The Three Stooges Debunk myRA
By Dennis Miller, Editor, Money Forever
Recently, a whimsical scene played out in my mind…
As the house lights dimmed, the striking American flag shimmered in the backdrop. The audience fell silent as a tall figure in an unusual costume confidently walked onto the stage.
Curly turned to Larry and Moe, exclaiming, “Look! It’s our favorite—Uncle Sam, our childhood hero!” Moe shushed him with a finger to his lips.
Uncle Sam tapped the microphone, and the sound reverberated through the hall. He boomed, “Hello, my fellow Americans!” and the crowd erupted in cheers.
He continued, “Today, I am thrilled to unveil an extraordinary opportunity. We all recognize that IRAs and 401(k)s tend to be instruments primarily for the wealthy seeking to secure their retirement. Today, I’m introducing a new retirement program designed for everyday people. Everyone deserves the right to retire with safety and dignity, and that’s what we aim to provide.” Continue reading
Peter Zoellner serves as the Head of the Banking Department at the Bank for International Settlements (BIS). He earned his PhD from the Vienna University of Economics and Business Administration. Over the weekend, during the ACI Financial Markets Association congress in Berlin, he remarked that the dollar’s share of central bank reserves could decline by 10 to 15 percent in the coming years.
However, there’s no need for concern, assures Dr. Zoellner. The anticipated decrease in the dollar’s role in central banks’ foreign currency reserves will not jeopardize its position as the world’s primary reserve currency. This perspective is strikingly optimistic.
“It is possible that the percentage will nudge down from its current range of 65 to 70 percent to somewhere between 50 and 60 percent,” Dr. Zoellner noted. “Yet, I do not foresee any fundamental change in the relative dominance of the U.S. dollar over the next 10 to 20 years.”
But how can Dr. Zoellner possibly predict what will unfold in the next two decades? In reality, he cannot. It appears he is banking on yesterday’s sunny weather to forecast tomorrow’s forecast. Continue reading
Today, we take a moment to step back from the markets and provide a brief overview of new research conducted by economists at the New York Federal Reserve. This past Tuesday, they released a special Economic Policy Review series, featuring 11 research papers analyzing the large banks.
A key finding from this research indicates that the five largest banks, including Bank of America and JPMorgan Chase, enjoy an unfair “too-big-to-fail” advantage in financial markets. Additionally, the study revealed that major U.S. banks can borrow at approximately 0.31 percent lower rates than their smaller counterparts. What accounts for this discrepancy?
While the Fed’s research did not pinpoint the exact cause, it’s reasonable to assume that large banks can borrow more cheaply because investors believe the U.S. government would rescue them during a financial crisis. Although the Fed economists didn’t explicitly mention this, they did highlight that these major banks are able to take on greater risks.
“The new research demonstrates that it is inappropriate to require taxpayers to support the non-commercial banking operations of a complex bank holding company,” stated Dallas Fed President Richard Fisher. This sentiment seems fair enough. Continue reading
A crisis is on the horizon. Stocks have surged to new heights over the past five years. While many celebrate this as a positive development, we view it with concern.
At some point during this journey, stocks have drifted away from the realities of the economy. Simply put, while the economy has been stagnating, the stock market has thrived. Naturally, the future remains unpredictable.
Stocks might continue their upward trend, hover at their current levels, or gradually decline from their peaks. However, like a malfunctioning satellite, we suspect stocks could quickly combust and disintegrate.
Conventional Wall Street wisdom suggests that with the Federal Reserve still pumping $55 billion monthly into the markets and maintaining a near-zero federal funds rate, prices are unlikely to plummet. This line of thinking, however, raises reservations.
We understand the rationale and the significant support the Fed has injected into the market. Continue reading
