Fans of the novel Atlas Shrugged (1957) by Ayn Rand will recall the infamous State Science Institute of the socialistic and dystopian United States. And for those of you who have not yet read the novel, beware of a spoiler coming. The State Science Institute was located in New Hampshire but conducted secret research projects in various
We all know the Fed has been on a path of interest rate hikes since December 2015 when the famous “liftoff” occurred — the first Fed rate hike since 2006 and the first time rates had been above zero since 2008. Since then, the Fed has raised rates six additional times, most recently 10 days
We’ve all heard the buzz about bitcoin and the rise of cryptocurrencies and how cryptos are the money of the future. I’ve always been skeptical of that. Last year when bitcoin hit $8,000 on the way up, I said in an interview that bitcoin “could go to $20,000” but it would crash after that. In fact, that’s
One of my favorite financial stories involves a time I was giving a speech in Hong Kong. I was waiting backstage to go on when a tall, professional-looking lady approached me to introduce herself. She presented her business card. It said she was a managing director of Goldman Sachs and her “boss” would like to
The debt disaster in China is not news; it has been building for years. China has relatively little debt at the national level but is buried under a mountain of debt incurred by provinces, corporations, banks and individuals. If all of these debts are combined, China’s total debt-to-GDP ratio is over 250%, higher than the
The case cited in the article above may be the only time the Treasury has failed to pay interest and principal on its debt. But there are many other ways to default on debt than nonpayment. Countries can slap on capital controls so investors can’t convert to hard currency or get their money out
Two of the articles above focus on a potential emerging-markets debt crisis. This would be the third emerging-markets debt crisis in 35 years. The first in this sequence was 1982–85 and was centered in Latin America. The second was 1997–98 and was centered in South Asia and Russia. (This sequence omits the Mexican Tequila Crisis
In 2011–13, the Obama administration waged an effective war on Iran using financial weapons alone without firing a shot. Iran was denied access to the global dollar payments system (Fedwire and the Clearing House Association) and later denied access to the global payments system for all major currencies (SWIFT). The result was a collapse of
Using the Fed’s broad real trade-weighted dollar index (my favorite FX metric, much better than DXY), the dollar hit an all-time high in March 1985 (128.4) and hit an all-time low in July 2011 (80.3). Right now, the index is 95.2, slightly below the middle of the 35-year range. But what matters most to trading
