Are you a deflationist? Or an inflationist? No matter which way you believe the wind will blow, the truth is this: it’s up in the air. But, as Jim Rickards explains, there are things you can do to cover your assets, no matter which one wins the tug-of-war. Read on…
There are two things you shouldn’t do this Election Day: one, vote; two, buy gold. Why? Chris Campbell explores this and more in today’s Laissez Faire Today. Read on…
America has about 4% of the world’s population, yet houses 25% of the world’s incarcerated. What’s going on here? Chris Campbell digs deep into the industry to figure out the truth. While many blame the private prison industry, the real culprit, says Chris, begins right outside your door. Read on…
“While I heartily subscribe to your premise of pursuing one’s dream,” one reader, Donald J., wrote, “there are alternate perspectives worth considering.”[We’re listening… go on.]“Some wiseguy once said that life is what happens to you while you’re waiting for something better to come along. Milton put it a little more poetically in one of his […]
Want to get rich? Don’t listen to financial “gurus,” says Chris Campbell. In today’s Laissez Faire Today, Chris shares a Zen proverb and shows how understanding it is the only real way to get rich (and live a rich life). Read on…
Sometimes life deals you lemons. It’s up to you to make lemonade. This month’s Insider Cellar recommended winemaker had no intention of making wine when his family settled just north of Santa Barbara. When our reluctant winemaker’s father walked his land in the early 1980s, he was probably disappointed when he discovered the soil did not have the nutrients to support his strawberry crop
Ben Franklin once said, “An ounce of prevention is worth a pound of cure.” In today’s Laissez Faire Today, you’ll learn about one FREE website that has the potential to not only keep your family safe – but also open your eyes to what’s happening in your own neighborhood. Chris Campbell has all the details. Read on…
All over the world, power is dying. The dictators and tyrants of the world are no longer able to wield it like they once used to. And they’re losing it to the “little guy.” Chris Campbell shows you how to be the king of your castle by taking advantage of this fact. Today, you’ll learn how to grab “power gaps” in the market and channel them into your product idea or project. Read on…
The fireflies along the tidal rivers of Malaysia show "feats of synchrony that occur spontaneously, almost as if nature has an eerie yearning for order." Chris Campbell tells you where else this might occur in the world. Also, new technology may revolutionize the agriculture industry and what we think of as a farm.
Jeff Davis is running for Governor in Hawaii and has an interesting campaign strategy. Also, what motivates hackers is revealed and the findings might surprise you. Finally, Ferguson is discussed in a new light. Chris Campbell has more...
This month, I’m going to tell you a hard truth. It’s one that Wall Street brokers and financial analysts try to hide. It’s one that most newsletter writers choose to ignore. In fact—when it comes to the financial world—this is a “secret” that everyone knows… but no one will mention.
When the government pumps trillions of dollars into the economy, they’re not actually printing the money. It enters as digital entries in banks across the country. It’s made the system fast, responsive, and, unfortunately, vulnerable. Now our money is no longer something we hold in our hands, but something that exists on a very susceptible network.
The so-called recovery is only built on debt and printed cash declares our own Byron King. In the long term, the only option for the government to continue financing it's operations is to print too many dollars. Money printing has it's limits, however. It's Byron's opinion that at some point, perhaps very soon, the government will have to turn to more desperate measures. Namely, capital controls. In the following featured essay, Byron outlines 4 probably ways the government will take your cash and one play you can buy through your broker to prepare today. Read on...
Americans expatriate because they want to get out of the country. Corporations expatriate for similar reasons. Clem Chambers explains...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
They lurk somewhere in everyone’s 401(k) program. Tick, tick… And it might be years before you discover them. Tick, tick… By the time you do… Kaboom! It’s too late. They’ve already blown up your retirement.
The U.S. dollar is the dominant global reserve currency. All markets, including stocks, bonds, commodities, and foreign exchange are affected by the value of the dollar.The value of the dollar, in effect, its “price” is determined by interest rates. When the Federal Reserve manipulates interest rates, it is manipulating, and therefore distorting, every market in […]
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance or the get-rich-quick adventurer. They will die poor.– Jesse Livermore, How to Trade in StocksThe trouble with capitalism’s guardians is that they have no […]
John Foust, a Democrat running for the 10th congressional seat in Northern Virginia, is — like Gov. Terry McAuliffe and other state Democrats — gung-ho to expand Medicaid. His wife’s position is, shall we say, a bit more nuanced.Foust has slammed his opponent, Republican Del. Barbara Comstock, for her opposition to expansion. He has spoken […]
The midterm election season is upon us, and it’s a tossup whether the Republicans will win the Senate, or if President Obama, seemingly oblivious as conflict flares up around the world, will, through his continuous campaigning, keep Harry Reid in his majority leader seat.The only thing we know for sure is that sociopaths will be […]
One industry is expected to grow from an estimated $77 billion sector by the end of 2014… to around $700 billion in 2024. And that, frankly, is a conservative estimate, as you’ll see below. This isn’t because of some resource boom or new discovery. This isn’t because of funny business or a trader play. This is real spending, done by real companies to combat a very real threat. It’s already an established industry but poised for exponential growth. Because the problem it combats is growing exponentially.
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.The states had accumulated relatively massive debts to finance that war, which mostly […]
A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
Fifty years after the 1929 crash, a group of money managers and investment thinkers put together a collection of essays looking back at that experience. The result was a distillation of some pretty fine investment wisdom. Timely, I think, to review now.One of the contributors was Arthur Zeikel, then with Merrill Lynch. The title of […]
Although the mainstream media have turned its attention away from the wreckage of Obamacare, don’t think for a second that all is well.As the politicos in D.C. focus their attention on the midterm elections in November, now is a great time to study, prepare, and seek out the most affordable, accessible, and highest quality options […]
Where do great investors come from?I’m not sure what the hurdle rate for greatness is, but Guy Spier has put up impressive results. His Aquamarine Fund has returned 463% since inception in 1997, versus just 167% for the S&P 500 (a broad proxy for the market). Put another way, $1 million invested at inception is […]
Turn on the tube and economic ignorance seems to be everywhere. There is constant shilling for more government. Business is demonized. Man is said to be trashing the environment. “Workers and women are oppressed” is the constant mantra.And members of the clueless media nod their heads in unison.Only John Stossel has provided the fresh air […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
In the minds of many people around the world, including in the United States, the term “capitalism” carries the idea of unfairness, exploitation, undeserved privilege and power, and immoral profit making. What is often difficult to get people to understand is that this misplaced conception of “capitalism” has nothing to do with real free markets […]
Some people are saying it is just what the doctor ordered. Others are saying that the cure is worse than the disease.The Affordable Care Act? Reengagement in Iraq? Tea Party bullying in the GOP?Not this time. Just as protracted in the corridors of Congress and the White House is the debate over the proposed reform […]
I made a choice five months ago. And that choice has saved my life. This wasn’t some instantaneous decision, with danger near. It wasn’t some great “eureka” moment, either. There probably isn’t a person out there who would question what I did. In fact, more and more people are making the exact same choice every day. And each one does it to the sound of applause.
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
People jacked up about income inequality can find a new hobby. The 1% are victims of a doomsday machine, and the countdown is ticking. Machine, thy name is “family.”This came to mind as I was reading a preview of Columbia Professor Andrew Ang’s forthcoming, must-read book on Asset Management. Ang is that oxymoron, an exciting […]
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.
Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The whole Obamacare fiasco has blown up in the president’s face, but Americans should know how that legislative sausage was made.
Taibbi is no financial scribe. He writes for Rolling Stone and the like, so he can actually write. He also comes at these issues from a side readers of this page may not normally see. Friends of free markets tend to want to give Wall Street a free pass, believing the nonsense that the financial exchanges are free-market capitalism at work.
The list of legislation regulating Wall Street is as long as your arm, and it’s the government’s currency they’re trading with. The 800-pound gorilla in the markets is the Federal Reserve. The corner of Wall Street and Broad Street is nowhere near Galt’s Gulch.
Early on, Taibbi writes, “Like most Americans, I don’t know a damn thing about high finance.” He tells the story of how while Wall Street was unraveling, he was covering the 2008 presidential campaign.
What this means for readers of Griftopia is that the author goes to great pains to explain all of that financial gobbledygook in language anyone can understand. If you never quite got the concept of what a collateralized debt obligation (CDO) or a CDO squared, or a credit default swap was, then let Taibbi walk you through it.
While Taibbi leans left, his chapter on the Affordable Care Act is worth the price of the book. Sure, the government website doesn’t work, and every night we hear some new horror story on Fox News. But Taibbi hits Obama’s crown piece of legislation where it hurts. “Really, Obamacare was designed as a straight money trade,” writes Taibbi. Billions in subsidies “and the premiums from millions of involuntary customers in exchange for the relevant industries’ campaign contributions for a few election cycles going forward.”
Echoing Hans Hoppe’s theories about democracy and high time preference, Taibbi harangues the Obama administration for its short-term thinking. “A radical reshaping of the entire economy, for two election cycles’ worth of campaign cash — that was what this bill meant.”
As it is, American health care is no free-market system, and Taibbi knows it. He describes it as “a Kafkaesque parody of corporate inefficiency.” He runs through some studies that point to administrative costs as the culprit for rising costs. Then he talks about the real medical cost smoking gun — the McCarran-Ferguson Act — that said until Jan. 1, 1948, the insurance industry was not subject to antitrust regulation. Even after this date, the industry would be exempt in any case where there were already state laws in place.
Insurance companies collude to set prices, and they do all they can to not pay. Taibbi illustrates this by morphing his Obamacare discussion into the behavior of property and casualty insurers after Hurricane Katrina.
The Democrats could have pursued undoing McCarran-Ferguson, but they instead “decided to try to ensure private competition in the health industry by creating a state-run insurance plan.” Obamacare was driven by chief of staff Rahm Emanuel, and the going price for votes was $100 million on the Democratic side.
Taibbi’s description of the bill’s passage captures the essence of all legislative work. Obamacare was passed “in a romper room of overgrown children seemingly barely old enough to keep from peeing on themselves.”
The author devotes a chapter to trashing Alan Greenspan, “a perfectly two-faced man, serving a perfectly two-faced state.” Taibbi takes some shots at Greenspan’s guru Ayn Rand. While not always on target, some of it is funny. Taibbi’s observation that never in history has there been a funny objectivist may, in fact, be right.
He also points out the irony that an objectivist, who by definition should be opposed to the very idea of the Federal Reserve, would have the job of running a central bank. Taibbi knows enough to recognize the Fed creates money out of nowhere, quantitative easing is “an utterly insane program,” and the Maestro was constantly wrong.
There are instructive chapters on Wall Street’s capture of the mortgage market and the commodity boom. Taibbi leans a bit hard on the idea that the rise in commodity prices was completely engineered by Wall Street, with supply and demand having nothing to do with it.
He does point out the idiocy of making long-term investments using short-term speculation instruments, and insists Wall Street sales sharpies took advantage of “midlevel state employees” who ran pension funds.
Where the author really lets loose is in his famous blistering attack on Goldman Sachs, which originally appeared in Rolling Stone. Taibbi updates and adds to his work, which was widely quoted when it first appeared, calling the white-shoe Wall Street investment bank a “vampire squid.”
In the chapter titled “The Great American Bubble Machine,” Taibbi lays out all of Goldman’s connections with government and market-manipulating activities. The author mentions an often forgotten bailout Goldman received in the heat of the financial meltdown. Overnight, the investment bank was granted bank holding company status, allowing them to attract FDIC-insured deposits. This process normally takes months or even years.
That change made the bank’s primary regulator the New York Federal Reserve Bank, whose chairman at the time was former Goldman managing director Stephen Friedman. He was conveniently able to get this violation of Federal Reserve policy waived by the Fed’s general counsel themselves. To top it off, Friedman didn’t divest himself of his Goldman shares, as the law requires. Instead, he actually bought 37,000 more shares.
The government takeover of AIG was really a way to hand billions directly to Goldman Sachs. And Bernanke’s zero interest policy boils down to “taxing Grandma to pay Goldman,” quoting University of Maryland professor Peter Morici.
The tea party can scream from the right and MoveOn.org can cry from the left demanding change. But it’s “groups of anonymous lawyers and bureaucrats and lobbyists” that dictate not only the rules of the game, but who wins and loses.
This linking of government with its preferred industries has turned the economy into a back-alley casino. One operated by Washington’s hidden bureaucrat class and rigged for the political elite to come out on top.
Knowing what you’re up against is half the battle. Taibbi shines a spotlight on the dark alley that connects Wall Street and Washington.