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Stephen Graves  

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  • 324 Years Of The Gold-To-Silver Ratio And $195 Silver [View article]
    Any sort of averaging that uses such a vast time period is highly questionable. The twenty-first century economy has next to nothing in common with eighteenth or nineteenth century economies. Using these periods to "average" the ratio of gold to silver is therefore going to create a highly misleading figure, which is exactly what the author has achieved. At the very least a genuine average should limit itself to the period following the Second World War, which marks the beginning of the truly global economy. A more relevant and realistic time frame like this would yield an average in the range of 50:1 and would imply that silver is either slightly undervalued or gold is slightly overvalued.

    In any event, $200 silver seems extremely far-fetched. The only way it would break $100 is probably in the event of global economic collapse which would inevitably spark a massive deflationary spiral that would ultimately lower the cost of silver - which, lest we forget and panics notwithstanding, is an asset after all - right back down to the $20s, if not even lower.
    Aug 4, 2014. 06:58 PM | Likes Like |Link to Comment
  • What Will the Next Recession Look Like? Part 1 [View article]
    This is a good article that makes some valid points, although as others have noted there is, at the very least, a trillion dollar bubble in student loan securities and delinquency rates are extremely high, so there's obviously going to be some pain there eventually.

    We may or may not go into recession this year or next, but this much is virtually certain: Growth will be anemic by so-called historical standards. As the author (indirectly) pointed out, US economic growth for the last two decades or so has been stimulated by massive financial bubbles. Growth in the 2000s officially averaged only 1.8 percent; imagine what it would have been without the housing bubble? The answer is south of one percent for sure, which is precisely what we're looking at in the 2010s. When that realization finally sinks in it's going to get ugly because the entire charade (as well as both CBO and White House projections) is built upon the premise of solid (in the range of 3 percent) economic growth, which is simply NOT in the cards. It was possible when we had two thirds of the world's gold supply and half of its industrial capacity, as we had following WW2, or when we ramped up our total outstanding debt by 1500 percent, as we managed to do from 1979 to 2008, but these scenarios have played themselves out and we can no longer avoid the more obvious implications of globalization - not to mention financialization - when it comes to our prospects for growth.

    The irony, in other words, is that it won't take a recession to send us over the edge - merely another 3-5 years of sluggish "growth." Whether our economy shrinks by one percent or grows by one percent will very likely produce nearly the same outcome, only with slightly different timing.
    Mar 5, 2013. 09:46 AM | 1 Like Like |Link to Comment
  • 50% World-Wide Debt Forgiveness: Creditors And Debtors Could Both Win [View article]
    Sounds like you've actually read Keynes. Of course the challenge faced by many nations today is that putting their fiscal house in order (i.e. reducing government spending, austerity) ends up creating even higher deficits, due to the ripple effects on the total economy, decreased tax revenues and increased social costs. Throw in aging populations and sluggish growth and generating surpluses for ten straight years might actually be physically impossible, not to mention unlikely.
    Mar 1, 2013. 10:10 AM | Likes Like |Link to Comment
  • 50% World-Wide Debt Forgiveness: Creditors And Debtors Could Both Win [View article]
    This is all wonderful except for the obvious fact that a global debt write down:

    A) Is pie in the sky. You might as well recommend that we end world hunger. Good luck wading through the various judicial branches around the world.

    B) We're already doing it - it's called the printing press. That there's no sign of inflation today is obviously irrelevant; if you juice the money supply sufficiently, which almost every central bank on the planet is currently doing, then you will eventually and inevitably have an inflationary write-down. The idea that it's not going to happen since we're not already seeing is, by definition, short-sighted.

    C) It does absolutely nothing to address the various economic and cultural factors which have contributed to this global debt frenzy in the first place, meaning that it's little more than kicking the can down the road for another decade or so. If that's the best we can do then we deserve to be saddled with all this debt and more (which is of course is where we're headed, in the real world).

    If we had a global government headed by a global emperor, this idea might gain traction. Short of that, by the time we could ever implement such a grand scheme it would be long past being necessary. Inflation and defaults will take care of business naturally.
    Mar 1, 2013. 10:00 AM | Likes Like |Link to Comment
  • Austerity Is Bad For The Economy (And The Sequester Is Even Worse) [View article]
    If austerity is bad and the sequester is even worse, then where does a $20 trillion national debt with sluggish growth and tens of trillions in unfunded liabilities fit into the equation? Obviously austerity is recessionary and the sequester is the brain child of lunatics (i.e., Congress & Obama), but what happens when the Fed (eventually) stops monetizing our debt and interest rates (inevitably) rise anywhere close to their historical norms? The answer, of course, is obvious: Austerity, with a capital A. And it won't be voluntary, or even stupid; when you're squandering close to a trillion dollars every year just to service your debt, it'll simply be brutal...

    The question we should all be asking is whether the US economy can grow robustly enough in the coming decade in order to shrink its debt-to-GDP ratio back down to more historically sustainable levels, because if it can't then this whole debate between the austerity hawks and the stimulus gurus is just a meaningless sideshow. And considering that US growth since the 1980s has consisted of massive financial bubbles blown by the epic 1500 percent explosion in total outstanding debt between 1979 and 2008... my money's on meaningless sideshow.

    Meaning austerity is inevitable. The sequester is stupid - that's how it was designed, on the theory that it was too stupid to work - but we need to stop pretending that the structural problems in the US economy are going to go away any time soon and that we're magically going to grow our way out of this hole we've been digging. Does anyone seriously believe that inflating another housing bubble is going to cure the long-term fiscal predicament of the United States? If so, you should run for office - you'll fit right in.

    We probably have a few years at the outside to get our house in order before the bond market does it for us. If the sequester is a stumbling bumbling baby step in that direction, I'll take it.

    Feb 28, 2013. 05:33 PM | 2 Likes Like |Link to Comment
  • Greece: The Unvarnished Truth [View article]
    Sounds like it's everyone's fault but the Greek's.
    May 29, 2012. 05:50 PM | 1 Like Like |Link to Comment
  • Greece: The Unvarnished Truth [View article]
    Either there's a political union that overrides national sovereignty or the Euro is ultimately doomed, right? Isn't the whole mess really that simple? Europe needs to stop plugging every new leak with chewing gum and muster the cajones to have this freakin' debate out in the open, once and for all. It's a political union, or we scrap the currency, next! The catch-22, of course, being that by the time they would have such a serious, all-or-nothing debate it would probably be too late to make any difference, if it isn't already. Oh well.

    At least it makes the US look pretty darn good in comparison (for now).
    May 28, 2012. 03:41 PM | 4 Likes Like |Link to Comment
  • 9 Widely Held Beliefs You Ought To Challenge [View article]

    You seriously disregard every point he made simply because he owns a single stock that has performed poorly? Wow, you're a tough crowd, dude. By your definition I'm guessing there isn't an analyst living or dead worth listening to!

    Jeremy, some excellent points as usual. Anyone who thinks that lots more debt is the best way to resolve a massive crisis that was ultimately caused by too much debt in the first place is obviously ignoring the fact that the US, the EU and Japan (more than half of the global economy) is either in recession or on the brink of it, despite the mind-boggling levels of additional debt that their central banks and central governments have assumed since 2008. We have yet to acknowledge, let alone address, let alone resolve, the underlying causes of our ongoing malaise. The farce continues...
    May 28, 2012. 01:57 PM | 5 Likes Like |Link to Comment
  • A Further Analysis On Deficit To Outlay Spending [View article]
    And that's the key to Japan, isn't it? Savings rate hits zero this year or next because the oldest population on the planet (demographically speaking) is now retiring in droves. BOJ has to either monetize (more) debt in the future or/and eventually Japan will be forced to sell more of their debt on the international market in order to keep running deficits, in which case their borrowing costs will rise significantly because foreigners will not be as tolerant of 300% debt-to-GDP as citizens. Claiming that Japan's debt is mostly internal so it's not such a bad thing is essentially backward thinking; their real problem is not their past borrowing so much as their future borrowing. Just because peddling so much debt to their own people has worked out well up to this point does not imply that the same strategy will therefore continue working into the foreseeable future. Demographically speaking, Japan has reached their own tipping point. That's why John Mauldin describes Japan as "a bug in search of a windshield."
    May 28, 2012. 10:20 AM | Likes Like |Link to Comment
  • 11 More Hard Facts About The Housing Recovery [View article]
    Man, these comments have gotten both interesting and (occasionally) nasty!

    But it seems like it comes down to this: If the US follows the EU into recession, which seems more likely than not but still open to question, then US housing prices will almost certainly continue to decline, perhaps precipitously. If we can somehow avoid recession then maybe prices have indeed bottomed, and some areas could even appreciate, albeit modestly.

    As far as Lawrence Yun goes, with his batting average Lou you may wanna avoid using him to support your arguments in the future. Just saying.
    May 26, 2012. 01:01 PM | 1 Like Like |Link to Comment
  • Decline In Labor Force Participation Reflects Demographics; May Not Be As Bad As Reported [View article]
    Then why is the labor participation rate higher for older Americans than it was in 2008 and the unemployment rate considerably higher for younger Americans? The study you cite is seriously flawed.
    May 26, 2012. 11:50 AM | Likes Like |Link to Comment
  • May Consumer Sentiment Highest In More Than 4 Years [View article]
    I take it you're a consumer.
    May 26, 2012. 10:19 AM | 1 Like Like |Link to Comment
  • May Consumer Sentiment Highest In More Than 4 Years [View article]
    Well it's official: consumers are idiots.
    May 25, 2012. 09:47 PM | 1 Like Like |Link to Comment
  • A Further Analysis On Deficit To Outlay Spending [View article]
    I concur with Jeremy. Deflation seems like a much stronger possibility than hyperinflation, especially considering what is happening in Europe and it's potential impact on the global economy. Besides, your second graph (the velocity of money) seems to refute the argument rather than support it. Central banks and governments have flooded the marketplace with liquidity, yet STILL the velocity of money declines. I would argue that debt-induced austerity measures will occur (as they already have in much of Europe) long before the excess liquidity can cause a spike (let alone an actual uptrend) in the velocity of money. But I suppose we'll all find out eventually...
    May 25, 2012. 11:10 AM | 1 Like Like |Link to Comment
  • Why A Greek Exit From The Euro Would Mean The End Of The Eurozone [View article]
    Of course it's the same folks who thought a Greek exit from the euro was unthinkable (while anyone with basic math skills considered it a foregone conclusion) who are now saying that it's going to be entirely manageable - not to worry. There are so many unknown variables in this whole intricately interwoven train wreck (in addition to the ones that we know of) that the idea that any of our resident technocrat rocket surgeons will have the necessary skills to "manage" it is beyond absurd. A common currency among so many diverse, independent economies was, is and always will be a bad idea. Hmm, let's see; how about we remove the basic balancing mechanism (i.e., floating currencies) which sustains (however imperfectly) economic harmony, and then see what happens...

    May 15, 2012. 05:48 AM | 2 Likes Like |Link to Comment