Dear Mr. Fed Man…

Nov 26, 2011

Dear Mr. Fed Man,

 

This is being written on the generational eve of your undoing, so I should mention that I do not make claim to uniqueness or even insightfulness. Nevertheless, I wish to spell out the broad case against your supposed necessity — for it is plain to see that some people are starting to question the intellectual grounds upon which you stand.

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Russell Napier (renown financial historian and consultant for CLSA) has articulated some fantastic insights on the generational cycle, bear market bottoms and currencies in recent years. So for this reason we decided to compile a ‘Russell Napier’s Greatest Hits’ video for you to enjoy. See below for the video and summary.

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In previous articles we have tried to throw some light upon the tendency of the crowd to deny the validity of gains and losses as they are distributed in the speculative markets. Indeed, in our most recent post (titled ‘Are Crowds Capable of Identifying Stupidity?‘) we suggested that individuals aiming for gain are often faced with a surprisingly harrowing choice; between assuming the role of the ‘lucky fool’ or the ‘perennially unlucky genius’. Here I’d like to expand upon this insight as it relates to secular trends in the monetary sphere. Namely, I outline an implication of the forthcoming generation’s (potential) knee-jerk distaste for leverage.

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Herd opinion seems to be a chronically troublesome matter for the allocator of capital. Not only does the herd hold a deep suspicion for making money as such, but it seems that agreement is regarded as an imperative when it comes to considering the future. I might contend that the question; ‘How dare they consider that which all of us are unable/unwilling to consider?’ contains the primary sentiment behind the crowd’s contempt and condemnation… Supposing that this suspicion is true it might be considered quite important for us, as speculators, to overcome this. As ever, we think that it is contrary thought that reveals the key to prudence. Here I invite you to mull over the controversial question in the title; is the crowd capable of correctly identifying intelligence and stupidity? continue reading »

As many of you may already know, the other day Ron Paul expressly mentioned that he would pick James Grant of Grant’s Interest Rate Observer as chairman of the Fed if elected. We cannot conceive of a better candidate for that unfortunately frightful job! Jim Grant is just fantastically insightful when it comes to monetary matters and particularly knowledgeable on the history of money. So, for anyone that might be interested, here I present a short video of his best moments on money, banking and the Federal Reserve over the past few years. See below for the video:

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