Hyperinflation Lessons from Weimar Germany
Sep 04, 2020 | Educational
In a rampant monetary inflation, the rich can become super-rich, and wealthy industrialists can become out-of-this-world rich, like Greek gods living atop a financial Mount Olympus. If you sit atop an industrial empire when runaway inflation comes, and if you deploy the right strategies, you can find ways to grow your horde of treasure by 10X to 100X, or maybe…
Publicly Held Debt-to-GDP Made Headlines This Week, But Another Chart Matters More
Sep 03, 2020 | Educational
The U.S. national debt made headlines this week, with federal debt held by the public expected to be worth more than 100% of gross domestic product (GDP) next year. This hasn’t happened since the mid-1940s, in the aftermath of World War II. According to new analysis from the nonpartisan Congressional Budget Office (CBO), the total amount of U.S. federal debt…
The Meaning of Tesla
Sep 02, 2020 | Educational
Tesla (TSLA) is a stock for the ages. But not in the way some would want. Our hunch is that, 30 years from now, Tesla will be remembered like the South Sea Company, if not something worse (think Enron). In Tesla, we are witnessing one of the greatest single-stock bubbles of all time, against a backdrop of speculative global frenzy….
Where Does Inflation Come From?
Aug 28, 2020 | Educational
A reader asks a great question about inflation. Here it is, slightly edited for clarity: Your article, Money is a Social Protocol, Built on a Network, Enabled by Technology, is one of my favorites. It describes the actual essence of money, and instead of employing empty phrases like, “Money is a medium of exchange,” which is true, but is obvious…
Rushing a Vaccine to Market is a Terrible Idea
Aug 27, 2020 | Educational
On the COVID-19 front, there is hope that the United States can rush a vaccine to market. Mark Meadows, the White House Chief of staff, expressed this view to the press on Aug. 23, saying the Food and Drug Administration (FDA) and National Institutes of Health (NIH) need to “feel the heat” on vaccine timing. “If they don’t see the…
Money is a Social Protocol, Built on a Network, Enabled by Technology
Aug 25, 2020 | Educational
Money is a social protocol, built on a network, with technology enabling the network. This goes for all forms of money, even gold. It also applies to all pre-metallic forms of money, and all manner of monetary objects that have existed through the ages. The concept of money as a networked social protocol is inherently a strange thing. This helps…
Long-term Rates Can’t Rise Too Much — If they Did, the US Government Would Go Broke
Aug 24, 2020 | Educational
The yield on the U.S. Treasury 10-year note, as of this writing, is 65 basis points. This means that, for every $10,000 worth of 10-year notes purchased at recent prices, you get $65 in annual interest payments. That is an incredibly low yield, not far from the all-time low for interest rates — with “all time” covering 5,000 years of…
The Market is Bidding Up Winner-Take-All Cash Flow Streams
Aug 21, 2020 | Educational
The market is bidding up pandemic-proof cash flow streams. When you look at stock price behavior through this lens, the picture makes more sense. This further implies the stock market is not reflecting economic recovery, or a “return to normal,” but rather the stark realities of a post-pandemic landscape. To put it another way: In a world where consumer behavior…
Why is the U.S. Housing Market So Strong?
Aug 20, 2020 | Educational
The U.S. housing market is bizarrely strong right now. But why? Before attempting to answer, we’ll look at some data. On Aug. 17, the U.S. National Association of Home Builders (NAHB) reported home buyer foot-traffic at all-time highs. Based on the NAHB/Wells Fargo Housing Market Index, or HMI for short, homebuilder confidence levels are also at all-time highs, matching a…
The Pandemic is a Hyper-Accelerant for Already Existing Trends
Aug 19, 2020 | Educational
The coronavirus pandemic is not just a 100-year crisis. It is an accelerant — one could even say a hyper-accelerant — of already existing trends. A number of momentous sea changes, which were already happening slowly, wound up happening faster — in some cases much, much faster — because of the pandemic. Take teleconferencing and remote work for example, with…
