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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Puru Saxena
January 20, 2011
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By pursuing grossly irresponsible monetary policies, the world’s most important central bank is (once again) inflating dangerous asset bubbles.  It is noteworthy that by increasing the supply of money like there is no tomorrow and by maintaining negative real interest rates, the Federal Reserve is breeding new asset bubble.

In our view, the Federal Reserve’s reckless policies have spawned gigantic bubbles in the following asset-classes:

Government debt – Given the precarious health of the developed economies and the huge mountain of debt, we find it absurd that bond yields are trading close to their historical lows. It is our conjecture that the government debt market is extremely overvalued and an abrupt adjustment is plausible.

In any event, we are of the view that government bond yields bottomed out in December 2008 and over the following years, interest-rates will trend higher

Make no mistake, most of the developed nations in the world are insolvent and we are amazed that their creditors are not demanding a higher return on their capital!  As far as the US is concerned, for now, the Federal Reserve is manipulating the bond market by monetizing debt, but no Ponzi scheme can go on forever.

At some point, when the bond vigilantes awaken to the ongoing monetary inflation, they will dump their government debt securities.  When that happens, interest-rates will rise and the government bond market will plunge, perhaps significantly.