The Bear’s Lair: Will Trump’s years be good for gold?

The price of gold shot up on Election Night, as it became clear that Donald Trump would be the next President, but has since sunk by more than $100 per ounce. President Trump may raise interest rates, cause a global depression through tariffs or govern as a Reaganite, boosting the stock market – all bad for gold. Conversely, he may blow out the federal budget, print money to fund it, thereby causing inflation or cause a massive market crash that destroys confidence – all good for gold. So, which tendency will win? Continue reading

The Bear’s Lair: The death of long-term investment

Last year, the British government redeemed the Consolidated Annuities perpetual bonds (Consols), which had been in existence for 263 years, albeit with two reductions in rates in 1757 and 1888. This was only an extreme example of the effect funny money policies worldwide have had on investment, reducing “time horizons” to no more than a few weeks, as investors look for ephemeral trading profits. Yet truly long-term investment is a cornerstone of capitalism, and both our individual lives and the economy as a whole suffer from its absence. Continue reading

The Bear’s Lair: Is there a better way?

The U.S. Presidential election has once again wound its way to the usual end of utter exhaustion and despair, with little elation even for the winning candidate’s followers and utter despair at four years of futility for the losers. With both major party candidates disliked by the majority of voters and the low quality of U.S. government since 1988, numerous commentators have scratched their heads wondering if there is a better way to run the system. Continue reading

The Bear’s Lair: Central bank independence is a dangerous myth

Bank of England Governor Mark Carney has announced he is staying on until June 2019, to implement the funny-money policies that British voters increasingly doubt. Republican Presidential candidate Donald Trump was criticized for “politicizing” the Fed when he called on Fed Chair Janet Yellen to raise interest rates. Similarly Bank of Japan Governor Haruhiko Kuroda and ECB President Mario Draghi are above criticism, even as their policies lead to disaster. The “independence” of central banks is a modern shibboleth, but far from being a market approach, it derives from the Keynesian Bureaucrat Fallacy, in which all-wise bureaucrats are supposed to govern us better than we can govern ourselves. Continue reading

The Bear’s Lair: The pitfalls of Hobbesean politics

Thomas Hobbes (1588-1679) believed that a huge state “Leviathan” was necessary to prevent the otherwise inevitable conflicts between mankind. The temporary rejection by Belgium’s Wallonia region of the Canadian trade deal agreed by the entire remainder of the EU suggests that even when we have a truly spectacularly sized “Leviathan,” absorbing 48.2% of Europe’s GDP in 2014, it often cannot achieve its objectives. Can it be, as Edward Hyde, Earl of Clarendon (1608-74) suggested, that Hobbes got it wrong? Continue reading

The Bear’s Lair: Bailing out Hillary’s America

Hillary Clinton is leading in the polls, but her election over Donald Trump is not yet certain. However, she is overwhelmingly favored by the pundit class, even the right-leaning of whom have developed an irrational distaste for Trump. It’s therefore worth looking at what the world will look like in 2024, after eight more years of current policies, themselves following 16 years of poor U.S. governance (or 28 years, depending on what you think of Bill Clinton.) By 2024, the U.S. will be in a deep hole – how will it be dug out? Continue reading