Financial Markets

While Modern Portfolio Theory (MPT) is popular in academic economics and finance, it fails to properly explain profits, mistakenly confusing entrepreneurial profit seeking with risk management.

In finance, memories are short. The mortgage industry makes out with 50-year paper, the consumer, not so much.

For the past 30 years, the US economy has bounced from one asset bubble to another. The recent Tricolor Holdings and First Brands bankruptcies are just another example of an economy being pumped up by the Federal Reserve.

The governmental response to the covid pandemic was to cripple the economy. To compensate for the damage, the Federal Reserve unleashed massive inflation in an attempt to do what the Fed always does in a crisis: bail out the economic actors.

The Dutch Tulip Bulb Mania of the 1630s continues to fascinate, especially given the recent asset bubbles our economy has experienced. What caused this bubble is worth a second look.

The political establishment is trying to stoke panic that Trump is “politicizing” the Federal Reserve. But it’s already political. The real danger, from their perspective, is not that Trump is changing the Fed; it’s that he’s making its true nature harder to hide.

Newly released jobs data this month shows that the jobs narrative from the media was based on bogus numbers.

Profits and losses play an important role in a free market system. However, as government intervenes to protect politically-connected firms from losses, the entire market becomes distorted and less reliable.

The Efficient Market Hypothesis claims that financial markets process information immediately and correctly. However, since the EMH is based upon unrealistic assumptions, we also have to question the efficacy of this hypothesis, especially when central banks intervene in the markets.

The Efficient Market Hypothesis claims that financial markets process information immediately and correctly. However, since the EMH is based upon unrealistic assumptions, we also have to question the efficacy of this hypothesis, especially when central banks intervene in the markets.