Weekend readings, 2016/12/09


Trump, Buffett and Greenspan are correct, according to Kelton. Too much debt could have its consequences, but it is not a financial crisis along the lines of what Greece and other countries have faced. As a sovereign nation with complete control over its currency, the U.S. can always make good on its debts, on time and in full – and that includes its Social Security, Medicare and its other dollar-denominated obligations.

Interesting read on the false concept of the US facing a debt crises. Article argues for aggressive fiscal policy.


People are acting as if there has never been a period of rising interest rates. In January 1941, the 10-year treasury was yielding 1.95%, by September 1981 it was up to 15%. Over that time,ten-year bonds had nominal losses just ten times, with the worst annual loss at 5% (table below). When bonds get crushed, it’s not the losses you see on your statement that get you, but rather the losses you feel when you go to the grocery store.

Puts bond losses in rising rate environments into perspective


We, therefore, expect a unanimous vote for an increase in the funds rate range to 0.50-0.75%. The statement will likely upgrade its description of the risks to the outlook to “balanced” from “roughly balanced”. The committee may adjust its assessment of the policy stance to “moderately accommodative” from “accommodative”, as many officials have already done in their public comments.”

The street is unanimous in expecting a 25bps increase from the Yellen on Wednesday. Most also expect “dovish” language to not mention expected fiscal stimulus this time around.


Maybe having some money in fighter jets and missiles is the thing you need to feel better about things. Call it an emotional hedge with the added kicker that you might actually make some money should your worst fears be realized.

Making the case for why an allocation to the defense sector might make sense. ITA is the most well-known ETF in this sphere and has great liquidity and a solid asset base. XAR is a smaller ETF fund with less liquidity but it is more diversified.