GBP

Ug, its frustrating, but i've had to abandon the short GBP position.  It has been breaking through resistance in an illogical stream of strength for the past month or so.  There is little fundamental information to drive this... it seems largely based on the theory that QE paces will continue at current rates in both contries.  That being said the current sentiment may continue for a while until a "shock" hits to spark a retracement.  It's sad but I don't want to continue waiting for this moment.... I feel like the gold bugs right now, holding and holding knowing your position is fundamentally right over the course of a decade but continuously taking short term losses.  Oh well.  I continue to be short EUR and Long USD/JPY, maybe that can get me out of this rut.  On the bright side.... bitcoin has gone up 1000% percent in the last month.  I suppose this is what keeps me from sitting at the bar alone in depression at this point.

QExperimentation

Whelp.... the time may be nearing....

One of these days the Fed will unleash the dreaded taper and we will no doubt dive into bear market territory.  Maybe the fed is ignorant..... maybe they just dont care....  deep down I refuse to believe that the people at the fed are completely ignorant, and thus logically there will be no taper in December because I believe they DO in fact care.

Let us continue bolstering the rich and driving the poor into debt for a little bit longer pls, my portfolio would appreciate it.

Yes America

There is still a student loan bubble.

Linear vs. NonLinear....

A long while back I posted on the exponential growth of our monetary base/debt and how it stands in stark contrast to the finite availability of resources.  Today I found a graph that sums this up quite well:

I give you the new normal.  How long will it be until the masses understand that that there are only two outcomes for that red line on the graph:

1) It goes down.... otherwise known as monetary contraction, the deflation, and that for which "there is no plan B" - Bernanke 2013.  

2)  It goes up..... we continue inflating that which has been inflated  (i'll give you a hint, it's not GDP).  

neither outcome is good, one outcome is certain.

EUR/USD Outlook is Fundamentally Bearish.

I don't think there is a question as to the stance of Mario Draghi and the ECB's monetary policy sentiment.  It is very clear that on a scale of dovishness, the administration lies somewhere between the BoJ and the Fed.  At the current value of the EUR this leaves a lot of room open for downside risk.  Thus I refuse to take positions long in this currency pair at the moment and the outlook for EUR/USD remains decisively bearish.

The Creation of Growth

This may be the single most important topic of economics and the basis behind fundamental differences in schools of thought.

It is very simple at its base, there are only two ways in which any economy can achieve growth:

1) Increased efficiency.
2) Increase in useful natural resources.

That is it.  All sides to a large extent agree with these founding principles.  It's notable that there is little to no argument revolving around #2.  How to achieve an increase in natural resources is scientific and straight forward.  You find coal, you mine it.  You acquire land with a splendid aquifer... great! You have drinking water.  You discover a diamond mine.... you get the picture.  The only heads or tails situations that arise do so when weighing the cost of extracting the resources with the moral or possible future costs of doing so.

There is, however, ample confusion and difference of opinion on how efficiency is achieved.  Specifically, whether it is more efficient/effective for a centralized government to control the operation of an entity or whether it would be better off in the hands of private enterprise.  Then to a greater extent, the idea of whether or not the forced sharing of income of the wealthy with those less fortunate is beneficial to the well being of society.

It has long been tested and proven that in the majority of circumstances, government makes less efficient use of capital than the free market.  This is the basis of capitalism and why it has been successful in history.  I think it is also clear that prosperity aside, it is at least more efficient for the wealthiest to decide for themselves what to do with their money, if nothing else for the mere fact that handouts are a disincentive, and those receiving them are less incentivised to work.

However, from a prosperity perspective things can take a whole new form.  Is everyone, on average, better off if the poor are better off and more is taken from the rich?  This becomes a matter of opinion that is more difficult to apply scientific reasoning to.   Many, if not most, would be inclined to say yes we are all better off.  I believe it to be true.... if the excess wealth of the rich is spread among the poor, disabled, and underprivileged, equality and a greater prosperity ensues.

The issue with this is that the phenomenon is fundamentally and predictably temporary.  The better off the lower class becomes, the more incentivised a population is to become lower class.  This is never a big deal at the onset, but history has shown it to grow ominously over time.  It's a dangerous phenomenon in a democracy, because if the lower class beneficiaries ever outnumber those who provide the benefits, majority voting favors the side of sustained and increased benefits for the lower class beneficiaries.  This has not only been the driving factor behind numerous rises of socialist and communist movements throughout history, but part of the downfall of those very same movements.... because a nation of unincentivised workers is not nearly as productive as a free one.   It's an unforgiving circle:  The poor are disincentivised and become less productive, less production drains value from the economy producing more poor people and less benefactors, more people are in turn disincentivised and the process continues....  Its a deadly circus of dwindling prosperity... or "The Road to Serfdom" as Hayek coined it.  Its a deficit building, production unfriendly cycle that acts slowly but with a high degree of certainty.

I do not shun the idea of helping the less fortunate.  I merely implore that it should be done via choice.  The second that the redistribution of wealth becomes mandated through the process of democracy, the countdown to a lesser standard of living has begun.

QQE

Otherwise known as the new normal.

The Bank of Japan now refers to QE as QQE, or Quantitative and Qualitative Easing.  The addition of quality is a nice touch BoJ, now we know your purchase programs are not just about the quantity of money but about the quality.

I wonder what they presume to be a qualitative easing purchase?  I surely hope they don't mean their own treasury bonds...... (insert troll face)

TWTR IPO

I am fairly confident that the TWTR IPO will be a success.  Why????  This is the perfect investment atmosphere for an IPO.  The climate is firmly bullish without regard for industry sustainability or fundamentals, and thus TWTR should flourish.  Janet Yellen gives a us promising hope that the QE train will keep rolling for at least another three months (and realistically probably longer), so I see no reason to be bearish until the great taper comes into play.