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April 11, 2021 | Tiny Housing Bubbles

Recently I searched the Thoughts from the Frontline archives to see how often I used the word “bubble.” It was more than I thought, and I wasn’t quoting Don Ho. The bubbles I talked about were anything but tiny. Most of them subsequently popped, too. Recently I searched the Thoughts from the Frontline archives to […]

April 4, 2021 | The Exponential Ride

The last year brought exponential growth in, among other things, use of the word “exponential.” It is now the go-to term when you want to say something is “growing super-fast.” I’ve got to admit it’s getting better (Better) A little better all the time (It can’t get no worse) I have to admit it’s getting […]

March 28, 2021 | The 1970s Never Ended

Big economic storms are rare and usually end quickly, but they tend to have long-lasting effects. Today I want to talk about a storm 50 years ago that still affects us now. Important things happened in the 1970s. I personally remember that decade well. I was in my 20s and they were formative years. I […]

March 21, 2021 | Broken Debt

Modern technology is amazing but our ancient forebears built some wondrous things, too. Long-ago historians organized them into “Seven Wonders of the Ancient World.” (Of course, their “world” was the Mediterranean and Middle East. Other wonders existed elsewhere.) Last week I noted how some call compound interest the Eighth Wonder of the World. Is it […]

March 14, 2021 | Inflation Is Broken

I have been writing for many years that the US in particular and the Western “developed” world in general were approaching a time where none of our choices would be good. We have arrived. Any choice the government and central banks of the US and the rest of the world make will ultimately lead to […]

March 7, 2021 | Everything Is Broken

Broken lines, broken strings, Broken threads, broken springs, Broken idols, broken heads, People sleeping in broken beds —Bob Dylan, “Everything is Broken” from the album Oh Mercy, 1989 I was on a client call earlier this week with Steve Blumenthal. The gentleman is at that stage in life where he needs cash income and not […]

February 28, 2021 | The Great Jobs Reset

We are almost through February and (knocking on wood) the US COVID-19 situation is improving daily. The B117 and other variants haven’t yet made a big impact. Possibly they will, but as time passes more people are getting at least partial protection through vaccines. The “race” I’ve described seems to be going the way we […]

February 21, 2021 | Random Thoughts from the Frontline

Readers often ask how these letters appear so regularly. The answer is we have a process. Normally, I talk to my associate Patrick Watson on Monday about the next weekend’s letter. We both go into research mode, verbally outlining a letter, and by Thursday I have an outline and some background research. This gives me […]

February 14, 2021 | Overstimulation Risk

Among the many strange, unforeseen changes of the last year is a new respect for Keynesian economic theory. Practically everyone in power now agrees that deficit spending produces GDP growth. They differ only on its expected magnitude and duration. The few exceptions are mostly outside the halls of power. This matters because deficit spending, already […]

February 7, 2021 | Controlling the Curve

If time is money, then interest rates are the price of time. The most important interest rates in the world are for US Treasury securities. This is why I’ve long said it makes no sense for a committee to set those rates. The markets could do just fine without that help, thank you. But the […]

January 31, 2021 | Inflation and Broken Windows

I’m often asked if I foresee inflation or deflation. This week we had an “Ask Me Anything” session for Alpha Society members and it came up several times. Both are possible in their own ways, and frankly I feel a little funny telling people I think we will see both. I would just like to […]

January 24, 2021 | Forecast 2021: The Stock Market

This will be the third part of my 2021 Forecast Series. You can read the first two parts here and here. The general theme has been “On the Gripping Hand.” Science fiction writers imagined a three-handed alien race with a left hand, right hand, and a very strong Gripping Hand. 2021 is the year of […]

January 17, 2021 | The Grip Tightens

This is part two of my 2021 forecast series. I began last week (you can read it here) discussing a three-handed alien race envisioned by science fiction writers Jerry Pournelle and Larry Niven. They had two regular hands and a third “gripping hand,” which though less dexterous, was far stronger. My analogy was that the […]

January 10, 2021 | Year of the Gripping Hand

This week’s letter is the first part of my 2021 forecast. There is simply too much to cover in one letter, and today we’ll start with the most important factor, a known unknown, that I think will be the driver for 2021. Before beginning, I want to make two points, one about my personal investment […]

December 20, 2020 | Stock Market Party

The end of 2020 has me looking back. I started writing the letters that later became Thoughts from the Frontline back in the late 1990s. Similar to COVID-19 today, we had a giant macro issue then, too: Y2K. It’s hard to believe now how frightened some people were. But as I expected, the big day […]

December 13, 2020 | Survival of the Biggest

The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process… At the heart of capitalism is creative destruction. …Situations emerge in the process of creative destruction in which many firms may have to perish that nevertheless would be able to live on vigorously and usefully if they […]

December 6, 2020 | Elites on the Edge

Growing income and wealth inequality were on my (and probably your) radar screen long before COVID-19 came along. The pandemic has made them both more obvious and more urgent. The actions by the Federal Reserve have widened the gap. We are now in a situation where society’s upper echelon can easily stay safe and prosperous […]

November 29, 2020 | The Financial Fire Trucks of 2021

A Happy Thanksgiving weekend to all my US friends. This year was different for many of us—sometimes by choice, sometimes not. But there’s one bit of good news I think we can all share: The holiday season means 2020 is almost over. Soon, we’ll be able to turn the page. Each year at this time, […]

November 22, 2020 | The Great Reset vs. The Great Reset

A quick note before I start: Some of you didn’t get last week’s letter because some major internet providers decided it was junk mail. This was maddening but beyond our control. It may be in your “spam” or junk folder. You can help us train the algorithms by marking them as “not spam.” Remember, you […]

November 8, 2020 | Complexity Wins Again

Here in Puerto Rico we are now an hour ahead of Eastern Time, as we don’t do daylight savings time. I stayed up much later than normal on election night to watch the returns. I knew fairly early, when Florida and North Carolina looked so close, we weren’t going to see a “blue wave.” But […]

November 1, 2020 | What Will Not Change

“If I have seen further it is by standing on the shoulders of Giants.” —Sir Isaac Newton, 1675   If you feel a bit overwhelmed, you’re not alone. A lot is happening right now. The US has a big election next week. We’re all on edge about the pandemic, which appears to be getting worse […]

October 25, 2020 | The Green Shoots of 2020

Those who lived through the last financial crisis might may recall the Green Shoots episode. It drew laughs on March 15, 2009, shortly after the Federal Reserve fired its heaviest artillery and, we now know, launched the longest bull market in history. Appearing on 60 Minutes, Fed Chair Ben Bernanke said the recession’s end was […]

October 18, 2020 | Caught in a Debt Trap

We’re caught in a trap I can’t walk out Because I love you too much baby Elvis Presley’s rendition of Suspicious Minds topped the record charts in 1969. The lyrics portray a romance that couldn’t work, but was also impossible to escape. That’s also a good way to describe our relationship with government debt. We […]

October 11, 2020 | Timeline to the New Normal

Like everyone else, I am weary of this pandemic mess. I want to travel freely, enjoy dinner with friends, hug, and shake hands. And, of course, I want everyone who lost jobs and businesses to get them back. I wasn’t thrilled with the economy a year ago, but I’d take it again in a heartbeat. […]

October 4, 2020 | Debt Bugs and Windshields

“There is no means of avoiding the final collapse of a boom brought about by credit expansion.” —Ludwig von Mises Economic recovery is coming, we are told, because the economy has found a new equilibrium. We are supposedly adapting to the new-normal pandemic world, with monetary and (some) fiscal stimulus filling any gaps. Except that’s […]

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