Economic Analysis

Japanese Policy Failure Means Disaster For Us All

Outside the Box

March 9, 2016

This week’s Outside the Box is a little bit different. I’m going to start with a selection from Mohamed El-Erian’s latest note. Mohamed himself is soft-spoken and calm, and I tell you that because the piece that follows is as close to capitals, underlining, and bolding with lots of exclamation points as Mohamed can get. He continues to get more concerned about the direction of central bank policy around the world and its unknown and unintended potential consequences. I will just cut and paste...

Growth Is the Answer to Everything

Thoughts from the Frontline

March 7, 2016

“Growth is never by mere chance. It is the result of forces working together.”
– James Cash Penney

If Only We Could Blame China

Outside the Box

March 4, 2016

I regularly read Niels Jensen’s monthly letter, and this month’s edition is exceptional. Longtime readers will know that he has been featured in Outside the Box several times over the years. Today, Niels challenges the widespread belief that the steep drop in commodity prices is all about the economic slowdown in China. He also questions whether China is in fact more a victim than a villain of the recent plunge in global equity markets. He arrives at the conclusion that high and rising debt...

ZIRP & NIRP: Killing Retirement As We Know It

Thoughts from the Frontline

February 28, 2016

“Baby boomers who are counting on the stock market are in trouble.”

– Robert Kiyosaki

“Pension and health care costs for our employees are going to bankrupt this city.”

– Michael Bloomberg

The New Mind Control

Outside the Box

February 26, 2016

In today’s Outside the Box, Robert Epstein, a senior research psychologist at the American Institute for Behavioral Research and Technology in California and the former editor-in-chief of Psychology Today, warns us of a insidious and pervasive new form of mind control: search results.

That’s right, search results. And not just any search results: Google search results. Since 2013 Epstein and colleagues have conducted a number of experiments in the US and India to determine whether search...

The Fed Prepares to Dive

Thoughts from the Frontline

February 22, 2016

“No one will lend at a negative interest rate; potential creditors will simply choose to hold cash, which pays zero nominal interest.”

– Ben Bernanke, 2009

“I think negative rates are something the Fed will and probably should consider if the situation arises.”

– Ben Bernanke, December 2015

“In theory there is no difference between theory and practice. In practice there is.”

– Yogi Berra

70 Is the New 65

Outside the Box

February 17, 2016

As some of us know far too well, forecasting the future with any precision is extremely difficult. There’s at least one exception to the rule, though. Population trends show themselves decades and even centuries in advance. If we know how many people were born in a given year, we can extrapolate what the population will look like far in the future.

On the other hand, demographic forecasting still requires assumptions. At what age will people start having children, and how many will they have?...

The Big Picture

Outside the Box

February 12, 2016

I’ve been a bit slow in bringing good friend Neil Howe’s predictions for 2016 to your attention, but over the last couple weeks I have turned back to them more than once as Neil’s take on the year ahead has begun to look very prescient indeed.

In this New Year’s interview that Neil did with his firm, Saeculum Research, he wastes no time in telling us that he thinks expectations of several more Fed rate raises this year are “delusional,” because “The global economy is in no condition to take...

$100 Trillion Up in Smoke

Thoughts from the Frontline

February 6, 2016

“We aren’t addicted to oil, but our cars are.”
– James Woolsey

“The greatest asset, even in this country, is not oil and gas. It’s integrity.”
– George Foreman

A Little Chaos Is a Good Thing

Thoughts from the Frontline

February 3, 2016

A Special Edition of Thoughts from the Frontline

Longtime readers know that I rarely delve into partisan politics. That’s not the usual focus of this letter. While I am sure that most readers suspect that I generally lean Republican, I try not to let that enter into our macroeconomic and investment discussions. And I’m not really going to change that policy today. What I do want to talk about are the rather arcane topics of how the delegates to a national convention are chosen and what a...