Debt & Deficits

Mark this day on your calendars. The Dow is at 16974, the S&P 500 is at 1982 and the NASDAQ is at 4549. From this day forward, we will be looking to see how the stock market performs without the monetary heroin that the Federal Reserve has been providing to it.

It’s widely expected that at the end of this month, the Federal Reserve will end its third round of quantitative easing (that began in September of 2012)...[but] is there another round of QE coming? Here’s why I ask:

The central bankers of the world have painted themselves into corner. Growing mountain of debt makes it harder for economies to grow at higher interest rates, hence forcing central banks into a downward spiral of record low rates and monetary stimulus that simply encourages more borrowing and worsening the underlying problem - what the BIS calls "a debt trap"

There is an idea floating about to stimulate the economy via providing cash directly to consumers. It may just be a trial balloon at this point, but I expect the idea to gain traction. Here's why.

Recession, currency devaluation, hyperinflation and social unrest are all distinct possibilities if Argentina does not reach a settlement with the holdouts in the near future. Below are more insights into Argentina's latest debt default.

An Argentine friend queried me about Argentina's debt default yesterday asking me for my thoughts on the subject. Here is my reply in the form of an open letter to my friend and to the Argentina government should they be interested. They should.

During the credit crisis, one of the problems that occurred was that too many loans were being made to people that had no ability of paying their debt back. We see this trend in full stride once again in the auto industry. Subprime auto lending is back in a big way. Why is this happening? What are its repercussions? This article explains.

We're doomed! Even if the economy were growing at a faster pace, it wouldn't come close to offsetting the interest payments on our ever-expanding debt. As such, any sort of credit shock - either rising rates or a decline in the rate of debt expansion - will cause the system to implode. Let me explain why that is the case.

The next time someone says, "The US is the richest country on Earth" correct them and state that "The U.S. is the most bankrupt and indebted country in the history of the world" because that's reality. Let me explain.

There is too much debt. Debt works the same way for a country as it works for an individual or a family, which is to say if you borrow too much, then your life basically craters. Everything gets harder to do, and you end up doing things in order to deal with your past mistakes that you would never do normally. You start trying absolutely crazy things, and that’s where the world’s governments are right now. We are doing all these things that are essentially con games and getting away with it so far, because a printing press is a great tool for fooling people. I don’t see how we can get away with it too much longer.