Thomas J. Gordon

Marc Faber: Equities Safer than Dollars

Rokjok777, Thanks, that makes some sense. People have talked a lot about banks having large reserves and not lending it out like they would in more normal times.

Marc Faber: Equities Safer than Dollars

Faber is an interesting guy. I watched the videos. I have a question. Faber said the stock market was going up be Bernanke was giving people money to buy stocks. What is the mechanism for that? When I took macroeconomics, the fed increased the money supply, the banks applied the multiplier affect, and overall prices rose. Overall prices aren't rising (yet?). How does money printed by the fed wind up in the hands of people that want to buy the overall stock market? I have a problem with the recurring statements that excess money printed by the fed ends up in some particular market (real estate, oil, etc..)

Households Cut Back While Government Debt Grows

CautiousInvestor: I would clarify something you said. I would say it this way "Capitalism as we knew it in the United States, will collapse". It is not a capitalist idea to allow the central gov't to borrow or print 11 trillion dollars it didnt' have. Capitalism didn't fail, the voters allowed a gov't that overspent, and that caused the failure.

Real Estate in the Midst of Bull Market

I didn't have the guts to go long reits generally but I did go long a few apartment reits thinking there might be some kind of move down affect from owner occupied and thinking that apartments have some stability in a down economy. I did a lot better than I expected. But I don't have the guts to go long office reits, hotel reits and the rest of the reit space.

Bernanke Being Rewarded for Failure

And what did it mean when Volcker/Reagan stopped the money printing game? Reagan didn't balance the federal budget. So Volcker correctly managed the money supply and didn't monetize any Treasury excess. Did that mean that the U.S. engaged in genuine borrowing for the Reagan deficits?

Bernanke Being Rewarded for Failure

This is an interesting statement. You would think the fed chief would complain when president + congress spend more than they bring in. Even if you do monetize, I would assume there has to be some bad effect somewhere from spending money you don't have. Zimbabwe monetized and they are not having such a happy ending.

"The Fed created moral hazard because the government assumed that any excessive debt would be monetized. "

Buffett and PIMCO Slam the U.S. Dollar

This article references a lot of gov't spending that benefitted many people over long periods of time. I think that gov't spending was made possible by the u.s. dollar's role as the world's reserve currency. I think it's important to ask yourself how the fed gov't can spend more than it brings in with no bad effects.

The FDIC Is Broke. Now What? (Part II)

I am a free market person so I sympathize with this article. But getting rid of fdic insurance is radical. the argument that fdic insurance creates moral hazard is subtle and mostly understood only by economists. we are on the verge of socializing health care in this country. that we could have a serious and correct discussion of the fdic and moral hazard when we just elected a mostly socialist president is hard to digest.

10 Notes on the Current Markets

Go Lakers, Thanks. I like David a lot. He's measured, careful, and non-sensational. I understand that the chinese should think about their treasury holdings. But it seemed like David was holding default over their head like a club. It seemed out of character, and as you and I agree, default is not in the cards for the u.s.

10 Notes on the Current Markets

I don't understand why David is talking seriously about the u.s. defaulting on its debt (last 2 subpoints on item #4). The Fed can print money. If the u.s. defaulted on its debt that really would cause Great Depression II. Why is David talking about that. I don't think we're anywhere near that.

John Hussman: Profiting from the Tooth Fairy

The highest places in hell are reserved for those with no opinion in time of moral crisis. As far as I'm concerned this article has no opinion.

2009 Mid Year Outlook: Expect Deflation and an Oil Price Drop

I read something interesting once about the Internet Bubble. It was bad but it was contained to the people who had unrealized capital gains on internet stocks. A real problem occurs when a large class of people default on their debt and that flows through to the banks that lent them the money. This subprime/mortgage meltdown we just had is this latter type of problem. I think I read this is how Roubini and those type of economists were able to tell that this downturn was going to be worse than others.

Is the California Budget Crisis Really Over?

I lived in California a long time. It always had a lavish post high school public college system - junior colleges, state college/univ, u of c. and the junior colleges were lavish, with football stadiums and the chancellors house on campus. But back in the early 80's no one thought boo about where the money was coming from to pay for all this higher education. What changed?

Obama's Sure-Fire Formula for Accelerating Inflation

A lot of people demonize Bernanke. Bernanke wasn't the one who decided to spend 300 bill deficit during late Bush, and 2 trillion deficit now. The fed chairman has to deal with the gov't deficit spending that is there. Maybe the fed should just say "we manage the money supply, if treasury needs to borrow extra, that's their problem". From 1988 to now, inflation has been under control in the u.s.. the guys running the fed did what they did and didn't cause any obnoxious inflation. I think they deserve some credit for that. I don't understand the motive of all this fed chairman bashing. I don't think Greenspan and Bernanke are secretly making money because of the policies they implement.

Why Are Interest Rates Rising on Treasuries?

I don't agree with this statement (below). Zimbabwe has a weak economy and high inflation. It is possible to have inflation and a weak economy. If you have an increase in the money supply, ceteris peribus, you get higher prices, whether you have a weak or strong economy. Author's timing was bad. Treasuries are down a lot today.

" Before inflation can rise meaningfully, the economy will need to get much stronger, so it is highly premature for inflation to drive up interest rates quite yet. Near term, inflation is still more likely to slow down."