Author Archives: philosophicalecon@gmail.com

In a previous piece, we examined the inner workings of a gold-based fractional-reserve free banking system–the monetary system that was roughly used in the United States for much of the 19th century and before.  The system works as follows.  Customers … Continue reading →

Over the last ten years, the “collectibles” market has produced a fantastic return for investors.  According to the Knight Frank Luxury Investment Index, classic cars are up 550%, coins and stamps are up 350%, and fine wine and art are … Continue reading →

Why is the Shiller CAPE so high?  In the last several weeks, a number of prominent academics and financial market commentators have attempted to answer this question, to include the inventor of the valuation measure himself, Nobel Laureate Robert Shiller.  In … Continue reading →

Most financial professionals–to include those that work in the banking industry–do not have a clear understanding of how money and banking work on a gold standard.  This is hardly something to be ashamed of–most mathematicians don’t have a clear understanding … Continue reading →

Earlier this year, the market was bombarded with a series of stupid charts comparing 2014 to 1929.  As happens with all incorrect predictions, the prediction that 2014 was going to unfold as a replay of 1929 has quietly faded, without a follow-up … Continue reading →

Of all the arguments for a significantly bearish outlook, I find John Hussman’s chart of estimated future equity returns, shown below, to be among the most compelling.  I’ve spent a lot of time trying to figure out what is going … Continue reading →

In this piece, I’m going to present and explain a simple, easy-to-understand method of forecasting stock market returns on the basis of valuation.  I’m then going to insert the popular Shiller CAPE into the method to assess how well the historical predictions … Continue reading →

In the previous piece, I addressed a popular argument for the necessity of profit margin mean-reversion grounded in the Kalecki-Levy profit equation: Profit/GNP = Investment/GNP + Dividends/GNP – Household Saving/GNP – Government Saving/GNP – ROW Saving/GNP I made three points. … Continue reading →

Mean-reversion in a system doesn’t happen simply for the sake of happening.  It happens because forces in the system cause it to happen.  With respect to profit margins, the following questions emerge: What are the forces that cause profit margins to … Continue reading →