Author Archives
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Doug Noland: Revisiting “Coin in the Fuse Box”
It’s reasonable to ask, “Where does it all end?” – with an equally reasonable answer, “with market dislocation and a crash”. All those Coins in the Fuse Box in 1929 contributed directly to the house collapsing in flames.
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Doug Noland: State-Directed Credit Splurge
With 2020 GDP estimates in the 2.0 to 3.0% range, the divergence between Chinese Credit and economic output is unprecedented. China’s “Terminal Phase” excess – including rapid acceleration of late-cycle loans of deteriorating quality – is unparalleled in terms of both degree and duration.
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Doug Noland: Summer of 2020
QE fundamentally changed finance. What commenced at the Federal Reserve with a post-mortgage finance Bubble, $1 TN Treasury buying operation morphed into open-ended purchases of Treasuries, MBS, corporate bonds and even corporate ETFs holding high-yield “junk” bonds. Markets assume it’s only a matter of time before the Federal Reserve adds equities to its buy list.
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Doug Noland: It’s About Jobs, Jobs, Jobs
Why is it reasonable to believe that monetary policy specifically aiming to inflate securities markets will somehow simultaneously ensure a corresponding modest increase in consumer prices? It’s not.
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Doug Noland: The Short History of Extreme Monetary Policy
“Consider the internet frenzy 20 years ago. Back then, large speculators, mostly hedge funds, were net short on S&P 500 futures in all but five weeks in 1998 and 1999. Those mostly losing bets were completely squeezed out in 2000. That’s when the crash came.”
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Smart Bird: Safe Haven Treasuries Not So Safe
Short-term Treasuries remain a safe investment. The TLT ETF mentioned by Doug has a long duration and its price moves 2% for each 0.1% move in interest rates. Interest rates popped a little this week sending bond prices down. And yes, inflation worries could be part of it.
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Doug Noland: Global Lender of Last Resort
It is a central tenet of Bubble Analysis that “things get crazy at the end of cycles.”
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The Federal Reserve: “It’s Not Our Fault”
…the safe havens signal a major crisis is unavoidable. This is not your granddad’s Economic Structure. And to hear the Federal Reserve still focused on below target inflation is a farce.
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Doug Noland: Crossing Red Lines
I seriously doubt China’s banking system inflates from $8 TN to $43 TN during this cycle without Trillions of “Bubble Dollars” flooding the world and its resulting reserves horde. U.S. crisis and QE1 provided China a blank check for a massive $600 billion 2009 stimulus plan. And Chinese Credit – along with investment, manufacturing, apartment Bubble, economic boom, technological advancement, military buildup, global influence peddling, and ambitions for superpower status – never looked back.
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Doug Noland: Drone Money
It was obvious the Fed had really blown it. That this academic, and recently appointed Fed governor, referred to the “bubble poppers” from the late-twenties and their role in fomenting the Great Depression made it difficult not to be disdainful. I underestimated both the man and the world’s gullibility.