Category: Investing

What Is Arbitrage? Hedge Funds Are Picking Up Pennies In Front Of A Steamroller

Hedge funds, especially “Relative Value” hedge funds, engage in something called financial arbitrage. Due to the sheer size of their exposure to currencies and bond markets, they put the entire financial system at risk. In normal market conditions, everything is fine. But rare events aren’t all that rare, and “risk-free” trades usually have the capacity […]

Read more

Why Deregulation Breaks Things

Introduction There is a very suspect trend in this country over the last few decades. Every time there is an administration that pushes to deregulate – especially the financial industry – it seems to be followed quickly by a crisis. The next administration is seen as “cleaning up the mess” by clamping down on regulations […]

Read more

Maturity Transformation: Transferring Risk from the Elites to the Public

Maturity transformation should be illegal. Maturity transformation is the process by which short-term deposits at banks are lent out as long-term obligations. Deposits, which are redeemable at any time, are not actually available. They are tied up in loans that are not redeemable. This makes fractional reserve banking even worse than it would be by […]

Read more

The Biggest Con of Our Lives: The Federal Reserve has Convinced America We Need Higher Inflation

The Federal Reserve is considering a much more aggressive approach to raising inflation.  Seeking higher inflation is perhaps the biggest con of our day.  The number one most important thing to understand about inflation is this: Rising prices are not healthy. Falling prices are.  The “deflation bogeyman” was invented in 2002 by none other than […]

Read more