Chris Grande - Peak Absurdity: Client Newsletter, Video and Great Articles
In this newsletter I have included my latest client newsletter, a quick video update and links to some great articles. Read on!
I've been trying to communicate just how ridiculous the financial world has become in the past few years but have felt that my words have not done justice to the gravity of the situation.
OTHER PEOPLE TO THE RESCUE!
Thankfully, some smart people have come to the rescue. Jim Grant, "Unnamed Veteran Fund Manager" and a journalist at the Financial Times (ft.com) have all come to provide assistance.
Das is Not Gut!
A few days ago, Satiyajit Das penned a wonderful summary of the dilemma facing central banks from all of their mindless stimulus. In a nutshell, here is the crux of the article:
Since 2008, total public and private debt in major economies has increased by over $60tn to more than $200tn, about 300 per cent of global gross domestic product (â€œGDPâ€), an increase of more than 20 percentage points.
Over the past eight years, total debt growth has slowed but remains well above the corresponding rate of economic growth. Higher public borrowing to support demand and the financial system has offset modest debt reductions by businesses and households.
If the average interest rate is 2 per cent, then a 300 per cent debt-to-GDP ratio means that the economy needs to grow at a nominal rate of 6 per cent to cover interest.
Read the rest of Das' article HERE. As you likely know, no one is growing at 6%. Not even close (China is probably 4% at best say many experts).
The Ph.D. Standard
Jim Grant, the well-respected publisher of Grant's Interest Rate Observer, in addition to betting against old line food companies (people like organic and fresh nowadays), opines on what he calls the PhD standard - where the value of money is not based on anything other than the credibility of the "former college professors" who run central banks:
The Ph.D. standard is the regime of discretionary monetary management by former tenured economics faculty. Not much is new under the sun in finance, except for this regime of improvisation by college professors trying stuff because it looks good on a blackboard. What it means for investors is thrills and chills. Richard Feynman, the wonderful physicist who was such a wit and so wise about much in life besides physics, talked about cargo cult science, in which things have the appearance of scientific rigor but not the substance. Thatâ€™s what characterizes the body of knowledge we know as macroeconomics. The people who deploy it are very well intended but very dangerous.
Read more of Grant's comments from Barron's HERE.
Peak Absurdity - Client Newsletter Available!
And finally, comments from a veteran fund manager. You can find his excellent thoughts outlined in my latest client newsletter. Find the link to that HERE. use the password "zero" to access. Also note that a link to my client newsletters sits in the right column of every email newsletter (see at right).
Also don't forget to watch my quick 5 minute video below shot at "the pond" near my office. What an awesome day today!
Thanks again for reading.
FYI - don't forget to subscribe to my Youtube channel directly HERE to get my latest video updates (I put many videos on there that don't show up here).
CLICK THE IMAGE BELOW TO LAUNCH MY UPDATE VIDEO IN YOUTUBE!