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March 17, 2024 | A Valuation Conversation

You may have noticed the stock market rising lately. Much of the gain isn’t so much “the market” as a handful of mega-cap stocks. Nonetheless, the bulls are clearly in charge. The question is how long they will stay there. History suggests longer than many market bears think. I expect another bear market at some […]

March 10, 2024 | Higher for Longer?

“There is a difference between you and me. We both looked into the abyss, but when it looked back at us, you blinked.” -Batman, referencing Nietzsche in 2010’s Justice League: Crisis on Two Earths -My first thought on the quote: Think Jerome Powell and the FOMC The idea that “market expectations” tell us anything about […]

March 3, 2024 | When Readers Speak

Today, we have a different kind of letter. I’ve been in California for some rather innovative and hopefully life/health span-extending medical treatment. I’m fine, but it has been a bit tiring. So this week, I’m handing the keyboard to you, my intrepid and smart readers. This is easier than it used to be, thanks to […]

February 18, 2024 | Choose Your Own Economy

If you’re a parent or grandparent, you may know of the “Choose Your Own Adventure” storybook series. Written in second person, they make “you” the hero. The reader makes choices as the story unfolds, leading to one of several possible endings. That format is disturbingly similar to a lot of economic forecasting. The economist—who of […]

February 11, 2024 | Desperately Seeking Neutral

One of the more fascinating and mysterious parts of watching the Federal Reserve is the ongoing dialogue between Fed leaders and Wall Street. We imagine private meetings held in great secrecy. Those may in fact occur, but I’m not sure they are even necessary. The parties exchange their requests publicly. All those speeches, interviews, and […]

February 4, 2024 | Industrial Size Surplus

Modern economies, even small ones, are unfathomably complex. The number of variables is far more than any human can comprehend or any model can track. It’s really no wonder so many forecasts are wrong. In my 2024 forecast letter I predicted “A Muddle-Through Year.” That’s still what I expect… but not for everyone, nor for every […]

January 28, 2024 | Going Bang!

“The Fickle Nature of Confidence” Stratospheric Heights Patience Pays Off New York, Somewhere in Florida, and… In thinking about the 2020s, I often find myself looking back to the 1920s. That decade began with a deep recession/depression and ended with a stock market crash. While we now see the 1920s as a kind of “in […]

January 21, 2024 | Clashing Crises

“Two is better than one” is a nice saying, but it really depends on what you’re describing. Two hurricanes or earthquakes aren’t better than one. Just one disaster at a time will suffice, thank you very much. The same holds true for man-made crises like the debt fiasco we’ve been discussing. Last week in No Way […]

January 14, 2024 | No Way Out

Having now spent almost six months describing the historical cycles and massive debt that surround us, I find myself looking for an “easy” exit. Maybe one exists, but I haven’t found it yet. I think we’re stuck. The building will have to collapse around us before we can leave. This is obviously not a great […]

January 7, 2024 | A Muddle-Through Year

First, let me wish you the best for the new year. I look forward to exploring it with you. It’s forecast season again, the time when people like me tell people like you what will happen this year. Sadly, we are often wrong. It turns out predictions are hard, especially those about the future (with […]

December 31, 2023 | Looking Back and Forward

It’s that time of year when we start thinking about the old and envisioning the new. This has always been a special season for me, perhaps because of my unusual quirk of really wanting to divine the nature of the future—not just an investment in economics but in general. This week’s letter will be in […]

December 24, 2023 | Time to Consider a VAT?

  First, let me wish you Merry Christmas, Happy Holidays or your favorite personal form of greetings for this time of year. I realize as you read this you are more focused on Christmas and the approaching New Year and family, so this will be a shorter letter than normal, but still a topic that […]

December 17, 2023 | Finding Revenue

If you really want to reduce the federal debt, you don’t have to convince Congress of anything. You can just write a check. The Treasury Department gladly accepts gifts from anyone so inclined. Few are, apparently. So far this year, donations totaled less than $1 million. Shocking, no? <grin> The government’s revenue is mostly involuntary via taxes, […]

December 10, 2023 | Fair Shares of Debt

Don’t Tax You. Don’t Tax Me. Tax That Fellow Behind the Tree –   Attributed to Senator Russell B. Long, Louisiana ~1930s One thing you learn when writing about the debt problem, as I have been in recent weeks, is that many people think it’s not a problem at all. They believe we could easily balance […]

December 3, 2023 | Healthcare, a Minor Major Problem

Back in the Great Financial Crisis era, someone quipped that the federal government had become a giant hedge fund with an army attached. That wasn’t far off. Various agencies and entities were absorbing all kinds of risky assets to stabilize an overleveraged system. It was ugly but worked, more or less…. with a heavy dose […]

November 26, 2023 | The Survival of the Republic

Thanksgiving brings to mind not only turkeys, family, and friends, but also should help us recall the remarkable ideas and philosophies that helped shape, and indeed were, the foundation for the United States of America as a Republic. In that spirit, we will forgo for this week the series we have been exploring on cycles […]

November 19, 2023 | Socially Insecure

If you get beyond the political rhetoric [and assembled a group to solve Social Security] it would take them 15 minutes. It would take them 15 minutes only because 10 minutes was used for pleasantries. —Alan Greenspan, Speech to the Commercial Finance Association on October 26, 2006 The federal government starts a new fiscal year every […]

November 12, 2023 | What Could Go Wrong?

Exploring federal budget data is a journey through endless rabbit holes, some of which are eerily close to Alice in Wonderland insanity. Countless variables interact in unexpected ways. Seemingly small changes can cascade into billions of dollars within a few years. Exploring federal budget data is a journey through endless rabbit holes, some of which are eerily […]

November 5, 2023 | Debt Scores

Identifying problems is great. Identifying solutions is even better, especially when the politicians who are supposed to be solving our big problems don’t even try. In last week’s Debt Catharsis letter, I offered some ideas to start fixing the federal debt problem. To be clear, those ideas won’t balance the budget and in many ways are woefully inadequate. But […]

October 29, 2023 | Debt Catharsis

The ancient Greeks had a word κάθαρσις, which in English we now spell as “catharsis,” although it’s pronounced basically the same. It originally referred to purifying religious ceremonies, medical treatments, and so on. Aristotle was the first we know to have used the word in a non-physical sense. He compared the emotions felt by spectators […]

October 22, 2023 | Supercycle of Debt

We have been looking at big historical/economic/political cycles for the past two months. We reviewed Neil Howe’s Fourth Turning concept, then George Friedman’s twin US institutional and socioeconomic cycles, then Peter Turchin’s “cliodynamics” concept, and then Ray Dalio’s Big Cycle. None of these theories exclude the others. It is quite possible they are describing the […]

October 15, 2023 | The Big Cycle 2

When your system, whatever it may be, is working extremely well, we used to say it’s “firing on all 8 cylinders.” What does that mean? A gasoline motor contains metal cylinders inside which the gasoline burns (hence “internal combustion engine”) and causes belts and gears to turn. A V-8 engine has eight cylinders arranged in […]

October 8, 2023 | The Big Cycle

“…what I learned is whatever successes I had in life had to do more with how I dealt with what I didn’t know than what I know… “…the reason I did that book is because there are things that are happening now that never happened in our lifetime before, and I want to be like […]

October 1, 2023 | Cyclical Forces

Intermission is over. Today we resume my series on the global cycle theories that, probably not by coincidence, all point to major change unfolding in the next few years. Finishing it may take some time since I keep finding new material. (If you missed—or want to review—the previous installments, check out this X thread for brief summaries […]

September 10, 2023 | Cycle Review

Greetings from Europe. I promised to write a letter describing my personal investment portfolio. I still plan to, but it won’t be this week. Shane and I are having a wonderful trip—a much-needed break for both of us. I will leave you with a suggestion, though. My ongoing series about cycles contains some of the […]

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