Free Money

Why Silicon Valley May Be At "DEFCON 1" Status

The amount of wasteful over investment on companies and ideas that should have never seen the light of a ledger book, let alone day, has been astounding. Without the intervention of the Fed’s QE (quantitative easing) free money enabling risk taking to supersede business fundamentals to fund and fuel speculative investments in ways that mirror the dot-com days: there would be no "Valley" as it currently stands. Unicorns, Non-GAAP, IPO’s, and more were the terms bandied or used to encapsulate what it was to be a "disrupter." Now with iconic Silicon Valley impresarios such as Theil or others being reported that to be looking for ways to cash out without an IPO, a nuclear winter pertaining to the world of Unicorns may be as '1' is said to represent: imminent.

Time For Torches & Pitchforks: The Little Guy Is About To Get Monkey-Hammered Again

The prospect that the leaders of our monetary politburo are about to be tarred and feathered by economic reality might be satisfying enough if it led to the repudiation of Keynesian central planning and a thorough housecleaning at the Fed. Unfortunately, it will also mean that tens of millions of retail investors and 401k holders will be taken to the slaughterhouse for the third time this century. And this time the Fed is out of dry powder, meaning retail investors will never recover as they did after 2002 and 2009.

If We Don't Change The Way Money Is Created & Distributed, We Change Nothing

If the money creation/distribution system isn't transformed, "reform" is nothing more than ineffectual policy tweaks that offer do-gooders the illusion of progress. The only real solution in my view is to create and distribute money at the base of the pyramid rather than to those in the top of the pyramid.

Market Figures Out Fed No Longer Has Its Back

The Fed is now - for the first time in adult memory for half the world’s traders and money managers - tightening rather than loosening monetary conditions. A quick look at financial history is all it takes to lead anyone with leveraged money at risk to lighten up. Equally important - and vastly more strange when you think about it - this tightening comes at a time when major parts of the global economy are either grinding to a halt or imploding.

An Xmas Message From Satan - "Ignorance, My Poor Dear Americans, Will Not Save You"

"My minions in the Federal Reserve - such loyal servants! - continue feeding an orgy of leverage and debt, spreading ruination under the false guise of prosperity. What a delicious irony, that the fools doomed to eternal damnation in my Empire believe themselves prosperous as they absorb the poison of exponentially rising leverage and debt."

The Market’s Gamblers Are Pumping Air

The Fed pricked the financial bubblethis week as expected. Janet Yellen’s press conference couldn’t have been more perfect as it confirmed that the money printers have come to a stark dead end. The fact is, the global economy is deflating rapidly and the U.S. is sliding into recession. But our Fed chairman is clueless about what’s happening. She and her posse of money printers are going to get bushwhacked by reality in the year ahead.

"In Short Janet, It's Too Late" - Albert Edwards Calls It With These Seven Charts

"The party's over and bond investors who always tend to be more sober types, realize this and have headed for the exits whereas equity investors are so intoxicated they haven't realized that the music has stopped. Equity investors are still gyrating around the dance floor - just as in 1999 and 2007... I believe the Yellen Fed will soon be treated with the same contempt the Greenspan Fed was in the aftermath of the 2008 financial crisis. And they will deserve it."

The Fed's Painted Itself Into The Most Dangerous Corner In History - Why There Will Soon Be A Riot In The Casino

The chart below crystalizes why the Fed is stranded in a monetary no man’s land. By the time of next week’s meeting the federal funds rate will have been pinned at about 10 bps, or effectively zero, for 84 straight months. After one pretension, delusion, head fake and forecasting error after another, the denizens of the Eccles Building have painted themselves into the most dangerous monetary corner in history. They have left themselves no alternative except to provoke a riot in the casino - the very outcome that has filled them with fear and dread all these years.

Forty Centuries Of Wage & Price Controls

Interest rates across the developed markets have been kept at emergency levels (and all time historical lows) for seven years. Do we think that allowing banks to access essentially free money is more or less likely to give rise to the sort of malinvestments that caused the financial crisis in the first place? If you believe that the answer is ‘less likely’, there is a job at your local central bank with your name on it.