Investment Rarities Incorporated
History |  Q & A  |  Endorsements  |  Portfolios  | Flatware | Gold Coins  |  Silver Coins  |  Contact |  Home

Products

Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

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.

..Read More »

The Best of Jim Cook Archive

 
Commentary Of The Month
July 28, 2016
archive print

HEADING FOR A GREAT FALL

By David Stockman

After dithering for 90 months the Fed has run out the clock. The current business cycle expansion – as tepid as is was – is now clearly rolling over. So the Fed has no option except to sit with its eyes wide shut while desperately trying to talk up the stock market. And that means happy talk about the U.S. economy, no matter how implausible or incompatible with the facts. No stock market correction or sell-off of even 5% can be tolerated at this juncture. That’s because the U.S. economy is so limp that a proper correction of the massive financial bubble the Fed and other central banks have re-inflated since March 2009 would send it careening into an outright recession. And that, in turn, would blow to smithereens all of the FOMC’s demented handiwork since September 2008, and indeed since Greenspan launched the era of Bubble Finance back in October 1987.

The fact is the Fed cannot even whisper a word about the giant risks, challenges and threats which loom all across the horizon. So for the third time this century, a business cycle contraction will come without warning from the Fed. Once again the Kool-Aid drinking perma-bulls, day traders and robo-machines will be bloodied as they stampede for the exit ramps. But it is the main street home gamers, who have been lured back into the casino for the third time this century that will suffer devastating losses yet another time. Indeed, if there were even a modicum of honesty left in the Eccles Building it would be warning about the weakening trends in the U.S. economy, not cheerleading about fleeting and superficial signs of improvement.

Likewise, it would acknowledge the drastic over-valuation of the stock, bond, real estate and other derivative financial markets and remind investors that a healthy capitalism requires a periodic purge of such excesses in order to check misallocation of resources and malinvestment of capital. Money printing is not pro-growth at all. Monetary stimulus causes systemic mispricing of financial assets. It turns money and capital markets into gambling arenas where speculators capture huge unearned windfalls while the mainstream economy is deprived of growth and real capital investment.

The recession will come, therefore, with the Fed flat-footed again and this time, out of dry powder. Indeed, so thoroughly will the Fed be discredited when the market crashes again by 40% or 50% or more, that modern Keynesian central banking will be faced with an existential crisis. To use the metaphor, our monetary Humpty Dumpty is heading for a great fall, and all the Imperial City’s potentates and poobahs will not be able to put it together again.