Monetary Inflation Becomes Less Supportive of Asset Prices

We have recently discussed the sorry state of the junk bond market, as well as the noteworthy decline in the annual growth rate of US money supply aggregates. The latter has finally manifested itself not only in terms of narrow monetary aggregates like M1 (see chart) and AMS (“Austrian money supply”, a.k.a. TMS-1, the narrow true money supply), but also in the broader true money supply aggregate TMS-2.


awhPhoto via


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Illiquid Trading Conditions 

In this holiday-shortened week (Thanksgiving), the price of gold dropped $20 and silver 10 cents. Friday, when the price dropped the most, could not have had much liquidity as most Americans were not at work, but shopping or partying. Whatever they may have been buying, it sure wasn’t gold.


Image via Getty Images


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The Dilemma

Politicians are faced with quite a dilemma over the refugee crisis in Europe: on the one hand, no-one wants to simply send back people fleeing from a brutal civil war or let them freeze to death in the coming European winter. On the other hand, it is crystal clear that many so-called “economic refugees” – which include numerous people who simply want to avail themselves of the welfare state goodies on offer in Europe – are exploiting the situation by riding piggyback on the stream of genuine war refugees.


Slovenia-Migrants_Horo-965x516Refugees crossing fields in Slovenia on their way to the Austrian border

Photo credit: Darko Bandic / AP


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A New Kind of War

BALTIMORE – “Hey, Dad, did you see this?” said our son Edward yesterday. Edward was chronicled yesterday as a boy; now he is a man. A lot has happened in the intervening 10 years.
“Anonymous … the international network of computer hacker activists … has joined the war on ISIS.”


anonymous_wallpaper_hd___by_thenextlover-d57gbi5Back in 1988, the DC Comics imprint Vertigo published Alan Moore’s graphic novel “V for Vendetta”. The iconic Guy Fawkes mask used by the story’s protagonist – a vigilante who starts a revolution against a fascist British government in a dystopian future – has made quite a career since then (Anonymous’ new war is reportedly beset by quality control issues though).

Image credit: thenextlover


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A Dying Paradigm

One popular delusion that won’t seem to go away is the notion that policy makers can stimulate robust economic growth by setting interest rates artificially low.  The general theory is that cheap credit compels individuals and businesses to borrow more and consume more.  Before you know it, the good times are here again.


san_joaquin_sunsetSan Joaquin Valley view at sunset – plenty of agriculture in a place that seemed not exactly ideal for the purpose.

Photo credit: WRIR4 Photo Gallery


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A “Major Concern”

The European Banking Authority EBA, which (we guess) is fighting for its survival after the ECB has become the sole supervisor of Europe’s “systemically relevant” banks, has recently issued a comprehensive report on the European banking system (this included the unintended revelation that its employees have yet to master the intricacies of Exel).

As an aside, we have little doubt that this bureaucracy will survive. Has there ever been a case of an EU bureaucracy not surviving and thriving? We don’t recall one off the cuff, but perhaps we are mistaken. We’re sure some reason will be found to preserve this particular zombie sinecure as well.


eba_2Hey guys! We’re still issuing reports! See how important it is to keep us well-funded?


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“Muslims Are Evil”

BALTIMORE – Manuel Valls, the prime minister of France, says the risk of terrorism will hang over the country for many years. Whether this is prophecy or wishful thinking, we don’t know.

But it seems at odds with the recent promise to “annihilate” ISIS made by French president François Hollande. But the fight against terrorism is full of contradictions and paradoxes.


coverimage2Cartoon via


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THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

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