Book review: David A. Stockman – “The Great Deformation – The Corruption of Capitalism in America”

Cover of David A. Stockman's The Great Deformation

David Stockman’s new book “The Great Deformation” is a brilliant, penetrating analysis of the present state of the US economy and the US political system, and a detailed account of how the nation got into this mess. The book will upset Democrats and Republicans alike, and quite a few other constituencies as well, which can, in this case, be safely accepted as proof that Stockman’s narrative is spot on. Stockman is an angry man and he admits so himself early in his 719-page tome. That anger adds bite and verve to his writing … [Read more...]

The triumph of politics

Richard Nixon

On August 15, 1971, President Richard Nixon declared that the United States would no longer honour its promise to exchange US dollars held by foreign central banks for gold at a fixed price of $35 an ounce. The innocuous term 'Nixon closed the gold window' that is now widely used to describe this act does not quite convey its significance. (Was something to be stopped from going out or from coming in through the window? Can the window be reopened again?) What Nixon did was cut the last remaining official link between the … [Read more...]

Is gold in a bubble?

gold

To answer this question is not straightforward. As the gold-sceptics keep reminding us, gold pays no coupon and no dividend, it does not offer a running yield, so traditional measures of 'fair value' do not apply. But gold is money, and just as the paper ticket in your wallet does not pay interest, neither does gold. Gold is a monetary asset that has functioned as a medium of exchange and a store of value for thousands of years, around the world and in almost all societies and cultures. Many modern economists believe that … [Read more...]

The second crisis of socialism

Communist Propaganda Poster

 The world is facing the worst financial crisis since at least the 1930s "if not ever," the Governor of the Bank of England said last week when he explained to an increasingly sceptical and weary public the Bank's decision to print yet more fiat money and use it to buy yet more government bonds. I doubt that his words or his actions will do much to restore confidence. And they will not mean an end to this crisis. What type of crisis is this? This is a financial crisis for sure. Its root causes are firmly located in money, … [Read more...]

Operation Twisted Logic – Why the Fed is the problem, not the solution

federal reserve

I wrote the following essay yesterday for TheStreet.com. Yesterday the U.S. Federal Reserve delivered no real surprises. Its new policy was expected by the market and those members of the public who still follow the central bank's every move with interest and, I can only assume, in the misguided belief that it has the answer to our problems. As part of "Operation Twist" the Fed will purchase $ 400 billion of long-dated government bonds and sell an equivalent number of short-dated securities from its extensive portfolio over … [Read more...]