Deviant Investor June 4 2013
In no particular order the following is a list of what many people think are contemporary insanities. Since most of these have been widely discussed, links have not been provided. The information is easily available via Internet searches.
Paper Pushers & Money
Nixon temporarily closed the “gold window” in 1971. It is still closed. How long is “temporarily”?
The Japanese government spends 24% of its annual revenues on interest expense, but only because the average interest rate is quite low. If interest rates rise to 2.2%, their interest expense will consume 80% of the government revenues. Japan has been described as “a bug in search of a windshield.” Since their economy has a huge impact on the rest of the world, the inevitable disaster that results from crazy economics will not be pleasant for Japan or the rest of the world.
Abenomics (Japan) wants a 2% inflation rate but expects long-term (JGB) government bonds to yield only 1%. This seems like a disconnect in thinking that happens in a crazy world.
Unbacked paper money has always, throughout history, failed to maintain its value and eventually failed as a currency. Yet all modern countries use unbacked paper money. That is indeed crazy for all except bankers and politicians!
The Federal Reserve is annually creating “out of thin air” about $1,000,000,000,000 to purchase US Treasury debt and to buy toxic assets from bankers. If it sounds crazy, it probably is crazy.