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Federal Reserve Quantitative Tightening Could Spur the Next Financial Crisis

In an unsurprising development, the Federal Reserve decided at this week’s Federal Open Market Committee (FOMC) meeting that it would begin implementing the program of drawing down its balance sheet that it had begun to develop earlier this year. But while ending aggressively expansive monetary policy is a good thing, actively tightening monetary policy does bring up some cause for concern. If the Fed actually tightens policy to the extent that it claims it wants to, it could hasten [...]

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US and Chinese dollars

China to Issue $2 Billion in Dollar-Denominated Debt

The Chinese government just recently announced plans to issue $2 billion in dollar-denominated debt, its first dollar-denominated debt issuance since 2004. With countries such as Iran, Russia, and Venezuela turning to the yuan both for political reasons as well as for oil sales, and with the yuan’s recent inclusion in the IMF’s basket of currencies that make up Special Drawing Rights (SDRs), China’s sudden decision to issue dollar-denominated debt is puzzling. But delving a little deeper show that, paradoxically, [...]

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Mexican Silver Libertad

Mexican Congressmen Propose Monetization of Silver Libertad Coin

A group of Congressmen in Mexico’s Chamber of Deputies recently held a forum to propose the monetization of the Mexican Silver Libertad one ounce silver coin. The monetization of silver in Mexico has been a favorite project of Mexican businessman Hugo Salinas Price for years, and the idea continues to enjoy support among some members of Mexico’s political class. Supporters of silver monetization within Mexico claim that a silver monetary unit would help many Mexicans to save money. Looking at [...]

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Equifax logo

Worried About the Equifax Breach? Here Are Some Tips

After the massive Equifax data breach, you might want to take proactive measures to check your credit history and prevent your identity from being stolen. Equifax’s measures to protect consumers in the aftermath of the breach have rightly been criticized, from setting up a site that asked for even more sensitive personal information, to sending consumers to an erroneous website, to charging them money to put a credit freeze on their accounts. Given the enormous size of the theft, many [...]

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Trump Tax Plan

Uncertainty Over President Trump’s Tax Reform Plans

President Trump claimed today that rich Americans will “not be gaining at all” from his proposed tax reform plan. That runs counter to many analyses of the tax reform plans he campaigned on as a candidate, which found that the rich would in fact benefit. The devil, of course, is in the details, but this statement leads to speculation that key details of the tax reform plan may have changed, which could be bad news for investors and businesses. Capital [...]

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popping the united states debt bubble

The United States’ Ever-Growing Debt Bubble

The national debt when Bill Clinton took office in 1993 was $4.188 trillion. By the time he left office in 2001, it was $5.727 trillion, an increase of 37 percent. As profligate as that seemed at the time, it has been overshadowed by even greater subsequent debt increases. By the time President George W. Bush left office in 2009, the total debt outstanding had increased again to $10.626 trillion, an increase of 86 percent. And when President Obama left [...]

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United States Federal Reserve System logo

Shakeups Coming at the Fed

Federal Reserve Board Vice Chairman Stanley Fischer unexpectedly announced his resignation last week. He will resign from the board in October, meaning that President Trump will now be able to appoint at least 4 of the 7 members of the Federal Reserve’s Board of Governors, thus making an immediate impact on monetary policy and potentially impacting monetary policy for decades to come. The Board of Governors of the Federal Reserve System consists of 7 Governors, each of whom is appointed [...]

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401k expenses

How Much Does Your 401(k) Plan Cost?

Fees charged on 401(k) plans have been falling for years, but that decrease has slowed down recently. The average 401(k) plan expense ratio is now 0.41%, down from 0.52% in 2013 and 0.42% in 2016. Lower fees are important to investors for a number of reasons. The primary advantage of lower fees is that you lose less money from your investment returns. If two identical funds offer 6.5% annual returns but one has a 1.2% expense ratio and the other [...]

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Currency Wars

Renewed Talk of Currency Wars in Aftermath of Jackson Hole Meeting

In the aftermath of the Kansas City Fed’s annual Jackson Hole conference, there has been renewed discussion of a potential currency war. Central banks responded to the financial crisis by pumping trillions of dollars worth of liquidity into the financial system. It wasn’t just the Federal Reserve that engaged in those policies of quantitative easing – the Bank of England, Bank of Japan, European Central Bank and others did the same thing. Those QE policies served to weaken currencies, but [...]

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