Currency Currents - June 15, 2009
Key News
• The 16-country euro zone lost a record 1.22 million jobs in the first quarter of 2009, data showed on Monday, highlighting the depth of recession and boding ill for any quick turnaround. (Reuters)
• Russian Finance Minister Alexei Kudrin said the dollar is in “good shape,” further affirming that there’s no substitute for the world’s reserve currency. (Bloomberg)
• Finland’s annual inflation rate fell to zero in May, the lowest level in 5 years, the government statistics agency said Monday. (AP)
Key Reports Due Today (WSJ):
• 8:30 a.m. June Empire State Fed Manufacturing Survey: Expected: -3. Previous: -4.55.
• 9:00 a.m. Apr Tsy International Capital: Previous: +$36.9B.
• 1:00 p.m. Apr NAHB Housing Index: Previous: 16.
Quotable
Allen[Woody]: That’s quite a lovely Jackson Pollock, isn’t it?
Woman: Yes, it is.
Allen: What does it say to you?
Woman: It restates the negativeness of the universe. The hideous lonely emptiness of existence. Nothingness. The predicament of man forced to live in a barren, godless eternity like a tiny flame flickering in an immense void with nothing but waste, horror, and degradation, forming a useless, bleak straitjacket in a black, absurd cosmos.
Allen: What are you doing Saturday night?
Woman: Committing suicide.
Allen: What about Friday night?
FX Trading – Euro Uht Oh!
Soaring unemployment in Europe, with still huge banking exposure, rising political tensions, fiscal concerns among the PIGS, a little country called Latvia that may be the canary in the coal mine for its Eastern European neighbors so similarly afflicted and a Russian finance minister reaffirming his commitment to the US dollar and what do you get? Maybe a top in the euro!
In the chart above, John Ross noticed a potential head and shoulders pattern shaping up in the euro – USD pair. He said to me this morning, “It looks like the euro is making a beeline for the neckline.” And he may be right.
Jack Crooks
Black Swan Capital LLC
www.blackswantrading.com
————————————————–
This morning we are including a special contribution from Yves Lamoureux, investment analyst for Blackmont Capital, head office in Toronto Canada. Yves is comparing bond price action today to 1987, the year we had a very nasty accident in the stock market:
[Note: Yves sent this analysis to us last Thursday, June 12th]
Bonds and 1987…what do they have in common?
I always suggest, to be a good student of financial history it certainly helps in not making the same mistake over. It also prepares you for the next outcome you may face. Fresh from recent trips in New York and Paris and the slowdown effects are taking roots. I will suggest that each episodes of green shoots going forward will fizzle as quickly as it began. This will undermine our bull-casino-style markets Investors better be prepared with a good dose of Gravol (motion sickness pill) in the eventual roller coaster ride.
The following graphs are not the same but clearly similar. They both depict the way bonds have dropped both in 1987 and 2009.
The path is down initially with an intermediate pause followed by a renewed downtrend. We did mention late in April about this possibility. It is a very dangerous development. One that removes the effect of QE [quantitative easing].Our measures still show contracting monetary aggregates or big slowdown. The case for holding USD for us is clear. At the margin deflation looks set to go a second time around.
The last graph will show the reaction to rates going up. In 1987 stocks never cared for a while until it was too late. The market broke hard and fast.
The question still remains: are stocks about to react to rates? Before you answer don’t forget to take your pill.
Yves Lamoureux, Investment Advisor Blackmont Capital Inc.
The opinions contained in this report are those of the author and are not necessarily those of Blackmont Capital Inc.. Every effort has been made to ensure that the contents of this document have been compiled or derived from sources believed to be reliable and contains information and opinions which are accurate and complete. However, neither the author nor BCI makes any representation or warranty, expressed or implied, in respect thereof, or takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. BCI is an independently owned subsidiary of CI Financial. CI Financial is a Canadian owned diversified wealth management firm, publicly traded on the TSX under the symbol CIX. Blackmont Capital Inc. is a member of CIPF and IIROC.
Currency Currents - June 12, 2009
Key News
• European industrial production dropped by the most on record in April as the worldwide recession ravaged demand for goods. (Bloomberg)
• German wholesale prices fell 9 percent in May from a year earlier, the largest decline in nearly 23 years as Europe’s largest economy wallows in recession, the Federal Statistical Office reported Friday. (AP)
• European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany, to support banks during the credit crunch, according to a European Union document. (Bloomberg)
• Treasuries rose for a second day after Japanese Finance Minister Kaoru Yosano said his country’s confidence in U.S. government debt is “unshakable.” (Bloomberg)
• China’s new lending doubled in May. (Bloomberg)
• Dueling Forecasts: The World Bank said Thursday it expects the global economy to contract by “close to 3%,” far bleaker than the bank’s March estimate of a 1.7% contraction, partly because of a slowing stream of cash and investment to the developing world. But a global recovery in 2010 may expand at a 2.4% clip, according to a briefing paper by the International Monetary Fund, which credits the faster-than-expected rebound to stimulus spending by developed nations. (WSJ)
Key Reports Due Today (WSJ):
8:30 a.m. May Import Prices: Expected: +1.5%. Previous: +1.6%.
10:00 a.m. Mid-June Reuters/U Mich Sentiment Index: Expected: 69.8. Previous: 67.9.
Quotable
“Action is purposive conduct. It is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means. . . . It is conscious behavior. It is choosing. It is volition; it is a display of the will.”
Ludwig von Mises
FX Trading – The $18,100,000,000 question!
The numbers are staggering…really incomprehensible…it’s the kind of stuff that if you made it up no one would believe you…I’m talking about the amount of money both the US and European Union have committed to this crisis:
• The US government and Fed spent or lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year.
• European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany ($3.3 trillion).
If we break the US spending down to per person living in the US, we get:
$12,800,000,000,000 divided by roughly 304,000,000 = $42,105 per person
Now I know what you’re thinking; if our government, in its infinite wisdom simply doled out that much money directly to every man woman and child, you can bet our crisis would be solved. Heck, in the Crooks family alone, four kids, my wife, and I would have racked up a cool $252,630! Granted, the kids would want their pound of flesh given that all are of age, but still, we could have paid off a whole lot of debt and bought some pretty cool toys with that, deleveraging and stimulating along the way. And I bet you a dollar to a donut that I could more efficiently spend that money than some government agency that’s only trying to “help” me by saving various dinosaur financial institutions and companies throughout our fair land.
Before I went off that tangent, I was going to say that what is really quite amazing is that with a total of….
$18,100,000,000,000
…committed by the US and Europe, one wonders about a couple of things:
1) How in the heck can banks screw up so catastrophically? Still an open question.
2) Why in the heck don’t we have ragging inflation by now? Still an open question.
When you consider that other governments besides the US and EU (China has been busy along with Japan, Brazil and Russia) are into the money pumping game, and we haven’t seen a whole lot in the way of global traction in demand, and even more surprisingly we haven’t seen any inflation per se from the “growing” countries, it has to make one very nervous.
In fact, as John Ross pointed out yesterday, we keep seeing deflation instead. Just today, as highlighted in the key news above, German wholesale prices fell 9% in May from a year ago! Say what? Yikes!!!!
And did anyone notice US consumer prices went negative year-over-year for the first time since 1954! Yikes!!!! [Highlighted below; source Economagic]
Annual Inflation Dec-Dec 1914 to 2008:
1914 01 921•000
1915 01 71.980
1916 01 1012•621
1917 01 7018.103
1918 01 8520.438
1919 01 5114•545
1920 01 692•646
1921 01 68-10•825
1922 01 57-2.312
1923 01 62•367
1924 01 420.000
1925 01 763.468
1926 01 59-1.117
1927 01 54-2•260
1928 01 41-1.156
1929 01 400.585
1930 01 65-6.395
1931 01 1-9.317
1932 01 4-10.274
1933 01 280.763
1934 01 761.515
1935 01 792.985
1936 01 941•449
1937 01 342.857
1938 01 18-2.778
1939 01 440.000
1940 01 00•714
1941 01 799•929
1942 01 409•032
1943 01 792•959
1944 01 332•299
1945 01 52.247
1946 01 1818•132
1947 01 898•884
1948 01 322.734
1949 01 82-1•830
1950 01 535.803
1951 01 75•965
1952 01 590•907
1953 01 50.599
1954 01 70-0•372
1955 01 890.374
1956 01 32•828
1957 01 923.040
1958 01 201•756
1959 01 161.519
1960 01 771•360
1961 01 870.671
1962 01 771.233
1963 01 961•646
1964 01 171•198
1965 01 601.920
1966 01 423•359
1967 01 603.281
1968 01 884•706
1969 01 45•899
1970 01 415.570
1971 01 653.266
1972 01 783.406
1973 01 398.941
1974 01 2312•095
1975 01 927.129
1976 01 985.036
1977 01 106•678
1978 01 658.989
1979 01 4813•255
1980 01 8712•354
1981 01 158•912
1982 01 613•826
1983 01 213.787
1984 01 574.043
1985 01 973.791
1986 01 971•187
1987 01 304.332
1988 01 34.412
1989 01 924•640
1990 01 86.255
1991 01 852.981
1992 01 992.967
1993 01 972•811
1994 01 732.597
1995 01 462.532
1996 01 843•379
1997 01 351.697
1998 01 951•607
1999 01 982.676
2000 01 263.436
2001 01 521•604
2002 01 42.480
2003 01 492.035
2004 01 153.342
2005 01 223.443
2006 01 522.521
2007 01 364.152
2008 01 67-0•076
And Japan is getting bear hugged again by deflation despite being stimulus gurus. Yikes!!!
This is a subject we have been harping on for a while and it goes to the point that there must be still massive amounts bad paper still on the balance sheets of a lot of institutions everywhere, not to mention private balance sheets too. This goes to the point of why this incomprehensible amount of stimulus is not getting the requisite traction, despite signs of hope and glee flowing from some of the emerging markets, which we don’t deny. But for a global recovery, we still think we need places like the US, Europe, and Japan to recover, don’t you?
When you look at the numbers, it’s easily understandable why many expected hyperinflation once there is even a modicum of traction.
Inflation is, and always has been, the preferred route out of trouble by governments past who issued too much debt i.e. inflate away the debt problem by paying it off with even more worthless paper. This is why you might have heard bonds referred to as, Certificates of Confiscation.
The scary part about what’s going on now is that governments present are running out of trees to cut down so they can print more paper in their vain attempts to conjure up a little headline inflation; it makes them look very bad compared to their inflationist counterparts past. A pathetic performance indeed it is. Mr. Summers, put down that Diet Coke and get going buddy! We still have plenty of trees in our neighborhood, and I’ve even seen a few around Washington. No excuses!!! In fact, if we really cared about our country, we would each donate a tree to help out our Treasury. It is the least we could do for all they do for us.
Anyway, back to some semblance of what this missive is supposed to be about. A few charts and a little quiz:
Do you notice which of the charts reflects why our government is having so much trouble achieving their goal of inflationism?
If you said Velocity of Circulation, you would be correct! Congrats! For those of you not versed in such arcane jargon, and be very thankful you are not, let me put it this way:
You can lead a horse to water but you can’t make him drink!
If you and I are very worried about our future earnings disappearing because our companies aren’t doing so well because there is little demand for its products or services, which represents most real people I know, then we are not predisposed to heading out to the store to find something shiny new to buy for us or our loved ones. Multiply this human action, which by the way is the title of the best book on economics ever written, by Ludwig von Mises, over and over and over again amongst the US population that does not either work for, or do business directly with, the US Federal Government, the only place with booming growth, and you can see why the Velocity of Circulation of money is falling, off a cliff.
And this goes to one of the major problems, I think, for all those neo-Keynesian economists that keep flowing from the woodwork to tell us we need more spending:
Econometric models still have a little problem with human action. They have a little trouble measuring, what they would say is “irrational behavior.” But those of us that live in the real world would call it quite rational behavior. When we are nervous about the future we make a logical decision to change the way we act with a thing called money. We viciously cut waste out of our budget. We change our spending habits dramatically. Our incentive system adjusts accordingly.
And when we watch our government commit $42,105 for every man women and child to “help” us, and eat away at the stored wealth built up by hard working Americans past, it makes us even more nervous. Thus, what the neo-Keynesians see as a rationale response, we see as incredibly irrational. And thus, we decide it’s time once again to reduce the Velocity of Circulation of our money.
Thus we end up with a self-reinforcing nasty feedback loop created by people who actually believed everything Keynes said in the General Theory, instead of moving on to von Mises Human Action and getting it right. And so it goes.
John Ross Crooks, III
Black Swan Capital LLC
www.blackswantrading.com
Currency Currents - June 11, 2009
Key News
China Fixed-Asset Investment Surges 32.9%, Countering Record Export Slump (Bloomberg)
Australian Employers Fired Fewer-Than-Expected Workers, Adding to Recovery (Bloomberg)
New Zealand Leaves Rate Unchanged at 2.5% Amid Signs of Economic Recovery (Bloomberg)
Quotable
“How I wish that somewhere there existed an island for those who are wise and of goodwill! In such a place even I would be an ardent patriot.”
Albert Einstein
FX Trading – Imagiflation Takes It
Imagination inflation – a.k.a. imagiflation — is what’s needed in order to understand price action these days.
Deflationary trends remain; no concrete evidence of inflation just yet. China yesterday posted a notable drop in its May Consumer Price Index. Of course, this bolsters China recovery efforts, according to news sources. Sure, in one sense it does, I guess.
But would the picture be any different if inflationists weren’t in control of the market right now? I think so.
We all know China is stock piling commodities (most notably iron ore and crude oil.) And we know they’re fortifying their gold reserves (heaven forbid we fail to acknowledge that fact.) These maneuvers simply amount to a big bet that the global economy will soon return to business as usual.
Business as usual means growth … which means global demand … which means inflation. If we get inflation then the Chinese will look like geniuses buying up their much needed natural resources et al when prices were relatively low. (In case you were wondering, Chinese exports plunged again in the month of May at a faster rate than April which too was a faster rate of decline than the month before.)
Their decision hasn’t come under much scrutiny just yet even in the face of deflation. That’s because inflation expectations are dominating markets, leaving prices of commodities high, keeping the value of China’s purchases from rolling over.
Let’s look at crude – a fairly precise gauge of commodity prices lately … and, of course, the “anti-dollar”.
Crude oil is DOWN a whopping 47% since this day in June last year when prices started getting ridiculously overextended. (Just wanted to point that out even though that’s not what this chart is trying to show!)
The above chart does show crude oil’s recent parabolic rise – up roughly 69% from its February lows. What’s the driver?
Surging demand? No, total world consumption has actually fallen since February.
Depleted supply? No, total world production has actually ticked higher since February.
OPEC rhetoric? No, the cartel notes high oil stockpiles and declining demand growth.
Government rebates for gas guzzlers? Ahhhhh yes, maybe we’re on to something now.
Congress is sifting through a plan to offer a $4,500 rebate, plus or minus, for trading in fuel-hungry trucks and SUVs in exchange for fuel-efficient cars. So as this plan takes hold we should see demand for gasoline drop considerably (at least that’s the hope) and crude oil prices skyrocket.
Sound a bit counterintuitive? What doesn’t sound counterintuitive these days when it comes to government ideas?
The estimated cost is $4 billion. Sounds like chump change in these days of hundred-billion-dollar bailouts. But the point is, it’s another couple BILLION dollars being spent that doesn’t make any sense.
Here is not the place to argue the potential effectiveness of this program, but it goes to the reason crude oil prices are higher – inflation expectations. With all this spending by our government, we’ll never be able to avoid inflation … whenever it gets here.
The tight negative correlation between the US dollar and crude oil got thrown out of whack a little bit last week, but the expectations of inflation seem to be the common driver here. And if inflation weren’t enough, then whatever is being riled up against the buck these days is eventually becoming supportive for crude oil based on this heavily-watched correlation.
Let’s beat up the dollar and send oil and commodity prices through the roof – the government wouldn’t have it any other way.
Regards,
John Ross Crooks, III
Black Swan Capital LLC
www.blackswantrading.com
Currency Currents - June 10, 2009
Key News
• European industrial production dropped by the most on record in April as the worldwide recession ravaged demand for goods. (Bloomberg)
• German wholesale prices fell 9 percent in May from a year earlier, the largest decline in nearly 23 years as Europe’s largest economy wallows in recession, the Federal Statistical Office reported Friday. (AP)
• European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany, to support banks during the credit crunch, according to a European Union document. (Bloomberg)
• Treasuries rose for a second day after Japanese Finance Minister Kaoru Yosano said his country’s confidence in U.S. government debt is “unshakable.” (Bloomberg)
• China’s new lending doubled in May. (Bloomberg)
• Dueling Forecasts: The World Bank said Thursday it expects the global economy to contract by “close to 3%,” far bleaker than the bank’s March estimate of a 1.7% contraction, partly because of a slowing stream of cash and investment to the developing world. But a global recovery in 2010 may expand at a 2.4% clip, according to a briefing paper by the International Monetary Fund, which credits the faster-than-expected rebound to stimulus spending by developed nations. (WSJ)
Key Reports Due Today (WSJ):
8:30 a.m. May Import Prices: Expected: +1.5%. Previous: +1.6%.
10:00 a.m. Mid-June Reuters/U Mich Sentiment Index: Expected: 69.8. Previous: 67.9.
Quotable
“Action is purposive conduct. It is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means. . . . It is conscious behavior. It is choosing. It is volition; it is a display of the will.”
Ludwig von Mises
FX Trading – The $18,100,000,000 question!
The numbers are staggering…really incomprehensible…it’s the kind of stuff that if you made it up no one would believe you…I’m talking about the amount of money both the US and European Union have committed to this crisis:
• The US government and Fed spent or lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year.
• European governments have approved $5.3 trillion of aid, more than the annual gross domestic product of Germany ($3.3 trillion).
If we break the US spending down to per person living in the US, we get:
$12,800,000,000,000 divided by roughly 304,000,000 = $42,105 per person
Now I know what you’re thinking; if our government, in its infinite wisdom simply doled out that much money directly to every man woman and child, you can bet our crisis would be solved. Heck, in the Crooks family alone, four kids, my wife, and I would have racked up a cool $252,630! Granted, the kids would want their pound of flesh given that all are of age, but still, we could have paid off a whole lot of debt and bought some pretty cool toys with that, deleveraging and stimulating along the way. And I bet you a dollar to a donut that I could more efficiently spend that money than some government agency that’s only trying to “help” me by saving various dinosaur financial institutions and companies throughout our fair land.
Before I went off that tangent, I was going to say that what is really quite amazing is that with a total of….
$18,100,000,000,000
…committed by the US and Europe, one wonders about a couple of things:
1) How in the heck can banks screw up so catastrophically? Still an open question.
2) Why in the heck don’t we have ragging inflation by now? Still an open question.
When you consider that other governments besides the US and EU (China has been busy along with Japan, Brazil and Russia) are into the money pumping game, and we haven’t seen a whole lot in the way of global traction in demand, and even more surprisingly we haven’t seen any inflation per se from the “growing” countries, it has to make one very nervous.
In fact, as John Ross pointed out yesterday, we keep seeing deflation instead. Just today, as highlighted in the key news above, German wholesale prices fell 9% in May from a year ago! Say what? Yikes!!!!
And did anyone notice US consumer prices went negative year-over-year for the first time since 1954! Yikes!!!! [Highlighted below; source Economagic]
Annual Inflation Dec-Dec 1914 to 2008:
1914 01 921•000
1915 01 71.980
1916 01 1012•621
1917 01 7018.103
1918 01 8520.438
1919 01 5114•545
1920 01 692•646
1921 01 68-10•825
1922 01 57-2.312
1923 01 62•367
1924 01 420.000
1925 01 763.468
1926 01 59-1.117
1927 01 54-2•260
1928 01 41-1.156
1929 01 400.585
1930 01 65-6.395
1931 01 1-9.317
1932 01 4-10.274
1933 01 280.763
1934 01 761.515
1935 01 792.985
1936 01 941•449
1937 01 342.857
1938 01 18-2.778
1939 01 440.000
1940 01 00•714
1941 01 799•929
1942 01 409•032
1943 01 792•959
1944 01 332•299
1945 01 52.247
1946 01 1818•132
1947 01 898•884
1948 01 322.734
1949 01 82-1•830
1950 01 535.803
1951 01 75•965
1952 01 590•907
1953 01 50.599
1954 01 70-0•372
1955 01 890.374
1956 01 32•828
1957 01 923.040
1958 01 201•756
1959 01 161.519
1960 01 771•360
1961 01 870.671
1962 01 771.233
1963 01 961•646
1964 01 171•198
1965 01 601.920
1966 01 423•359
1967 01 603.281
1968 01 884•706
1969 01 45•899
1970 01 415.570
1971 01 653.266
1972 01 783.406
1973 01 398.941
1974 01 2312•095
1975 01 927.129
1976 01 985.036
1977 01 106•678
1978 01 658.989
1979 01 4813•255
1980 01 8712•354
1981 01 158•912
1982 01 613•826
1983 01 213.787
1984 01 574.043
1985 01 973.791
1986 01 971•187
1987 01 304.332
1988 01 34.412
1989 01 924•640
1990 01 86.255
1991 01 852.981
1992 01 992.967
1993 01 972•811
1994 01 732.597
1995 01 462.532
1996 01 843•379
1997 01 351.697
1998 01 951•607
1999 01 982.676
2000 01 263.436
2001 01 521•604
2002 01 42.480
2003 01 492.035
2004 01 153.342
2005 01 223.443
2006 01 522.521
2007 01 364.152
2008 01 67-0•076
And Japan is getting bear hugged again by deflation despite being stimulus gurus. Yikes!!!
This is a subject we have been harping on for a while and it goes to the point that there must be still massive amounts bad paper still on the balance sheets of a lot of institutions everywhere, not to mention private balance sheets too. This goes to the point of why this incomprehensible amount of stimulus is not getting the requisite traction, despite signs of hope and glee flowing from some of the emerging markets, which we don’t deny. But for a global recovery, we still think we need places like the US, Europe, and Japan to recover, don’t you?
When you look at the numbers, it’s easily understandable why many expected hyperinflation once there is even a modicum of traction.
Inflation is, and always has been, the preferred route out of trouble by governments past who issued too much debt i.e. inflate away the debt problem by paying it off with even more worthless paper. This is why you might have heard bonds referred to as, Certificates of Confiscation.
The scary part about what’s going on now is that governments present are running out of trees to cut down so they can print more paper in their vain attempts to conjure up a little headline inflation; it makes them look very bad compared to their inflationist counterparts past. A pathetic performance indeed it is. Mr. Summers, put down that Diet Coke and get going buddy! We still have plenty of trees in our neighborhood, and I’ve even seen a few around Washington. No excuses!!! In fact, if we really cared about our country, we would each donate a tree to help out our Treasury. It is the least we could do for all they do for us.
Anyway, back to some semblance of what this missive is supposed to be about. A few charts and a little quiz:
[insert charts here]
Do you notice which of the charts reflects why our government is having so much trouble achieving their goal of inflationism?
If you said Velocity of Circulation, you would be correct! Congrats! For those of you not versed in such arcane jargon, and be very thankful you are not, let me put it this way:
You can lead a horse to water but you can’t make him drink!
If you and I are very worried about our future earnings disappearing because our companies aren’t doing so well because there is little demand for its products or services, which represents most real people I know, then we are not predisposed to heading out to the store to find something shiny new to buy for us or our loved ones. Multiply this human action, which by the way is the title of the best book on economics ever written, by Ludwig von Mises, over and over and over again amongst the US population that does not either work for, or do business directly with, the US Federal Government, the only place with booming growth, and you can see why the Velocity of Circulation of money is falling, off a cliff.
And this goes to one of the major problems, I think, for all those neo-Keynesian economists that keep flowing from the woodwork to tell us we need more spending:
Econometric models still have a little problem with human action. They have a little trouble measuring, what they would say is “irrational behavior.” But those of us that live in the real world would call it quite rational behavior. When we are nervous about the future we make a logical decision to change the way we act with a thing called money. We viciously cut waste out of our budget. We change our spending habits dramatically. Our incentive system adjusts accordingly.
And when we watch our government commit $42,105 for every man women and child to “help” us, and eat away at the stored wealth built up by hard working Americans past, it makes us even more nervous. Thus, what the neo-Keynesians see as a rationale response, we see as incredibly irrational. And thus, we decide it’s time once again to reduce the Velocity of Circulation of our money.
Thus we end up with a self-reinforcing nasty feedback loop created by people who actually believed everything Keynes said in the General Theory, instead of moving on to von Mises Human Action and getting it right. And so it goes.
Jack Crooks
Black Swan Capital LLC
www.blackswantrading.com