14 Search Results: deflation

A Little Chronic Deflation
Articles / Inflation vs. Deflation

Though I may disagree with the terminology Gary Shilling uses to describe various categorical increases and decreases in price, I do agree with the general direction Gary suggests many parts of our economy are headed. Gary is one of the very, very few major economists calling for pervasive deflation. He is one of the few economists who correctly predicted 10-year and 30-year bonds would have arrived at such low yield levels--and this he did in the face of very vocal disagreement with the majori...

Published: Oct 14th, 2012 - Popularity: 164 views
Q&A: Is Bankruptcy Really Deflationary?
Q & A / Macroeconomics

Question Bankruptcy You've said bankruptcy destroys money and causes deflation. But consider the following: you loan me $10 and I buy $10 worth of gold, then give the gold away and go into bankruptcy. The $10 transferred from you to me to the seller of the gold. The gold transferred from the seller to me to the receiver of my gift. In our little economy, neither money nor product has been lost--the commodity has the same value and the money has the same value and neither product nor money en...

Published: Apr 27th, 2013 - Popularity: 415 views
The Battle of the Flations
Articles / Macroeconomics

As we traverse these difficult economic times together, and as many of you have requested of us, we are endeavoring to make our research and analyses of the macroeconomic direction available on a regular basis. We hope that this economically focused newsletter (of which this is the first issue) can serve as just one more way we can help equip you for these unique economic circumstances. Deflation or Inflation? It makes a big difference to you. Many of the most intelligent and prominent econom...

Published: Jul 21st, 2009 - Popularity: 145 views
The Decline of Social Mood (Spain)
Articles / Unemployment

Ambrose Evans-Pritchard highlights the very scary slippery slope that Spain is headed down with the latest threats by certain military leadership to resist any attempt to pursue a potential breakup of the Spanish sovereignty with military tribunals and charges of treason. Scary times indeed. This is just another pressure point among the many brought on by Spain's 25%+ unemployment, and deflation/austerity death spiral under the weight of debt that is too burdensome to repay. What has the Europe...

Published: Sep 27th, 2012 - Popularity: 157 views
Q&A: Australia & China to Stop Using the US Dollar in Trade? How Will Business be Affected?
Q & A / Currencies

Question Australia & China to Stop Using the US Dollar in Trade? How Will Business be Affected? I recently read that China & Australia are going to be using the Yuan as their trade currency instead of the US Dollar. Migration away from the US dollar as a global currency seems to be trending right now. As a small business owner with clients who transact commerce both domestically and internationally, should I be concerned? What can I do to shore up against a weakening US dollar? A...

...he value of the US Dollar. Instead, it is primarily monetary inflation and deflation that affect the value of the US Dollar. In fact, it is actually the reserve currency stat...

Published: May 5th, 2013 - Popularity: 2904 views
The Five Categories of Collateral
Articles / Principles of Wealth Management

Given the complexity of investment vehicles today, it can be difficult for investors to know what actually backs their investments and what their rights to the collateral are. We composed this article to help our clients understand the types of collateral that ultimately stand behind their investments and how we leverage this knowledge to achieve broader diversification, better risk mitigation, and greater potential upside with their investments. We believe that, despite the typical comple...

...s and how each type responds to major economic factors (such as inflation, deflation, interest rates, recessions, etc.). Though the collateral categories are supposed to be al...

Published: Feb 14th, 2013 - Popularity: 1654 views
Finding Value in a World of Misdirected Liquidity
Articles / Macroeconomics

The issue with writing a newsletter rooted in the common sense of value investing is that though the circumstances of our economic landscape are ever adjusting, the long-proven principles of wealth management do not change. Thus, in "frothier" times such as these, common sense becomes less common and can begin to be viewed as passe by the readership. Human nature inherently ebbs and flows with the misdirected exuberance and despair of the crowd (herd mentality). Moreover, human nature is restle...

...nt positions we have been taking to protect our downside from shorter-term deflation, prepare for longer-term inflation,and take advantage of the higher return opportunities t...

Published: Jun 6th, 2011 - Popularity: 82 views
Dancing--Nay, Sliding Down the Edge of a Cliff
Articles / Macroeconomics

Before jumping into the content of this current newsletter, I would like to make a couple of important points regarding the stock market warnings in our last letter. In early May, I warned of a large market fall--right before one of the most significant single stock market drops in history. First, with respect to the timing, I certainly would love to claim genius or ownership over some proprietary market-timing crystal ball; however, it was simply a bit of luck and eerie timing. Though I did a...

...simply curious. In this letter, we will discuss the ongoing battle between deflation and the Federal Reserve, odds of another recession, market timing, general forecasts of wh...

Published: Jun 27th, 2010 - Popularity: 131 views
Dancing On The Edge Of A Cliff
Articles / Macroeconomics

As many of our clients have some level of exposure to the stock market, I am writing to all clients to warn of a potential market fall in the near term. I do not pretend to be a great "trader" or "market timer," but several indicators of extreme optimism are converging at the same time that usually accompany important market tops. Put another way...watch out below! Given the underlying weak fundamentals of the economy and the short-term technical extremes that are present, downside risk is ver...

...ronment. Moreover, in the bigger picture, as we are still in the throes of deflation and what we believe is a longer-term bear market, all of the upside progress of the recent...

Published: May 1st, 2010 - Popularity: 98 views
Macroeconomic Thoughts - April 2018
Blog / Macroeconomics

The best laid plans of mice and men… Approximately one year ago I sent a letter noting my intention to resume providing you with occasional macroeconomic updates. As you may have noticed, that had not happened as of the time of this letter. I have not forgotten. In the period following that letter, my partners and I have been wholly occupied with stewarding what has now grown to exceed $1.2 Billion of client assets entrusted to our care. We have dedicated ourselves to building our te...

...s that are ultimately at work behind the velocity of money, inflation, and deflationary forces. His conclusion is that in the face of increasing over-indebtedness, we are goin...

Published: Apr 6th, 2018 - Popularity: 54 views
Wile E. Coyote, the Road Runner, and the Cliff
Articles / Macroeconomics

Why the Feeling of Flying High Will Not Ultimately Overcome the Consequences of Gravity General Motors emerged from bankruptcy with one of the largest initial public offerings of all time, this November. This impressive show of investor optimism was heralded as just another indication that the economy turned around and that the U.S. is free and clear from recession. On the other hand, only weeks prior to the GM IPO, the Fed announced a second round of massive credit expansion (Quantitative Eas...

...easing") may allow us to overcome the natural effects (a.k.a. "recession,""deflation," and "deleveraging") of our fundamental economic situation and the excesses of the past d...

Published: Dec 6th, 2010 - Popularity: 348 views
Principles of Wealth Preservation and Growth
Articles / Principles of Wealth Management

The principles of risk management and wealth building that I outline below are nothing new. I borrow liberally from the past and current financial greats who have far more knowledge and experience than I do. Nevertheless, the swings of human nature are such that very few investors/wealth managers actually implement the following principles with discipline. We are striving to be one of those few firms, and we want to encourage our clients to practice the same disciplines with us. Given the tumul...

...mattered very little as the entire technology sector experienced a massive deflation. To this day, some of the strongest, most profitable companies in the world have not recov...

Published: Nov 11th, 2011 - Popularity: 1933 views
How Does Quantitative Easing Impact Interest Rates?
Blog / Macroeconomics

It is quite rational to assume that bond prices will go up and yields will go lower when the Federal Reserve purchases billions of dollars of US Treasuries and other government-backed bonds on a monthly basis for an unlimited period of time. The only problem with this assumption is that it is clearly not working out that way. In fact, the exact opposite is occurring! With each and every round of quantitative easing (aka the Fed goes on a massive buying spree of government bonds with money crea...

...ket suffered a decent sized correction. (I suppose it is hard to avoid the deflationary hangover when they remove the perception of the cheap money punchbowl!) Therefore, equi...

Published: Jul 25th, 2013 - Popularity: 393 views
Know Your Collateral
Articles / Principles of Wealth Management

Perhaps the most important question you can ask prior to placing capital into an investment is "What is the collateral backing the investment?" The collateral is the asset (or legal rights) that you are left with at the end of the day when all of the other structural and external factors are stripped from the investment. Generally, investment returns (or the lack thereof) are ultimately derived from the underlying direction or performance of the collateral. Coupled with knowing your position...

...stments, which will help you take advantage of economic swings (inflation, deflation, interest rate fluctuations, etc.), and maintain a much broader diversification across mul...

Published: Feb 13th, 2013 - Popularity: 367 views