After The Gold Rush

    If I were an underemployed and thoroughly self-entitled crank, I could write three Volumes of horrendously lugubrious prose and describe it as my theory of life, the universe and everything.* When not earnestly engaged with inseminating his domestic help, an underemployed and thoroughly self-entitled crank named Karl Marx did exactly that. He called this Volumes I – III of Kapital. Natter on for over 2,000 pages, and even a guy like Marx will bury an occasional intellectual ruby beneath the copious mounds of pony-poop.

    In light of the “Gold-Apocalypse” occurring today on Wall Street, Marx’s plaint regarding Commodity Fetishism may well be worth donning a protective mask and digging out. It could as an explanation for why my full-bodied monies recovered from the 16th Century Spanish Galion just aren’t all that valuable any more.**

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    Non-lawyer Cain and the deflation of Krauthammer’s Panel

    Herman Cain endures Beltway  economic ignorance and poor legal advice on non-disclosure agreements from The Center Seat on FNC’s Special Report, The Panel segment, on Tuesday This time, Americans want a man with courage to implement the values and principles that might just save America, rather than a Barbie Doll that gives all the lawyered-up, Beltway-approved “right” answers. Americans are amenable to a normal conversation | Read More »

    Conjecture on Reversing Deflationary Expectations.

    Civil Truth posed some questions recently, and in attempting to answer them I developed this blog entry.  His questions were about today’s deflationary pressures and inflationary expectations. I don’t think we have deflationary pressures and inflationary expectations.  We have primarily deflationary “pressures,” creating deflationary expectations today.  I don’t think our fiscal and monetary policies are at odds–they are both inflationary at the moment, about the | Read More »

    The Coming Real-Money Economy

    It’s pretty clear to everyone that the financial industry is not doing what it normally does, which is to extend credit and lend money. Just as clearly, the decline in new credit formation leads to deflation in risk-bearing financial assets, and a sharp contraction in overall economic activity. Less clear are the implications for policy and for business forecasting. Businesspeople are simply confused about the | Read More »

    If we can’t cure the economic cold, maybe we should bring on economic pneumonia.

    You remember the old joke to that effect?  We know how to cure pneumonia? Blackhedd recently provided an explanation of how “a zero nominal interest rate might correspond to a real interest rate that is hundreds of basis points higher” if expectations are for a deflationary period. I took it to mean that since the original principal must eventually be repaid, even a zero interest | Read More »

    China Devalues Its Currency

    It seems to me that focus has shifted away from China’s economic and financial doings during the acute financial crisis that began last September. The story in China for most of this year and last year has been extremely high inflation (particularly in prices for staple foods), and vigorous measures by the country’s banking and monetary authorities to reduce the formation of credit. Up till | Read More »

    Deflation

    There are words you don’t ever want to use in polite company, and deflation is one of them. Unfortunately, it’s a serious possibility that we now need to consider. Yesterday, the Bureau of Labor Statistics reported that the overall level of consumer prices declined by about 1% in October. The so-called “core inflation rate” declined by 0.1%, the first such decline in more than twenty-five | Read More »