Was Bank of America’s $4 billion error really an error?

The BofA so-called $4 billion “error” in its stress test calculations is, in my view, another sign of overbearing government regulations and their negative impact on the marketplace. The “error” was in the calculation of capital it would have under the Federal Reserve’s onerous stress test.  Apparently, the capital requirements of the Basel III regulatory […]

What’s Inflation? It Depends on the Definition

One of today’s economic myths is that the money that the Federal Reserve has created through its quantitative easing programs has not found its way into the money supply, and, as a result, no significant inflation has occurred. The theory is that QE has only resulted in bank reserve creation, but little new money. Money […]

What’s the Safest Way to Hedge Against Inflation With Gold?

  Until inflation becomes recognized, the investor holding gold as a hedge must have both patience and the ability to hold for an extended period. Historically, the price of gold protected the purchasing power of the currency invested in it, as the price rose in some reasonable correlation with existing or expected inflation of that […]

Why Gold Prices Dropped in 2013

Most seasoned investors have some allocation to precious metals in their portfolios, most often gold. They believe that such an allocation protects them, as it is a hedge, or an insurance policy, against the proliferation of paper (fiat) money by the world’s largest central banks. Fiat money is not backed by real physical assets. In […]

The Fed’s ‘Bizarro World,’ Part II

The “Seinfeld” TV comedy series (1989-98) had a set of episodes, known as “Jerry’s Bizarro World,” where everything “normal” was turned upside down and inside out. I have referred to this world in a previous column, and continue to find such Bizarro patterns in our real world. The Fed was established in 1913 to act […]