The common belief is that increases in the stock market drive overall economic growth. Expansionary monetary policies, however, are responsible for driving up stock prices even as they simultaneously damage the economy.
Mark explains why the recent "all-time highs"—even "new highs"—are an ambiguous signal about the future.
One of the biggest and most pervasive myths in modern-day economics is the myth of the omnipotence of the Federal Reserve.
With US government debt skyrocketing past $33 trillion and possible recession looming, the Treasury faces the prospect of running out of suckers. Finding buyers for US debt will become much more difficult.
The new problem we now face arises from the fact that huge deficits are only manageable so long as interest rates remain very, very low.
Mark looks at the implications of famed investor Jim Chanos shutting down his hedge fund which specialized in shorting stocks.
America is draining its economy by federal debt in a way similar to how American farms and cities are emptying the nation's aquifers. We cannot sustain these losses much longer.
As the federal government continues its Ponzi scheme of issuing debt to pay for past debts, interest rates will increase to the point where this no longer is a tenable strategy—if it ever was.
Today, the Fed takes a short break from robbing us via inflation and, instead, delivers huge amounts of cash to banks to service Black Friday purchases. The large cash infusions often make banks vulnerable to robberies.
What lies behind the attempt to bypass fear of failure is the perceived lack of any substantial cost to failure. The illusion lasts only for so long before economic reality prevails.
