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Tag Archives: bear

Mauldin: Social Security Is Screwing Millennials

Social Security is a textbook illustration of how government programs go off the rails. It had a noble goal: to help elderly and disabled Americans, who can’t work, maintain a minimal, dignified living standard. Back then, most people either died before reaching that point or didn’t live long after it. Social Security was never intended to do what we now expect, i.e., be the primary income source for most Americans during a decade or more of retirement. Life expectancy when Social Security...

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Confidence Drives The Economy & Trump’s Trade War Is Killing It

Economic growth isn’t random. It comes from individual decisions to buy, sell, or do nothing. We all make dozens every day. Corporate CEOs and CFOs make bigger decisions, like whether thousands of people get hired or a factory gets built. That means, the economy generally does better when business leaders see growth opportunities, and worse when they don’t. Right now, the latter is happening. We know why, too: President Trump’s erratic trade policies make long-term planning difficult, to say...

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Mauldin: Economics Is Like Quantum Physics

I often say a writer is nothing without readers. I am blessed to have some of the world’s greatest. Your feedback never fails to inspire and enlighten me. My last week’s That Time Keynes Had a Point letter brought many more comments than usual. Apparently Keynes is still provocative 73 years after his death, no matter what you say about him. But my real point was about the twisted economic thought that is having dangerous effects on us all. And we can’t blame it just on Keynes. Today I want...

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J.M. Keynes: The Time He Had A Point

John Maynard Keynes once said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” While true, it doesn’t go far enough. The problem isn’t simply defunct economists or “scribblers of a few years back.” We are in the grip of economists who, far from being defunct, hold great...

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The 60/40 Portfolio Is Riskier Than Ever

As investors we have to make assumptions about the future. We know they will likely prove wrong, but something has to guide our asset allocation decisions. Many long-term investors assume stocks will give them 6–8% real annual returns if they simply buy and hold long enough. Pension fund trustees hire consultants to reassure them of this “fact,” along with similar interest rate and bond forecasts, and then make investment and benefit decisions. Those reassurances are increasingly hollow,...

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Negative Rates Are Destructive But Profitable

“Remember that Time is Money.” Benjamin Franklin, Advice to a Young Tradesman It’s unfortunate that such genius identifications as the above have long been forgotten by the economic community. First penned in 1748, Benjamin Franklin makes the connection between human effort—or rather the application of human effort towards productive work—and the effect/product, i.e. wealth. We measure this increase in prosperity, of course, in terms of money. Thus, “Time is Money” (or rather, time is...

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War Gaming The Trade War

People respond to incentives. So do national governments. This is foundational to both economics and geopolitics. Carefully examining each side’s incentives can illuminate how a conflict will end. No one has infinite choices. They choose from limited options. That applies to the US-China trade war, which is right now one of our top economic issues. So let’s think through what the players really want, and what each can actually do. Outrageous or Flexible? To begin, let’s note that the US and...

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The Lunacy Of The Dow

I’ve been on Twitter (TWTR) quite a few times railing against the Dow Jones Industrial Average and its price-weighted calculation. And, of course, I am not alone. This index presents a distorted view of any given day’s events although most of the time its foibles are hidden in the performance of the rest of the market. Let’s look at today, September 11, 2019. I am writing at about 2:30 in the afternoon and the Dow itself is up roughly 137 points on the day. All of that gain, and I mean all of...

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2020 Will Be The Most Volatile Year In History

The last few weeks marked a turning point in the global economy. It’s more than the trade war. A sense of vulnerability is replacing the previous confidence—and with good reason. We are vulnerable, and we’ll be lucky to get through the 2020s without major damage. Let’s talk about the risks facing us in the next year or so and the economic environment in which we will face those risks. Supply Shocks Ahead In a recent Project Syndicate piece, NYU professor and economist Nouriel Roubini outlined...

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Globalization Hits A Brick Wall Named Trump

Until about 50 years ago, people paid attention to the area where they lived. They read local papers, shopped at local merchants, and socialized at local events. Technology ended all that. Now we get our news from the internet. We buy imported goods. We converse on social media with friends thousands of miles away. This “globalization” process changed the world, sometimes for the better but with significant side effects. Hence, today’s dissatisfaction. Now, technology is swinging the pendulum...

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