November 16 was another debt milestone (or is that millstone) with the Federal debt reaching $12,031,299,186,290.07.
The 11 trillion milestone was passed on March 17, or just under 8 months.
How long to 13 trillion? My guess is under 8 months.
Tuesday, November 17, 2009
Thursday, November 12, 2009
Gold charts 11/1/2009
In all charts, money stock values come from the St. Louis Fed. Gold stocks come from the Gold Council and gold prices from Kitco. These comparisons are for US money stock vs. World gold supply.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
In October, both M2 and MZM broke a four month trend and started to rise. The additional money created by the Fed to purchase Treasuries and Agency MBS has helped fuel a powerful stock market and precious metals rally. I expected more negative news in October.
Looking at the money supply to price ratios, it is the most expensive time in 2009 to buy gold. Roughly historical years for M2/price would be 1973 and 1985.
All charts start from a number greater than zero to better show monthly changes.
M2/World Gold Supply (oz) in 2009
MZM/World Gold Supply (oz) in 2009
M2/Gold Price in 2009
MZM/Gold Price in 2009
In October, both M2 and MZM broke a four month trend and started to rise. The additional money created by the Fed to purchase Treasuries and Agency MBS has helped fuel a powerful stock market and precious metals rally. I expected more negative news in October.
Looking at the money supply to price ratios, it is the most expensive time in 2009 to buy gold. Roughly historical years for M2/price would be 1973 and 1985.
Monday, November 9, 2009
Added world currency exchange rates
Added a link to FXstreet.com major currency exchange rates.
I suspect the risk of a currency dislocation, such as the the one in Iceland last year, will increase in the first half of 2010. The trigger event could be the end of Fed MBS purchases, but it could also come from a major devaluation of a small Euro state currency that spreads to a major currency.
It could also happen if the Fed tries to unwind some of its questionable assets or raises rates.
I suspect the risk of a currency dislocation, such as the the one in Iceland last year, will increase in the first half of 2010. The trigger event could be the end of Fed MBS purchases, but it could also come from a major devaluation of a small Euro state currency that spreads to a major currency.
It could also happen if the Fed tries to unwind some of its questionable assets or raises rates.
Wednesday, November 4, 2009
Barry Ritholz: The Hubris of Economics
In this blistering commentary about a recent WSJ article, Mr. Ritholz chastises the profession of economics for starting with incorrect assumptions, relying on incomplete models, and being paid to look the other way.
Someone should give this guy a Nobel prize. Oh, wait, they did. Twice.
Science is the ultimate “show me” state.
Economics has a somewhat, shall we call it, less rigorous approach. Indeed, the arrogance of economics is that it is the polar opposite of Science. It begins with a few basic assumptions, many of which are obviously untrue; some are demonstrably false.
No, Mankind is not a rational, profit maximizing actor. No, markets are not perfectly, or even nearly, efficient. No, prices do not reflect the sum total of all that is known about a given market, sector or stock. Those of you who pretend otherwise are fools who deserve to have your 401ks cut in half. That is called just desserts. The problem is that your foolishness helped cut nearly everyone else’s 401ks in half. That is called criminal incompetence.
Someone should give this guy a Nobel prize. Oh, wait, they did. Twice.
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