Purchasing Power

Marx & Markets

Investors should check their ideologies and personal politics at the door. The fact is, that strong and enduring capital markets can only survive in truly capitalist economies, preferably with strong representative governments. With accretive capital formation in question, it occurs to us that the largest global capital markets have become little more than tools for Marx’s "ruling class" - in this case well-funded politicians and their patrons - to socialize the factors of production. Whether such a conclusion is good, bad or irrelevant to market performance is the focus of this report.

The Marginal Buyer Holds The Pin That Pops Every Asset Bubble

The person willing to pay top dollar is called the "marginal buyer". Most of us don't really think about him much, but he (or she) is very, very important. Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her "top dog" spot, sets the prices of nearly every asset class held by today's investors.

Inflation: It's A Wealth Redistribution Scheme

Far from maintaining economic stability and fostering prosperity, consumer price inflation targeting practically guarantees a pernicious wealth transfer year in and year out, a perpetual duping of unsuspecting employees and companies, and a permanent blind spot to hidden inflation.

Back To Square One: Why The Financial System Needs To Reset

"Zero interest rates and negative interest rates and Europe and Asia are a huge signal that we are almost at the point where central banks have lost their tools to perpetuate a sense of confidence, that things are cyclical.... If you were to apply the Bretton Woods model for valuing money today, gold would be up to $15,000 an ounce..."

Misunderstanding The Real Problem: An Updated Version Of The "Peak Oil" Story

The amount of oil (or for that matter, any other resource) isn’t a fixed amount. If the price can be made to rise to a very high level, the quantity that can be extracted will also tend to rise–in fact, by a rather large amount. The “catch” is that wages for the vast majority of workers don’t rise at the same time. As a result, goods made with high-priced oil soon become too expensive for workers to afford, and the economy falls into recession. The result is prices that fall below the cost of production. Thus, the limit on oil supply is not the amount of oil in the ground; instead, it is how high oil prices can rise, without causing serious recession.

US Productivity Plunges For 3rd Quarter In A Row - Longest Losing Streak Since 1979

Following the Q2 GDP print, the slowing in aggregate weekly hours suggested a modest pickup QoQ in non-farm productivity, but it plunged 0.6% - dramatically missing the +0.4% exp in this preliminary Q2 report. This is the 3rd quarterly decline in a row - the first time that has happened since 1979. This three quarter plunge is the biggest drop in productivity since 1993, and this is the first YoY drop (-0.4%) since Q2 2013. All in all... a disaster!

The Warren Buffett Economy: How Central-Bank-Enabled Financialization Divided America

Needless to say, the above outlandish graph does not capture capitalism at work. Nor did the speculators who surfed upon this $45 trillion bubble harvest their monumental windfalls owing to investment genius. Instead, it is the perverted fruit of Bubble Finance, and there is no better illustration of this bubble surfer syndrome than the sainted Warren Buffett.

Saving The System: Exposing The 4 Fallacies Of Modern Monetary Policy

Monetary policy, we are told, is all about staving off recession and stimulating economic growth. However, not only is monetary debasement in any form counterproductive and destroys the personal wealth of the masses, but the economists who devised today’s monetarism have completely lost their way. The real reason for today’s global monetary policies is an ultimately futile attempt to prevent a systemic and economic crisis.

Government "Is" The Problem, Stupid!

Despite the fact that competition keeps prices low, the socialists think they can run education, health care, and the entire economy better than the free market. Here are two charts that show how successful, government solutions are for the citizens of this country....