On Tuesday, November 24, 2020, amid the coronavirus pandemic and poor economic conditions, the Dow Jones Industrial Average (DJIA) reached an all time high and crossed 30,000 points. It became evident that the divergence between the Main Street (businesses/ economy)…
Category: Economics
The US – China Cold War
In May 2020, the White House published a report, United States Strategic Approach to the People’s Republic of China, detailing a whole-of-government strategy with respect to the People’s Republic of China (PRC). This 16 page report outlines when and how…
The Wealth Of Nations – Book Of The Month
The Wealth of Nations, written by Adam Smith, is truly a masterpiece. Billionaires such as Warren Buffett and Charlie Munger have admired and praised Adam Smith's writing. Here's a video form Berkshire Hathaway's 2015 shareholder meeting, where Warren Buffett and…
What Determines The Wages Of Your Labor?
Wages have always been a topic of discussion. I sometimes see people talk about how even after getting a 4 year degree, they barely make enough money to sustain themselves. On the other end, I see folks who never went…
Solvency Crisis Looms Over The Economy
The Federal Reserve and the US government together have injected more than $6 trillion into the economy. The US government's spending directly puts money in the hands of its citizens either by creating government jobs, or by sending out paychecks…
Why Is Universal Basic Income (UBI) Detrimental For The Society?
As the gap between the haves and have-nots grows, the concept of Universal Basic Income (UBI) seems very appealing to the populous. In this week's blog post, I will talk about how the entire concept of UBI is flawed. I…
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Goodbye To The Volcker Rule
Paul Volcker was the chairman of the Federal Reserve from 1979 to 1987. A period when United States experienced stagflation i.e. an environment where a region has high inflation coupled with high unemployment. Unlike the present situation (2020 - when…
The Federal Reserve Kicks The Can Down The Road
The US Stock market has been all over the place. Mr. Market becomes euphoric when any bad news is released, which isn't "that bad". Needless to say, the euphoria continues when there is any good news. With Federal Reserve's "whatever…
3 Key Takeaways From Berkshire Hathaway’s 2020 Shareholder Meeting
The annual Berkshire Hathaway shareholder meeting was held virtually on May 2, 2020. Charlie Munger was unable to make a trip to Omaha to answer shareholder questions with Warren Buffett, however Greg Abel was there on stage as Buffett's side…
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Should Public Companies Be Allowed To Fail?
Shareholders are the owners of public companies. The CEO is elected by the shareholders to undertake the daily operating decisions of the company. It is important to understand that running a business is a risky endeavor, and business officials are…
If Something Cannot Go On Forever, It Will Stop.
The US Economy is in uncharted territory. All non-essential businesses have shut down to curtail the spread of virus, the Federal Reserve is flooding the market with cash by buying just about anything it can get its hands on, the…
Where Is The US Economy Headed?
On April 9, 2020, the Department of Labor released new unemployment insurance weekly claims for the previous week to be 6.6 million. More than 16 million people have lost their jobs so far, and if we compare this to the…
Is High Inflation Around The Corner?
As coronavirus outbreak has locked down many cities and states in the United States, unemployment is on a rise. According to the Department of Labor's news release on March 26, 2020, the seasonally adjusted initial unemployment claims was 3,283,000, an…
Is A Global Recession Inevitable?
The stock market has been very volatile this past week. The Dow Jones Industrial Average dropped 10% on Thursday (3/12/2020) due to fears of coronavirus. This was the largest one day drop in US stock market since Black Monday of…
Is Coronavirus The Black Swan For The Stock Market?
Economy is like a machine, which has multiple interlocked gears that need to function in harmony. As Ray Dalio explains in How the Economic Machine Works, anytime there is a problem in one gear, the other gears will be affected…
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Are Commodities In Your Portfolio?
What are commodities? Commodities are basic goods, which are often used as inputs in the production of other goods and services. Overall, there are 4 kinds of commodities: Metals, Livestock & Meat, Energy, and Agriculture. Gold, silver, copper, hogs, live…
Slowdown In The Indian Economy
India is Asia's third largest economy. India has had an amazing growth in the past few years, however in 2019, it has experienced slowdown in its manufacturing and construction sectors. On November 7, 2019, Moody's downgraded India's outlook from "stable"…
The World Of Negative Interest Rates
The US Federal Reserve cut interest rates on July 31, 2019. This was the first rate cut since the 2007-08 financial crisis. In the latter part of 2019, with inflation at bay, the Federal Reserve has changed its stance from…
Repo Rate Spikes, And The Fed Starts Buying T-Bills. What Does That Mean?
The US Federal Reserve announced on Friday, October 11, 2019, that it will buy $60 billion of treasury bills (T-Bills) each month to build its reserve. Jay Powell, the Federal Reserve Chairman, said that this decision was made to address…
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US Economy, Federal Reserve, And Interest Rates
On September 18, 2019, the Federal Reserve decided to cut the interest rate by 0.25%. This has been the second rate cut of the year. Let me illustrate what is going on with an analogy. You can think of this…
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