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A Requiem for the 2020 Lockdown Mania

By: Justice Clark Litle

Jun 12, 2020 | Educational

The 2020 lockdown mania — our term for the ripping rally off the March lows, which went completely off the rails in the end — was the worst kind of bubble. It was born of greed and hubris, with little of value left behind. It was powered by ill-considered government stimulus, adding weight to a deficit topping $26 trillion. And…

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Like It or Not, We’re All on Board the MMT Train — and the Train Has No Brakes

By: Justice Clark Litle

Jun 11, 2020 | Educational

Modern Monetary Theory, or “MMT” for short, is a hot topic — or at least it was before 2020 exploded. Prior to the pandemic, there was a lively, ongoing debate about whether MMT was a good thing or a bad thing; whether MMT makes sense, or whether it’s a bunch of nonsense; and how soon deeply indebted Western governments might…

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Two Theories of How America Beat the Great Depression

By: Justice Clark Litle

Jun 05, 2020 | Educational

For more than 80 million Americans, a replay of the 1930s is not a hypothetical possibility. It is already starting to happen. According to a May poll from the Kaiser Family Foundation (KFF), 26% of Americans — more than one in four — have experienced food insecurity in the past few months. That means skipping meals, reducing meal size due…

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Pain is Bliss When the Anticipated Policy Response is Infinite

By: Justice Clark Litle

Jun 04, 2020 | Educational

An infinite policy response is like infinite morphine. The pain hurts, but the morphine overwhelms the pain, to the point of generating bliss. This can create a twisted Pavlovian response, in which injury or illness is something to be happy about, because new pain means a new morphine dose. This can continue deep into the throes of addiction. It can…

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Legal Market Rigging and the Panic of 1873

By: Justice Clark Litle

Jun 03, 2020 | Educational

Is the stock market rigged? That is to say, are there shadowy hidden forces influencing market prices, in a manner that most investors don’t understand and often aren’t even aware of? The answer to that question is yes. Absolutely and without question, the stock market is rigged. But perhaps not in the way one might think, and not for the…

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Goldman Sachs Had an Embarrassingly Bad Take on Bitcoin

By: Justice Clark Litle

May 29, 2020 | Educational

On a May 27 video call discussing the U.S. economic outlook, Goldman Sachs tried to dismiss cryptocurrencies in general, and Bitcoin in particular. The Goldman powerpoint slide, which made the rounds on Twitter, was titled, “Cryptocurrencies Including Bitcoin Are Not an Asset Class.” The whole thing was deeply embarrassing — for Goldman Sachs. In fact, the power point bullets advanced…

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“Deflation World” is Coming — and It Will Be Like Nothing You’ve Experienced

By: Justice Clark Litle

May 28, 2020 | Educational

“Deflation World” is coming. For many, if not most, it is going to be a bizarre and disorienting experience. Most investors will fail to understand what is happening, or to process the consequences of what deflation will mean. And many of the “normal” financial relationships investors have come to expect will seem to run backward, like a movie playing in…

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Why Buffett Sold Berkshire Hathaway’s Goldman Sachs Position

By: Justice Clark Litle

May 27, 2020 | Educational

When Warren Buffett explained his logic for dumping airline stocks, he was blunt. “It turns out I was wrong,” Buffett said via teleconference at the Berkshire Hathaway annual meeting. “The airline business — and I may be wrong and I hope I’m wrong — I think it has changed in a very major way,” he added. For an investor whose…

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Physical Gold Has a Centralization Problem

By: Justice Clark Litle

May 22, 2020 | Educational

Physical gold has a centralization problem. It tends to gather in centralized places, and be guarded by centralized forces, under the strict administrative control of some centralized political authority.  In regard to this topic, Ed Seykota, a legendary trend trader, made a spot-on observation in his late 1980s Market Wizards interview: “Gold tends to be dug up, refined, and then…

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Liquidity, Solvency, and Zombies

By: Justice Clark Litle

May 20, 2020 | Educational

“Free money from the Federal Reserve” sounds fantastic for stock prices. Picture a giant firehose of liquidity, just spraying cash in every direction, as the Fed expands its balance sheet by trillions. How could U.S. companies — and stock prices — not benefit from that bonanza? Pretty easily, that’s how. It has to do with the difference between liquidity and…

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