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Showing posts from December, 2016

Keeping Interest Rates Low Is a Function of Demand, Not of Politics

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/keeping-interest-rates-low-is-a-function-of-demand-not-of-politics?post=105956&uid=4798


Donald Trump, who recently spoke about the false economy as if he understood the economy, obviously does not have a clear idea about how that false economy actually works. He tipped his hand when he said that the Fed is deliberately keeping interest rates low until after the Obama presidency. That is an ignorant statement, if we understand what long bonds are used for.

While the Fed certainly created an atmosphere in which interest rates can remain low, it does not keep long rates low. Demand for bonds with limited supply keeps rates low. Trump has spoken of fiscal deficit spending as a means to increase the amount of bonds, but that would not radically raise rates, as the demand is so large for the bonds that it may not matter.

And US citizens don't get much benefit from deficit spending, but …

Donald Trump on the False Economy. R-Star Estimates Bleak

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/the-false-economy-r-star-estimates-bleak?post=105561&uid=4798

When the Fed speaks, it is like that insurance company telling you that your car will not be replaced if totaled in the fine print. The fine print reads, blah blah blah blah blah blah blah. Well, the Fed, the BOJ and central banks everywhere are getting us to ignore the fine print, expecting us to really believe they will fix things. Unless radical solutions are found, they won't fix things.

Donald Trump, who is not my favorite politician (come to think of it, I don't have any favorite politicians anymore), has kindled a potentially useful discussion that could one day be helpful to the real economy. The odds are that it probably won't be helpful, so I am not trying to get anyone's hopes up. As I show later R* (R-Star) predictions are very bleak.

But more people need to understand the argument for getting mo…

Timid Fed and Jeremy Stein and Potholes

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/timid-fed-and-jeremy-stein-and-potholes?post=105246&uid=4798

The Timid Fed, trying to muster the fortitude to raise interest rates by a measly .25 percent, does not listen to Harvard Professor Jeremy Stein. Before getting into Jeffrey P. Snider's examination of Professor Stein and shortages of collateral, it would be good to see some of the things Dr. Stein was proposing as a help to the real economy, through his research at the Federal Reserve.

Stein retired from the Fed, and he gave this assessment upon his exit from the institution:

If your only real concern is monetary policy implementation and controlling rates, I think then there’s lots of ways you can do it.
For example, suppose the RRP rate is 5 basis points and it’s creating a pretty tight floor at five. Meanwhile the interest on reserves is 25 basis points, so the federal funds rate is going to be between 5 and 25.
N…

Libertarianism, the Good, Bad and Ugly

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This article was published to my personal blog at Talkmarkets: http://www.talkmarkets.com/contributor/gary-anderson/blog/bonds/libertarianism-the-good-bad-and-ugly?post=110273&uid=4798

Most people don't take the time to understand Libertarianism, but they should. Libertarianism is a political movement with an economic school attached. That school is known as Austrian Economics. The Mises Institute, which attempts to bring libertarian/Austrian thought together in one place is located in Auburn, Alabama. It was founded by Lew Rockwell and Murray Rothbard.

Before discussing the really disturbing three ugly issues regarding Libertarianism, here is a quick rundown of political and economic beliefs contained within the philosophy that fascinate many people.

As to the political, I have a brief opinion. That is, Ludwig Von Mises, 20th century thinker whose name is affixed to the institute, believed that limited government was best. Whether limited government is the best way forward, …

The Fed Did Not Save Real Estate But Gives Banks Welfare Checks

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This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/us-markets/the-fed-did-not-save-real-estate-but-gives-banks-welfare-checks?post=104598&uid=4798

It is very clear that the Fed saved big business, but not the consumer real estate market. As we can see, the Fed has kept the money stock high, but the red line in the Fred chart below shows that home mortgages have taken a nosedive beginning with the Great Recession and continuing. Certainly the commercial banks lend in real estate, but it has been mostly for big business's benefit.

At the end of this article I will show, with the help of Kevin Erdmann, that all of subprime real estate did not deserve to die. But the Fed (a private bank according to the Lewis VS USA court case in 1982), killed it all anyway, and now gives banks welfare checks from the citizens of the United States in the form of interest on reserves (IOR). 



I think I know the reason why the Fed did this to the real estate m…

Congress’ Rotten Idea for Fighting Anti-Semitism

http://nypost.com/2016/12/08/congress-rotten-idea-for-fighting-anti-semitism/


Thank you, NY Post. I don't often agree with you, but your author, Jacob Sullum, has boldly told the truth to our  United States Senate with these words:

Last week, the Anti-Semitism Awareness Act of 2016, a k a S. 10, was introduced in the Senate, read three times, and approved by unanimous consent without debate or amendment — all on one day. 
And:

S. 10, introduced by Sens. Tim Scott (R-SC) and Robert Casey Jr. (D-Pa.), codifies a controversial State Department definition of anti-Semitism that includes one-sided criticism of Israel and opposition to Zionism.Last year, the University of California declined to adopt that definition based on concerns that it would violate the First Amendment by deterring pro-Palestinian activism.
Again, thank you Jacob! Please read the link above to Jacob's article to fully understand what is at stake with the colleges and this very evil law.  Jacob Sullum is a Jerusal…

Trump IV - Causes of An Economic Crisis and My Response

This controversial, but interesting article was published at Talkmarkets by Michael Taylor at BankersAnonymous: http://www.talkmarkets.com/content/economics--politics/trump-part-iv--the-causes-and-uses-of-an-economic-crisis?post=114632&uid=4798


And this was my response:

Fascinating article, but where to start?
First, Trump may be anti Semitic. But he is pro Zionist. People should know that Zionism and Judaism are really not historically linked. Judaism,a religion, existed for thousands of years and Zionism, a political doctrine, was formulated in the late 1800's. It would be good if people learned that there are differences, like the British Court ruled.
Also, he is not a tolerant person. Tolerance is key in these times. I do worry about his tendencies towards authoritarianism when times get tough, and they likely will.
Second, Trump does hit a populist chord. He is threatening tariffs, and that is probably a good thing to threaten. We are getting killed with loss of manufact…

Paul Krugman wants to Bless Us, But It Is Mostly for Wall Street

This article was first published by me on Talkmarkets: http://www.talkmarkets.com/content/bonds/paul-krugman-wants-to-bless-us-but-it-is-mostly-for-wall-street?post=103243&uid=4798

The following is a slightly tongue in cheek interpretation of Paul Krugman's ideas based on the history of Alexander Hamilton, versus my fantasy for America and there may be a still better third option discussed at the end of this article. One thing is certain, we do not live in the age of Alexander Hamilton.

My economic fantasy for America is the hope that the treasury will keep some of its valuable gold for all of us. I am not talking about the inferior stuff, the gold that may or may not be at Fort Knox. No, I am talking about the superior gold, the treasury bonds that we could use to make money for the government. In the derivatives markets, treasury bonds are more valuable than gold itself!

Capitalism in the form of structured finance is failing main street. My fantasy is that the government w…

My Response to a Very Lame Article on Newsweek about Globalization

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This is my response to an article on Newsweek, written by professor John Rennie Short regarding the march towards globalism that the professor appears to be pushing on us. It is an article that comes right from the heart of globalization, through The Conversation, a globalist rag deceptively draped in free expression clothing:


Globalization has us fighting limited wars. Globalization has us fighting never ending limited wars. And globalization has us subject to liar loans and a financial system where no banker goes to jail for screwing the common man. If it was just about free trade I am all for it. But unfortunately, it isn't just about free trade. It is about keeping America weak so that the globalists have nothing to fear from it.
Globalization in its current form is the vision of people like Cecil Rhodes and David Ben-Gurion. It is about New World Order control, about financial control of the nations by the Square Mile. Look up the Square Mile, home of Gog and Magog, the Roman…