In 2011, one hedge fund manager bought twenty million nickels. Today, all across the U.S., Americans have stacks and stacks of nickels in their basements. What’s going on? And why should you be concerned? Chris Campbell investigates. Read on…
Smell that? Smells like burning money. That can mean only one thing: It’s tax time! In today’s episode, Chris Campbell shows how the rich really get richer. And why it has everything to do with your 1040ez. Read on…
Chris Campbell’s Thailand journey is coming to an end. In today’s Laissez Faire Today, learn all about the “Warren Buffet of Thailand” and why Bangkok is a lot like New Orleans. Read on…
The Internet is experiencing another Y2K moment. A quiet overhaul is taking place behind all the 1s and 0s. And very few know about it. And you won’t either until you read on…
If hyperinflation were going to happen in the U.S., it already would have, right? Wrong. Jim Rickards explains the clear reason why the U.S. hasn’t seen hyperinflation… and why it’s still more than possible. Read on…
In December last year, a lot of people were laughing off an inept thief. Not only did Charles Jennings, a cargo worker, quickly get caught — but his $1.5 million haul was snicker-worthy. Who’d want his product? How on earth could he sell the 7,500 pieces — or move them anywhere near that $1.5 million retail price tag? How dumb could he be? Here’s the thing — all the people snickering don’t know what they’re talking about. The $1.5 million stash? On the open market, it could easily be worth twice that. Heck — it could be worth 10 times as much or more. And moving it would be easy.
A new war is quietly brewing in America. A war on your retirement. Either you take steps now to protect yourself, or watch Wall Street and Big Government suck away everything you’ve worked for. Because, as Chris Campbell shows, the first shots have already been made. Learn how to protect yourself. Read on…
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…
Smart meters are supposed to be our saving grace. Reduce pollution… reduce blackouts… and keep you and your family safe. The truth, though, is the exact opposite. What’s the true agenda behind smart meters? And why are you being lied to? Read on…
You hear a lot about gold these days. But what about silver? Chris Campbell speaks out about the moon metal with one shocking confession. Read on…
Among red wines, two varietals are often latched onto by certain enthusiasts. “I only drink cabs,” or, “I only drink pinots.” Such statements are common surrounding these wines. Pinot noir and cabernet sauvignon: two wines with very different bodies, styles and flavor profiles. In my experience, those who “only” drink one usually cannot relate to those who “only” drink the other. The Hatfields and the McCoys of the wine drinking world.
Markets have you spooked? You’re not the only one. In today’s Laissez Faire Today, you’ll hear from three market experts on how to stay safe, no matter what direction the overall market heads. Read on…
Savvy investors: Two experts weigh in on why having your own personal gold standard… and betting that Ebola will get worse… could be your best investment decisions of 2014. Read on…
Writing a book? Chris Campbell shares a PROVEN system to making your book go viral on the Internet. But he doesn’t just tell you how to do it, he shows you how he did it too. Just last weekend he received nearly 7,000 downloads in only three days. Read on…
Bitcoin has been pretty quiet lately. But that doesn’t mean big things aren’t taking place behind-the-scenes for the digital currency. In today’s Laissez Faire Today, Chris Campbell pulls back the curtain and shows you how Bitcoin is quietly slipping into the mainstream. He also shows you why now could be the time to buy now, or forever hold your peace. Read on…
Last month, when renewing our health insurance, our carrier screwed up, leaving the entire Hill family without dental coverage... Their incompetence, however, opened our eyes to burgeoning alternatives in the health care space. To be specific, we were able to save $88 on our recent dental visit despite not having insurance. And it was all thanks to a little slip of paper that took us five minutes to acquire and cost us nothing.
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…
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.
What’s the single biggest health problem in America? Note that I’m not asking about the most widespread disease. Instead, I’m inquiring about the specific health problem that the largest number of Americans would most dearly love to solve.
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...
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.
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 […]
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 […]
For the last few decades, virtually everyone seems to have agreed that eating beef is a bad idea: bad for the planet, bad for personal health, and bad morally. The problem? Beef haters are wrong on all counts. Beef can be a boon for the planet, extraordinarily healthful, and a highly moral choice.
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 […]
Let’s head back in time…In 2004, a mere decade ago, the US national debt rang the register at $7.4 trillion. That represents “debt per citizen” of over $25,000. You, me, your neighbor, your 4-yr old grandson, you name it and they’re portion of the U.S. debt is $25k.But flash forward to today and you’ll see […]
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 […]
Remember that correction we’ve been quietly talking about over the past couple of months?Well, it might be right around the corner. Stocks waited until the last day of the month to nose-dive. The S&P 500 posted its first 2% down day since April — and the Dow wasn’t far behind. Early this morning, futures continue […]
Pretty much everyone, I hope, has heard of genetically modified organisms, also called GMOs. And pretty much everyone, I hope, knows that they are now a major part of the American food supply. Most people, however, can’t say why this situation might be dangerous, beyond the idea that splicing genes from one species into another is “unnatural.”
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 […]
No other price pops during a boom like that of condominiums. The common view among savvy real estate types is condos are the last to jump and the first to crash. A decade ago, Bernanke’s post-Sept. 11 easy money fueled condo prices and in turn high-rise residential construction from coast to coast.
In downtown Miami, 22,200 condo units were built in the 2003-08 boom. Many sat empty as prices plunged 60%. Now, just five years after the crash, a new condo boom is underway in the Sunshine State.
Interest rates are still low, making memories short. “How many condo units are necessary in this town?” asked builder Carlo Melo rhetorically. “Unlimited. Because we are selling to the world.”
Nothing clears a crystal ball like a bubble. Fearless developers have proposed 118 condo towers for the Miami area, and 35 are already under construction, reports The Wall Street Journal. Downtown has 41 projects on the drawing board that would add 12,100 new units.
“This boom is very reminiscent of where we were a decade ago,” said Peter Zalewski, principal at Condo Vultures LLC, a real estate consultancy.
It’s very reminiscent of the many booms that have taken place for centuries. I wrote about three famous bubbles and the inevitable crashes in the Laissez Faire Club selection Early Speculative Bubbles.
The Mississippi and South Sea bubbles, along with tulip mania, set the standard for financial manias as far back as 1636 in Amsterdam. Back then, trading tulip bulbs was all the rage. Before the mania, the Bank of Amsterdam offered sound money and free coinage. But as precious metals flooded the Netherlands from all over the world, the influx of money ignited the animal spirits. Coins, debauched by leaders around Europe, flowed into the Bank of Amsterdam to be re-coined at a fair value.
Formal futures markets developed to trade tulip bulbs, with no margin required. The frenzy peaked in January 1637, when the Witte Croonen bulb rose in price by 26 times, only to fall to 1/20th of its peak price a week later.
While tulip mania was relatively short in duration, the crash led to a doubling of bankruptcies in Amsterdam.
The tulip mania portion of Early Speculative Bubbles is what makes the book truly unique. This is the only Austrian business cycle theory analysis of the frenzy. My thesis is that tulip mania was caused by monetary factors like all other bubbles and crashes.
The Bank of Amsterdam inspired John Law, the world’s first Keynesian (even though Keynes hadn’t even been born yet). As founder of France’s first central bank, he abandoned the institution’s sound money ways. Instead, he sought to repair the French economy with copious amounts of paper money to refinance France’s stifling war debts. Sound familiar?
Law is easily the most interesting economist, monetary theorist, and central banker of all time. He killed a man in a duel, gambled his way across Europe and, along with his friend Philippe II, the Duke of Orleans, enjoyed what one biographer called “extraordinary success with the opposite sex.”
Law flooded the French economy with both banknotes and Mississippi Co. shares. Ever the promoter, Law used various gimmicks like rights offerings, special dividends, and options to allow people to buy increasingly more shares. The common Frenchman couldn’t get enough. As author Janet Gleeson writes, “Like gluttons at a Mississippi banquet, most investors ingenuously accepted the opportunity to gorge themselves and never considered the consequence.”
Ultimately, the Mississippi Co. owned nothing of value other than the trading rights the government had granted the company to pay off its debt.
As I point out in the book, the English looked on from across the channel and were jealous. British war debts were choking that economy as well. Sir John Blunt and the Hollow Sword Blade Co. copied Law and formed the South Sea Co., which sold stock and used the proceeds to buy government debt. Its assets were exclusive trading rights with South America.
The company’s shares tripled in a matter of weeks, but crashed quickly. Even the brilliant Sir Isaac Newton went broke. The South Sea bubble was short, as I explain, because the Bank of England stayed out of the South Sea frenzy. Investors had a place to run to with their money. In France, Mississippi Co. investors could trade the shares only for equally inflated banknotes. Gold and silver were outlawed.
I wrote the first edition of Early Speculative Bubbles in 1992 as my master’s thesis under Murray Rothbard’s direction, long before the current flurry of bubbles and busts. Although I didn’t know when or what the next bubbles would be, my concluding sentence was:
“What can be predicted with absolute accuracy is that fiat money, fractional reserve banking, central banks, Keynesian monetary policies, and self-serving politicians will combine to ensure that there will be many more booms and speculative bubbles for future economists and historians to chronicle.”
Since then, financial markets have been a series of bubbles and crashes. Not often do bubbles inflate so quickly in the same place after a crash. However, the Fed’s endless policy of easy money has gone where no central bank has gone before.
This Miami condo boom is said to be different because 85-90% of buyers are foreign and they’re paying cash. Developers are demanding that buyers fund 50% of the purchase price upfront to finance a portion of the construction. Less dependence on high-leverage bank lending leads bulls to assume cheap money isn’t fueling this boom and nothing can go wrong.
But nothing could be further from the truth. The malinvestments from the last condo boom were never fully cleared, with cheap money propping up redundant projects. Buyer project financing is a product of the central bank lowering interest rates below the natural rate. Low rates push investors, foreign and domestic, into riskier assets.
Grant’s Interest Rate Observer analyst David Peligal returned to Miami recently to find a project proposing to include a private helipad on its roof. He inspected a 1,500-square-foot unit just like the one he toured in 2011. Two years ago, the vacant unit was priced at $640,000. The current unit is listed for $749,000 and has been vacant for five months.
“With more supply hitting the market next,” Peligal says, “that could be a harbinger of something no developer wants.”
This is a lesson learned over and over again. Through the centuries, from Amsterdam to Miami, bubbles form and pop, spreading financial agony in their wake. Early Speculative Bubbles combines theory with storytelling about three famous bubbles that foreshadowed today’s financial tragedies.