3rd Quarter Update Summary

The monetary and fiscal stimulus packages that began last spring effectively halted the meltdown taking place in the economy and in the financial markets. The markets revived quickly as they always do when money is being pumped into the economy, but in the economy, the stimulus could at most mitigate in some degree the paralysis that was taking place from the effects of efforts to contain the epidemic.

Those efforts generally succeeded and bought us some time to supply our medical system with PPE and testing capability. The economy also largely survived the state-by-state scattershot approach to various lockdowns and is poised for future growth in the form of pent-up consumer demand. Although given this haphazard approach, the epidemic is returning yet again in another wave of infections further delaying a full economic recovery. The Federal Reserve has deployed

2nd Quarter Update Summary

The economy at present is finally emerging from our pandemic constraints. During March, employment was remarkably strong as unemployment continued to fall. The lowest interest rates in a century together with massive pent-up demand backed up by stimulus liquidity is creating a perfect storm for rapid short-term recovery and growth. There is little uncertainty that the pandemic will retreat. Our scientific knowledge base of mRNA techniques will grow and our producers will quickly refine and distribute vaccines for emerging covid variants as necessary. We may be looking at upcoming annual booster vaccine shots for these variants along with the seasonal flu.

Many people have expressed concern that the huge deficits will cause inflation and a subsequent collapse of the dollar. However, these massive deficit spending policies have successfully been deployed in our past but under very different circumstances, so let’s briefly review them.

Massive deficits (or money printing) in the past were of necessity liberally deployed in the service Continue reading 2nd Quarter Update Summary

Do Deficits or National Debt Really Matter? No, But Yes Only in Rare Circumstances.

Anytime a given economy has excess unused labor or plant capacity, deficits and federal spending are essentially mandatory to revive and expand the economy. The greater the excess capacity, the greater federal spending (deficit) is required to employ that excess. The is especially crucial in times of economic stress where private money creation (bank lending) is either dormant or in collapse. In addition, the only constraint on money creation ought to be, and must be, inflation. And inflation, in monetarily sovereign economies generally is not evident in economies with excess labor, plant and resources.

Here’s some background to help you understand a little better:

During the Great Depression, a small recovery had begun in 1936. Unemployment had dropped from Continue reading Do Deficits or National Debt Really Matter? No, But Yes Only in Rare Circumstances.

Basic Investment Dogma, or, When Is It Safe to Get in the Pool Again?

Yes. There’s yet another cardinal rule that tells you when to get into the market and when to get out (more or less). It has never failed us and following it, helped us avoid entirely the catastrophic markets last year and turn in positive performance for 2008. You’ve all heard it before but let’s restate it because it’s important and it works. Herewith: “Don’t Fight the Fed!”

Fifteen years ago, Continue reading Basic Investment Dogma, or, When Is It Safe to Get in the Pool Again?