Purchasing Power

Depression, Debasement, & 100 Years Of Monetary Mismanagement

There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever... with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.

Nine Meals From Anarchy

Fear of starvation is fundamentally different from other fears of shortages. Even good people panic.

Dear Janet: Your Own Atlanta Fed's "Core" Inflation Tracker Is At Six Year Highs

First the AtlantaFed (with occasional shoulder-tapping exceptions) created a mini revolution in the way GDP was tracked on a day to day basis with its GDP Nowcast, one which spawned the NYFed to create its own version (influenced by Goldman's own economic models as the Atlanta Fed's number were seen as too pessimistic), and now the same Atlanta Fed is casting serious doubt over the government's official inflation numbers, with its own "sticky-price" CPI tracker.

What Bull Market?

...the market has created exactly $0 of additional purchasing power for investors over the past 15 years. That’s right, none, zilch, nada.

Triffin's Paradox Revisited: Crunch-Time For The U.S. Dollar & The Global Economy

While all eyes on fixated on global stock markets as the measure of "prosperity" and "growth" (or is it hubris?), the larger force at work beneath the dovish cooing of central bankers is foreign exchange. The reality is that we're one panic away from foreign-exchange markets ripping free of central bank manipulation.

The Future of Money

The reason is that banks understand their core reason to exist is threatened by peer-to-peer, decentralized payment platforms and currencies. If payments no longer need to be routed through a centralized trusted institution, then one core function of banks disappears. If peer-to-peer lending and securitization becomes easier and cheaper due to the blockchain, then banks' function of allocating capital also vanishes.

The Next Big Problem: "Stagflation Is Starting To Show Across The Economy"

"I think stagflation is starting to show - that idea of stronger nominal growth but weaker real growth is starting to show up across the economy. It certainly is showing up with real personal consumption slowing; it's showing with slower job creation growth as the wage rate rises, and it's showing up in weaker profits as the share of labor income rises reducing profit margins for corporations."

The Path To The Final Crisis

We cannot be sure what shape the next crisis will take, although it seems likely that it will be yet another “deflation scare”, mainly caused by falling asset prices. However, we do know what the last crisis of the current system will look like. It will entail a crumbling of the public’s faith in fiat money and the institutions that issue and administer it.

Gold Money's picture

It is our mission to rebut any mainstream article that spreads misinformation about gold and/or shows a gross misunderstanding of monetary history. Matt O’Brien argues in the Washington Post that a “gold-backed dollar would have been a much more volatile one” and that “[gold]…has nothing to do with the price of food or housing.“ We show in a few simple charts why Matt O’Brien’s arguments are misguided, misinformed and just plain wrong.

Another Volcker Moment? Guessing The Future Without Say's Law

If the dollar’s purchasing power falls much further, the market will expect higher interest rates, so this then becomes the likely outcome. The question will then arise as to whether or not the Fed will dare to raise interest rates sufficiently to stabilise the dollar's purchasing power. If the Fed delays, it could find itself facing a difficult choice. The level of interest rates required to stabilise the dollar’s purchasing power would not be consistent with maintaining the record levels of debt in both government and private sectors. Thirty-six years on it could be another Volcker moment.

"Free" Trade, Jobs, & Income Inequality: It's Not As Easy As We Might Think

Slapping fees on imports (which by the way is illegal in treaties such as the WTO) will not solve the larger problems of reduced employment, stagnant wages and rising income inequality. To make a dent in those issues, we'll need to tackle central bank and central-state policies that have pushed finance and speculative churn to supremacy over the productive economy.