Monthly Archives: January 2009

So, Who’s Going to Bail Out the Consumer?

Since the consumer is now and forever the great engine of all economic activity and growth representing approximately 70% of GDP, doesn’t it make sense to re-liquify the balance sheets of the consumers/taxpayers who are arguably in worse shape than … Continue reading

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Yikes! We’re caught in a liquidity trap. What the Heck is That?

Since the Fed increased the monetary base by, oh, about a TRILLION dollars, why aren’t we having massive hyperinflation?     Well, It’s because

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The Economic Perversity of our Banking System.

I recently wrote about the cause of this recession/depression being a collapse of the money supply. The money supply is collapsing because money is literally evaporating with each loan default and bankruptcy and is accelerated by the reverse multiplier effect … Continue reading

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Is it Deflation yet, or is hyperinflation on the way?

Let’s take a short detour to make sure we understand what inflation and deflation are. Milton Friedman, the father of the monetarist school of economics said that inflation is always and everywhere a monetary phenomenon. This is usually explained to … Continue reading

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Why the money supply is collapsing.

Inflation and deflation are almost always monetary phenomena as are booms and busts, recessions and depressions. The current economic environment has surprised nearly everyone with the sharpness of the decline, it’s suddenness and it’s sheer ferocity. To better understand what is happening … Continue reading

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My 2008 year-end letter to clients.

To My Clients: This past year we continued the full defensive strategy we adopted in late 2007. It has certainly performed well as the stock markets literally collapsed. In all candor, the positive performance in your account is the most … Continue reading

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