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Links: 2009-04-28 – How libertarian dogma led the Fed astray – Henry Kaufman The original Dr. Doom speaks. Hat tip Yves Smith. “The Federal Reserve has been hobbled by at least two major shortcomings that were primarily responsible for the current and several previous credit crises. Its failure to spot the importance of changing financial markets and its commitment to laisser […]

Stress tests reveal Citi and BofA need more capital, but you knew that already

The leaks about who failed the stress tests are already starting.  Who got a big fat ‘F’?  Apparently, Citi and BofA for starters.  But is that any surprise? Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government’s so-called stress tests of lenders, according […]

Berkshire Hathaway Annual Meeting this weekend

Berkshire Hathaway’s Annual Meeting is this coming Saturday 2 May 2009 in Omaha, NE at the Qwest Center (details in pdf here).  Given the financial turmoil and all of the hubaloo around Berkshire’s credit rating, it should be a very interesting affair. In conjunction with the Annual meeting, Berkshire CEO Warren Buffett’s son Peter is hosting a unique event, a […]

Swine Flu video primer from the Wall Street Journal

I showed you a video from CNBC in a previous post detailing how Swine Flu spreads in humans. Here is a second look at what Swine Flu is all about in three videos from the Wall Street Journal. New York City Mayor Michael Bloomberg says “stay calm.” Here’s the last Wall Street Journal Video which talks about the logistical challenges […]

Ackman and Stigliz talk Stress Tests with Charlie Rose

In this much-talked about Charlie Rose roundtable with Nobel Laureate Joseph Stiglitz joined by Bill Ackman of Pershing Square, Andrew Ross Sorkin of the New York Times and Kate Kelly of the Wall Street Journal, these experts discuss the government-administered stress tests. Joseph Stiglitz has been particularly negative about the Obama Administration’s banking crisis plan. If you want to know […]

Links: 2009-04-27

FT Alphaville » Just how big a problem is falling capacity utilisation? Nice reference to Austrian School economist Josef Steindl. “Former commodity mega-bulls Goldman Sachs are expecting markets to continue to pull back from current levels in the near term as “fundamentals are not yet stable enough to support higher prices”” Bronte Capital: Biota – a wild speculation If Swine […]

GM offers a debt for equity swap to bondholders

As the possibility of bankruptcy draws nearer, General Motors is moving to sell non-core assets and to broker arrangements with bondholders and unions alike which will keep it out of bankruptcy. In a 9AM press conference today, new General Motors head Fritz Henderson announced a debt-for-equity swap offer for GM bondholders which would cut debt dramatically at the company. It […]

Swine Flu has Mexican peso bears feeding at the trough

After a good run-up in the last month, the Mexican Peso is getting crushed in the currency markets today.  How much of the pullback is a result of the news regarding Swine Flu and how much is technical, due to the prior run up, is hard to identify.  Nevertheless, the outbreak will have a negative effect on the Mexican economy […]

The Age of the Fiat Currency: A 38-year experiment in inflation

The Age of the Fiat Currency: A 38-year experiment in inflation

When the United States closed the gold window in 1971, the world entered a new era in which nearly all money was supported by nothing more than the full faith and credit of the governments issuing it. If one looks back to the history of paper money, no government has had the discipline to maintain its currency without resorting to the printing presses.

All of these paper money experiments have ended in disaster.  This is one reason ‘gold bugs’ are so keen on the Gold Standard – because a currency tied to a real asset is better than a currency backed only by the promise of its government not to inflate (a return to Gold is nearly impossible, for reasons I outlined in my post "A New World Order").

But, the era since 1971 is unique in history in that ALL major currencies are fiat currencies.  This is truly the Age of the Fiat Currency – unprecedented in human history.

BofA saga continues as John Thain calls Lewis a liar

The Wall Street Journal is running a front-page story about John Thain today in which he  accuses Bank of America CEO Ken Lewis of lying about events surrounding the Bank of America – Merrill transaction and the ouster of Thain as a top Bank of America executive.  Thain spent most of his career at Goldman Sachs, but left to head […]