Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelertoing Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

U.S. Consumer Booms Inevitable Bust

Economics / US Economy Jan 13, 2009 - 09:24 AM GMT

By: Oxbury_Research


Best Financial Markets Analysis ArticleA Nation Named Desire - Classic film buffs will be familiar with the 1951 film – A Streetcar Named Desire – which starred Marlon Brando and Vivian Leigh. My favorite scene in the film involves Blanche DuBois (Vivian Leigh) and Stanley Kowalski (Marlon Brando).

Blanche DuBois is a fallen woman – her family fortune and estate are gone. In an absolutely classic line, Blanche says to Stanley Kowalski - “I have always depended on the kindness of strangers”.

I can think of no better analogy for the current condition of the United States than Blanche Dubois. Here stands the United States, her vast fortunes have been frittered away by a generation of people who followed a doomed economic model. An economy based mainly on consumption simply does not produce any real long-term wealth, only long-term debts.

Now the United States is reduced to, like Blanche DuBois, relying on the kindness of strangers. The US is nearly totally reliant on strangers (overseas investors) to buy trillions of dollars of US Treasury paper just to keep the lights on in the country. Yet most Americans don't even realize this.

Muddled Thinking from Wall Street

The ignorance of some Americans doesn't bother me nearly as much as the sheer arrogance and sense of entitlement of some people from Wall Street. I came across an article this week written by someone from the Point and Profit stock trading service.

In the article, he stated that foreign investors would gladly buy up any amount, no matter how large, of Treasuries the US would sell. Why? Because they “have” to do it to sustain their economies. I wonder if he has ever left the cozy confines of Manhattan?

Here is a direct quote - “They (meaning foreigners) have nothing , they build nothing , they sell nothing without OUR demand”. So he is basically saying that foreigners are nothing without the United States. The whole purpose in life of everyone else on the globe is to merely serve the needs of Americans and to make their Wall Street masters filthy rich.

I think I will send a copy of that article to every overseas institutional fund manager and central banker. I wonder what the arrogant author of that article would think when all of the “worthless, nothing ” people around the globe do absolutely nothing at upcoming Treasury auctions?

Many of these countries that are filled with these “worthless, nothing ” people such as China actually have plenty of money unlike the United States which, like Blanche DuBois, is reduced to relying on the “kindness of strangers”.

More Muddled Wall Street Thinking

I also came across a critical comment about an article written by my brilliant colleague at Bourbon & Bayonets, Nicholas Jones. In their comment, the person said that Nick's analysis on the Fed's money creation was worthless because Nick was ignoring the trillions of dollars lost by the banks.

That person went on to say that it didn't matter that the Fed had created all of this funny money. After all, the banks weren't lending any of it – a liquidity trap. Obviously, this person has swallowed the Wall Street deflation fairy tale hook, line and sinker.

This person should try to do something that Wall Street people rarely do – think outside the box. I don't care how many trillions of dollars that the black hole called bank balance sheets has swallowed up. The Federal Reserve can create many more trillions of dollars than were lost in the blink of an eye. The Fed can literally create an infinite supply of funny money if they so wish.

There is also no law that says the Fed has to go through the banks to get the money to the public. They can easily use Ben's famous helicopter. I can picture it now – armies of uniformed government thugs wearing arm bands saying “US Federal Reserve”.

While black helicopters hover overhead, these armies will go into every American community. Street by street and house by house, the Fed armies will go, giving out freshly printed money to one and all. The only catch will be that the funny money they give out will have an expiration date on it. If you don't spend the money within a few weeks, the money will become worthless.

One consolation however - the money will be pleasant to the eye. The new money will come in the color of your choice and will have a picture of your favorite CNBC talking head on the front. On the back, there will be a picture of Ben Bernanke with the slogan In Ben We Trust in bold letters.

So much for Wall Street worries about a liquidity trap and deflation. It is inflation and the rapidly descending value of the US dollar that people should be worried about.

Even More Muddled Thinking

Here is another interesting tidbit I ran across this week. Michael Lewitt of Harch Capital Management said that the last thing Wall Street “investors” are thinking about when purchasing zero percent Treasuries is reselling them at a profit. Mr. Lewitt said that, in most cases, the Wall Street “investors” are expecting to resell the zero percent Treasuries at a loss.

I would argue that these Wall Street “investors” are NOT thinking at all. Why would anyone in their right mind deliberately make an investment into a security where you know you are guaranteed a loss? I thought the whole idea was to make money.

Oops – I forgot! The whole idea is to make money for Wall Street, not for their clients. These Wall Street “geniuses” are paid exorbitant fees and make millions of dollars a year in salary and bonuses for this type of investing acumen? Incredible!

Why would any individual investor give his or her hard-earned money to these Wall Street money managers? To lock in a guaranteed loss? A better solution for clients of Wall Street firms would be to put their money under the mattress. I think that is what Blanche DuBois would do.

By Tony D'Altorio

Analyst, Oxbury Research

Tony worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and as a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Tony was trading supervisor during the great crash of 1987 and was responsible for millions of dollars of customers' orders.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2009 Copyright Nick Thomas / Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oxbury Research Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules