The Mess That Greenspan Made - Part 11

Inflation Since 1510 (in the U.K.)

Super long-term charts like the one below, painstakingly created at Deutsche Bank and appearing in this item at Business Insider, are fascinating in that they tell a story that few seem interested in hearing, namely, that the world’s financial system and conventional thinking about economics has transformed radically in recent decades as the world switched to a pure paper money system administered by central bankers.

Obviously, you’d see a similar chart for the U.S. where, prior to the 20th century, high rates of inflation used to coincide with wars and was followed by periods of deflation to reverse those price increases almost invariably caused by supply shocks and temporarily abandoning a hard money standard to fund the war effort. Technological advances also fueled prior bouts of deflation, however, even a hint of deflation these days is considered taboo and must be countered by central bank money printing on a grand scale.

In what is part of a growing trend, economists at Deutsche Bank are asking whether deflation is really as bad a thing as most dismal thinkers think it is, as conventional wisdom toward deflation increasingly appears to be another case of The Emperor’s New Clothes.

Monday Morning Links

MUST READS
Europe Should Call Greece’s Bluff – Bloomberg
At heart of new euro crisis: Germany’s obsession with debt – Globe & Mail
Obama proposes $3.99 trillion budget, sets up battle with Republicans – Reuters
Russia’s Eroding Economy Risks Putin’s Economic Union – Fiscal Times
Gazprom gets highest investment grade from China’s biggest ratings agency – RT News
No risk of ‘eating away’ Russia’s currency and gold reserves – Central Bank governor – Tass
When Even the Fed Is Confused About Gold, We Still Have Some Work To Do – Forbes
Settling Case, Standard & Poor’s Backs Off Claims of Government ‘Retaliation’ – NY Times
Market Action Suggests Abrupt Slowing in Global Economic Activity – Hussman Funds
The Forces at Work as Developed World Currencies Diverge – Sober Look
Fiat’s Obvious Failure – Dollar Collapse
The Housing Mania’s Untold Story – RCM
So Long, January – Bespoke

MARKETS/INVESTING
Stocks: 5 things to know before the open – CNN/Money
Oil prices rally above $55 as investors pile in – Reuters
January’s Market Volatility: Blip or Omen? – Bloomberg
Fed Up: How Will Rising Interest Rates Affect Stocks? – WSJ
Gold edges lower after biggest monthly gain in three years – Reuters
LBMA ‘experts’ go for $1,211 gold price average in 2015, $16.76 silver – Mineweb
Gold Gets Safe Haven Bids But COMEX Has Stopping Power – GoldSilverWorlds
NY Fed Gold Withdrawals Don’t Match Dutch-German Repatriation Claims – BullionStar
India reclaims top spot as No. 1 gold consumer – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
Another solid GDP report – Econbrowser
Demographics and GDP: 2% is the new 4% – Calculated Risk
Almost half of US households exhaust their salaries – AP
How Americans Are Spending Their Windfall From Cheap Gas – Bloomberg
China January HSBC factory PMI contracts for second month – Reuters
Alberta’s real estate woes threaten the rest of the country – Globe & Mail
China’s Property Market Is Now On Shaky Foundations – Barron’s
Can monetary policy turn Argentina into Japan? – China Financial Markets
As of Yet, Fed Not Changing Tune – Fed Watch
Less Than Zero – Alhambra Partners

 

Cramer Says “Sell” (No, Not Really)

Haven’t watched or heard CNBC’s Jim Cramer in some time, but, just the first few seconds of this clip from yesterday, after what can only be described as a monster rally sandwiched between two monster sell offs (the latter coming today, apparently) just seems so dated.

What does he have to say? CNCB puts it thusly:

Mad Money host Jim Cramer preps investors for the next blitz down.

I could only take it for about two minutes – he seemed pretty sincere.

For those looking for something more highbrow, see The Bear Case for Stocks at Barron’s

Friday Morning Links

MUST READS
Falling Prices Spread Pain Far Across The Oil Patch – WSJ
Germany: talk of trimming Greek debt ‘divorced from reality’ – AP
France – no waiver for Greece, maybe more time to pay debts – Reuters
Russia Unexpectedly Cuts Key Rate as Economy Eclipses Ruble – Bloomberg
Far-right leader Marine Le Pen is leading the French presidential poll – Metro
Senate Approves Keystone XL Pipeline Bill, Testing Obama – NY Times
Obama Sets Stage For Big Budget Showdown with GOP – Fiscal Times
Elizabeth Warren backers fund poll stoking Hillary Clinton doubts – Politico
Winkelvoss Twins See Trillion Dollar Bitcoin Valuation – Barron’s
Texas Executed a Man with a 67 IQ Tonight – Vice News
Jimmy Vaccaro Isn’t Excited About The Super Bowl – FiveThirtyEight
FAA to Idiots: Don’t Fly Your Drone at the Super Bowl – reason.com

MARKETS/INVESTING
Dollar set for record run, European shares rise Reuters
The Bear Case for Stocks – Barron’s
Legends Of Indexing: Rob Arnott – ETF.com
Cramer: Sell into any rally in US stocks for these reasons – Arabian Money
Momentum trading, return chasing, and predictable crashes – voxeu
Will equity ‘vigilantes’ push this market south? – MarketWatch
Cheap Oil Burns $390 Billion Hole in Investors’ Pockets – Bloomberg
Gold firms but on course for biggest weekly fall since Nov – Reuters
U.S. 10 month gold mine output falls 7% y/y – Mineweb
Will India’s gold imports surge on tariff cuts? – Jayant Bhandari – Mining.com
Thomson Reuters Calls the Bottom for Gold – Gold Investing News

ECONOMY/WORLD/HOUSING/BANKING
A new Vox Debate on Secular Stagnation – voxeu
Spain’s Economic Growth Accelerates in the Fourth Quarter – Nasdaq
China’s Provinces Lower Their Sights After Most Miss Their Economic Targets – WSJ
Germany succumbs to Europe’s deflationary crisis – Telegraph
U.S. homeownership hits 20-year low, but new households growing – Reuters
The American Dream Dissipates at Record Pace – Wolf Street
Fed Statement: Not Dovish, Not Hawkish—-Just Gibberish – Contra Corner
Why Dovish Critics Of The Fed’s FOMC Statement Are Wrong – Forbes
A moral case for bank money – Magic, Myths, and Money

 
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