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The Marginal Buyer Holds The Pin That Pops Every Asset Bubble

So it's important to watch him very closely
Friday, August 19, 2016, 1:01 AM

Those of you who took an Economics class in college may remember the saying that prices are set "at the margin". That's a fancy way to say that prices are set by the person (or people) willing to pay the most.

This person willing to pay top dollar is called the "marginal buyer". Most of us don't really think about him, but he (or she) is very, very important.

Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her "top dog" spot, sets the prices of nearly every asset class held by today's investors. » Read more

Insider

George Tsartsianidis | Dreamstime.com

Off The Cuff: Elusive Earnings

Profits vanish as as the next recession encroaches
Wednesday, May 4, 2016, 9:55 AM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • Elusive Earnings
    • Corporate profits are vaporizing across all sectors
  • Non-GAAP Crap
    • Companies are increasingly contorting their books to look more solvent than they are
  • The Ramifications Of Distorting Price Signals
    • Malinvestment the world 'round
  • Inflate Or Die
    • Why helicopter money is coming
Podcast

Rosie Apples/Shutterstock

Ed Butowsky: Calculating The True Cost of Living Increase

Why it's much higher than we're told/sold
Sunday, March 20, 2016, 12:06 PM

Over the past decade, we've been told that inflation has been tame -- actually below the target the Federal Reserve would like to see. But if that's true, then why does the average household find it harder and harder to get by?

The ugly reality is that the true annual cost of living is far outpacing the government's reported inflation rate. By nearly 10x in many parts of the country.

This week, we welcome Ed Butowsky, developer of the Chapwood Index, to the program. His index is a 'real world' measure of how prices are increasing much faster than the wages of the 99% can afford. » Read more

Insider

Broken Signals

Prices are so distorted, we're blind in these "markets""
Tuesday, March 8, 2016, 9:50 AM

Prices matter. Or at least, they should

They tell us about the relative value of things, and provide indication of scarcity or abundance.

Sadly, we don't have good prices anymore because the markets have been so heavily dominated by hot money speculators. » Read more

Insider

Carsten Reisinger/Shutterstock

Off the Cuff: The Importance Of Global Capital Flows

More responsible for prices than any other current factor
Thursday, November 6, 2014, 9:56 PM

In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:

  • Japan's Halloween Massacre
    • The most glaring sign yet that the central banks are desperate
  • Capital Flows Are King Right Now
    • The reason we have record-high markets despite crummy fundamentals
  • Musical Chairs
    • Every (market) player has fun until the music stops
  • Throwing The Bums Out
    • As our lifestyles contract, we vote out the incumbents
Blog

Jingran Hu | Dreamstime.com

Rising Resource Costs Escalate Odds of Global Unrest

The critical 40% income-to-food threshold
Tuesday, May 13, 2014, 9:34 PM

As we observe the growing unrest in Ukraine, there is the usual rush to ascribe a cause. Was it meddling by the West? Russia? Was it corruption by prior leaders? Simmering resentments that stretch back centuries that finally erupted?

The answers apply to Ukraine as well as to many other countries. Which is why having an accurate framework, a clear 'lens' for seeing what is actually transpiring, will prove far more useful to you than 99% of what you will hear on the ni » Read more

Insider

Keremgo | Dreamstime.com

What To Avoid When Relocating

Whether in or outside of your home country
Tuesday, May 13, 2014, 9:34 PM

Executive Summary

  • The math explaining why Ukraine was a predictable flashpoint
  • Why the IMF's "help" is about to make the Ukranian situation a lot worse
  • Implications for those considering relocating inside or outside of the US
  • Chris' "must have" ingredients that make a potential relocation destination worth considering

If you have not yet read Rising Resource Costs Escalate Odds of Global Unrest, available free to all readers, please click here to read it first.

Ukraine

Now back to Dave’s original series of questions. I think that Ukraine was primed and ready for a shove into instability.

There’s a well known psychology experiment where two male rats can be placed in a cage where they will live somewhat happily as long as they have sufficient food. However, if painful electric shocks are applied to the floor of the cage in such a way that the rats cannot escape, the two males will begin fighting.

Keep up the shocks long enough and the fighting will be severe, even to the death.

What’s happening? The rats lack the context to know that the shocks are coming from outside somewhere. The only thing they can project their discomfort onto is the only other living thing in their sight – the other rat.

So they fight.

Similarly, the people of Ukraine lack the context to know just who is to blame for the unpleasant conditions in which they live and seemingly cannot escape. So they blame each other and fight each other. They blame the President and so he’s gone. But the next one, and the ones following, will be just as bad; and eventually they will each be in turn ousted, too.

The problem is the shocks are not being caused by players they can see and blame. We’ll get to more on that in a minute.

By the numbers, the ...: » Read more