The Bernanke Agenda - It Isn't What You Think It Is [View article]
My issue is - will the leaders of the major powers in the world really cooperate - to bring about a new currency regime? more I think about it - its possible. The countries themselves are very different and have vastly different priorities ( China, US, Europe, Japan). BUT - the monetary leaders probably all went to MIT/ Hahvahd etc. Probably frat bros - still get together at Davos to fondly reminisce about that wild time when Ben had 3 beers!!!! These guys think alike - want to think alike. They have a common problem - their populations. Dirty, hungry, angry, undereducated , with high expectations in life. So - they get together at Davos to figure out how to keep these riff-raff in check - sullen is OK , mutinous is a problem.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
When thinking "globally" one needs to stop think about what would be fun and conducive to US. Why would the rapidly emerging economies in Asia agree to forfeit their hard won Dollar reserves in a giant debt holiday? particularly since the US economy is not exactly crumbling. One cannot be naiive enough to think that all these countries trust each other to such an extent that they would give up sovereignty, or assets.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
OK - so the USD remains king. China already has the Yuan quasi-pegged to USD and have been gradually loosening the link - will they reverse and go to a hard peg? Unlikely. Europe has a problem because of a unified currency that is inappropriate for the disparate economies - are they likely to in some way peg to the USD? Why? More likely , Germany breaks off and goes back to D-mark, France follows and the rest stay with Euro that gets devalued. The Yen? It seems with their aging pop, and companies that have pretty well diversified away their currency exposure - they would want a stronger Yen. I guess I dont really understand Japan. Bitcoin and its ilk will never take off ( famous last words). You need Trillions of Dollars of Debt denominated in a new currency - for it to be a player.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
What do you think Bretton Woods 2 would look like? Europe has a seemingly unsolvable problem - which the Europeans have been unable to solve. China and Japan are hardly likely to cooperate. Why would the US relinquish its role as Reserve Currency? After all, in spite of our problems - we are looking much better than Europe or Asia at this moment. ie. I just dont see a conducive environment for a globally coordinated radical new currency regime.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Finally, I would'nt bet the farm on some speculation about why Bernanke is skipping out on J-Hole. Who knows? Maybe he is very sick. maybe he plans to hand the reins to Yellen.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Your sequence makes no sense: Huge market crash > Global recession > gold back currency reset > all is well. Much more likely if we get Huge market crash > Global recession, would be sharply decreased cooperation between major countries, trade wars, shooting wars, banking crises , renewed fiscal deficits, monetary spigots wide open everywhere and general chaos. Currency reset will be the furthest from people's minds.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
If there is going to be a great currency reset - I would think the best investment course would be to own hard assets and shares of well-capitalized, robust businesses. These will continue to have value - no matter what the currency system is. A manufactured crash that scares the population out of such assets just prior to a reset would be a cruel hoax indeed.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
The excess reserves can be handled in one other way: simply convert them to required reserves by massively increasing reserve requirements. Then you permanently make the banks more robust, of course at the price of reduced profits (que small, very small violins).
The Bernanke Agenda - It Isn't What You Think It Is [View article]
One of the best articles I have read on this site. Thanks. Why are you assuming an epic market crash is necessary as a prelude to a global monetary reset/ currency regime? I would think another crash of the 2008 variety would create so many brush fires - numerous banking problems/derivatives blowups etc that the monetary authorities would be too preoccupied putting out fires to sit back and blueprint a new currency regime. A crash of that magnitude always has many large unintended consequences - I doubt Bernanke would purposely bring one on.
The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known - that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers - including Bernanke - are set to speak next week. [View news story]
The likelihood is that "financial repression" ( AKA Zero interest) will continue for a long time ( 2+ years). The Fed policy has already shifted to tweaking their bond buying , rather than interest rates. So- the likelihood is that staying in cash for prolonged period will result in zero nominal returns and negative real returns. To preserve capital and ideally make a bit of money - it is , therefore, necessary to own risky assets. But, the catch is that just because an asset is risky does not mean you will ultimately make money! Selectivity and market timing are key. So , the way I see it, one needs to own carefully selected investments - not cash. But doing so blindly ( indexing) or foolishly ( leverage) is not likely to work out. To make money now - you have to do some work, have a risk discipline, understand valuations and watch out for the various landmines out there. Its not a no-brainer.
The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known - that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers - including Bernanke - are set to speak next week. [View news story]
Fed bond buying is , I believe, closely linked to our Budget Deficit. The budget deficit trend is as follows: 2011:$1,300 Bil, 2012: $1,100 Bil, forecasted for 2013: $850 Bil. Current Fed bond buying: $1,020 Bil/yr ( $85 Bil/mo). Ofcourse, the forecasted deficit is highly dependent on the economy - if it continues to muddle along the Fed would be buying a bit more than the deficit. How loose or tight the Fed bond buying is - is relative to the Budget Deficit. So if the deficit , in fact looks like $850 Bil for 2013, the Fed could taper their buying back to about $70Bil/mo and be about as accomodative as they were in late 2012. No great disaster for markets - unlessthe algos react violently and emotionally. Therefore this Hilsenrath leak is simply a heads up to Wall Street to reprogram the algos , so they dont over react.
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
More "convulsion" possibilities: Money Market Funds crashing, Bank Deposits becoming risky. taxes. Inflation. No legal system, or at least , no enforcement of laws - just modest businesslike adjustments "admitting neither guilt or lack of guilt".
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
So, in this environment, "diversification" means having a multidimensional portfolio where you dont get killed during the next 'Convulsion". The convulsion could be anything - a sudden plunge in the Dollar, a sudden rise in interest rates, a stock market crash. High inflation, High Deflation. Who knows? ask ben.
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
Yes the Dollar has rallied modestly. But - no-one should be taking victory laps yet. In this Fed created unstable system - things can change suddenly. Its how you survive/prosper during the convulsions we have every 3 or 4 years, that will determine your financial future. The intervening small "trends", "swings" etc. may provide some entertainment value - but its the Convulsions that matter.
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
Ron - excellent post! I too believe that the primary issue in investing is : protection of your wealth. Real assets are the goal. Money/cash is of uncertain and temporary value. The so called "cyclical" stocks - are often companies with hard assets - energy, food, metals etc. Risk management to me is how much exposure do you want to have to Bernanke Bucks - beyond the amount you need for day-to-day expenses and taxes.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
more I think about it - its possible. The countries themselves are very different and have vastly different priorities ( China, US, Europe, Japan).
BUT - the monetary leaders probably all went to MIT/ Hahvahd etc. Probably frat bros - still get together at Davos to fondly reminisce about that wild time when Ben had 3 beers!!!!
These guys think alike - want to think alike. They have a common problem - their populations. Dirty, hungry, angry, undereducated , with high expectations in life. So - they get together at Davos to figure out how to keep these riff-raff in check - sullen is OK , mutinous is a problem.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Europe has a problem because of a unified currency that is inappropriate for the disparate economies - are they likely to in some way peg to the USD? Why? More likely , Germany breaks off and goes back to D-mark, France follows and the rest stay with Euro that gets devalued.
The Yen? It seems with their aging pop, and companies that have pretty well diversified away their currency exposure - they would want a stronger Yen. I guess I dont really understand Japan.
Bitcoin and its ilk will never take off ( famous last words). You need Trillions of Dollars of Debt denominated in a new currency - for it to be a player.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
ie. I just dont see a conducive environment for a globally coordinated radical new currency regime.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Who knows? Maybe he is very sick. maybe he plans to hand the reins to Yellen.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Huge market crash > Global recession > gold back currency reset > all is well.
Much more likely if we get Huge market crash > Global recession, would be sharply decreased cooperation between major countries, trade wars, shooting wars, banking crises , renewed fiscal deficits, monetary spigots wide open everywhere and general chaos. Currency reset will be the furthest from people's minds.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
A manufactured crash that scares the population out of such assets just prior to a reset would be a cruel hoax indeed.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Why are you assuming an epic market crash is necessary as a prelude to a global monetary reset/ currency regime? I would think another crash of the 2008 variety would create so many brush fires - numerous banking problems/derivatives blowups etc that the monetary authorities would be too preoccupied putting out fires to sit back and blueprint a new currency regime.
A crash of that magnitude always has many large unintended consequences - I doubt Bernanke would purposely bring one on.
The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known - that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers - including Bernanke - are set to speak next week. [View news story]
So- the likelihood is that staying in cash for prolonged period will result in zero nominal returns and negative real returns.
To preserve capital and ideally make a bit of money - it is , therefore, necessary to own risky assets.
But, the catch is that just because an asset is risky does not mean you will ultimately make money! Selectivity and market timing are key.
So , the way I see it, one needs to own carefully selected investments - not cash. But doing so blindly ( indexing) or foolishly ( leverage) is not likely to work out.
To make money now - you have to do some work, have a risk discipline, understand valuations and watch out for the various landmines out there. Its not a no-brainer.
The rumored Hilsenrath "tapering" story - originally expected to come out late Thursday - instead came out after yesterday's market close. It's mostly a summary of what's already known - that Fed officials plan to reduce asset purchases in steps, the timing of which is still being debated. The article leans heavily on Richard Fisher and Charles Plosser, two well-known hawks (and non-voters on the FOMC this year) who would have already tightened if it was up to them. A number of Fed speakers - including Bernanke - are set to speak next week. [View news story]
Ofcourse, the forecasted deficit is highly dependent on the economy - if it continues to muddle along the Fed would be buying a bit more than the deficit. How loose or tight the Fed bond buying is - is relative to the Budget Deficit. So if the deficit , in fact looks like $850 Bil for 2013, the Fed could taper their buying back to about $70Bil/mo and be about as accomodative as they were in late 2012. No great disaster for markets - unlessthe algos react violently and emotionally. Therefore this Hilsenrath leak is simply a heads up to Wall Street to reprogram the algos , so they dont over react.
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
No legal system, or at least , no enforcement of laws - just modest businesslike adjustments "admitting neither guilt or lack of guilt".
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
Its how you survive/prosper during the convulsions we have every 3 or 4 years, that will determine your financial future. The intervening small "trends", "swings" etc. may provide some entertainment value - but its the Convulsions that matter.
Apparently behind the mid-afternoon drop in the S&P 500 (SPY) (a not insignificant 10 points), the soaring dollar (UUP), and sinking commodities (GLD, USO) was the rumor of a Jon Hilsenrath article set to hit the WSJ claiming "tapering" of asset purchases is coming sooner rather than later. Thus far, nothing is up. [View news story]
Risk management to me is how much exposure do you want to have to Bernanke Bucks - beyond the amount you need for day-to-day expenses and taxes.