 2016. Trump threatened a haircut on treasury bonds. He threatened to not pay part of the debt back, buying the bonds back for a lower price than at the price they were issued!



Of course, the author, Josh Barro, only offer…

The Real Problem with Real Estate Understood by Market Monetarists

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/real-estate--reits/the-real-problem-with-real-estate-understood-by-market-monetarists?post=97232&uid=4798

The real problem with real estate as understood by Market Monetarists requires understanding the concept of closed access versus open access cities. No, I am not talking about cities with restricted travel because there is a military base on the city, as we see in the old Soviet Union or even in modern Russia. For purposes of real estate, closed access cities are those that produce high quality products through having a highly trained workforce.

Salaries are high in closed access cities. It is difficult to move to a closed access cities as even rents are very high. Some tech people have actually lived in the Google parking lot because of cost. The Tiny House movement seeks an escape from closed access cities or at least an escape from their high living costs. Multigenerational household…

Billionaire Fascism Is on the Rise Risking Financial Instability

This article was first published by me on my personal blog at Talkmarkets: http://www.talkmarkets.com/contributor/gary-anderson/blog/global-markets/billionaire-fascism-is-on-the-rise-risking-financial-instability?post=95461&uid=4798

How much influence the bigoted billionaires have in the eventual meltdown of world civility and financial stability,  with the goal of a totally dominant empire is unknown, but it could be a huge influence. Here are three billionaires we need to look at:

1. Ihor Kolomoyskyi. This man has sought a fusion between Jewish people in the Ukraine and eastern Europe with right wing fascists. Most Jewish people in eastern Europe do not want to war against Muslims. They would prefer to live in peace. So, they have wisely rejected the bigoted billionaire, Kolomoyskyi. But his money and influence continue.

2. Sheldon Adelson. This famous owner and creator of the wonderful Venetian Hotel in Las Vegas has called for Donald Trump to go to Israel. He supports …

LIBOR Triple Damages Loom. Chart Shows How the Banks Won Bets

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/libor-triple-damages-loom-chart-shows-how-the-banks-won-bets?post=95347&uid=4798
The biggest banks in the world are in real trouble. They may have won too much when they won their derivatives bets. At issue is whether these big banks manipulated the LIBOR rate downward, increasing the gap between the floating rate they bet on, and the fixed rate their counterparties bet on to protect against inflation.

I have used the following chart many times to show the relationship between the fixed high rate and floating low rates that banks use. When the fixed rate drops below the floating rate the banks are compromised. They want the floating rate, designated by the red line, to always float below the blue line.
The long simmering LIBOR cases against the big banks may have hit a danger point according to reports by Fortune Magazine and others.

Fortune said: on Monday, a judge pushed an anti-trust…