Herd mentality can be as frustrating as it is inexplicable. Financial markets are currently following this pattern with respect to the unshakable belief that the Federal Reserve is ready, willing, and most importantly, able, to immediately execute a wind down of its quantitative easing program.
The signs of recovery that have caused investors and politicians to bubble with enthusiasm are just QE in disguise. Take away the QE and the economy would likely tilt back into an even more severe recession than the one we experienced before QE1 was launched.
It's starting to feel like we are part of a giant poker game against the US government, whose hand is the true condition of the American economy. The government has become so good at bluffing that most people feel compelled to watch how the biggest players in the game react to determine their own investment strategy.
If the Fed could not pull the trigger back in September with Ben Bernanke at the helm and the nation not yet traumatized by the debt ceiling drama and the Obamacare disaster, why should anyone expect tougher treatment from a Janet Yellen led Fed in a few months?
Given the government's enormous resources, it's safe to say that the site itself will ultimately be fixed. But when it is finally up and running, the plan's many deeper, and more intractable, flaws will come into focus. That's when the fun will really begin.
It is rare that investors are given a road map. It is rarer still that the vast majority of those who get it are unable to understand the clear signs and directions it contains.
In their assessments of Ms. Yellen's long career, Congressman, editors, and academics have underscored how her prescience and caution distinguish her from the reckless overconfidence that have plagued her male colleagues at the Federal Reserve.
Democrats, and the President in particular, believe that continually taking on more debt to pay existing debt is a more responsible course of action. Even worse, they appear to believe that debt accumulation is the equivalent of economic growth.
Now that Janet Yellen has been named to lead the Federal Reserve the global financial markets should factor out any possibility that the Fed will diminish their Quantitative easing program anytime during her tenure.
Anyone who bought the media buzz about a September reduction of QE - called the "taper" - was very surprised when the Federal Reserve announced that stimulus would continue unabated. According the the official narrative, inflation is under control and the labor market is steadily improving. Why wouldn't a modest taper be announced?
The Fed's failure to announce some sort of tapering of its QE program, despite the consensus of an overwhelming percentage of economists who expected action, once again reveals the degree to which mainstream analysts have overestimated the strength of our current economy.
The exhaustion of short-sellers paired with insatiable global physical demand has positioned gold for an exciting conclusion to a volatile year.
As if the federal government were not already doing enough to kill the U.S. airline industry with restrictive workplace rules, over-regulation, and a monetary policy that supports higher fuel prices, earlier this month anti-trust authorities at the Justice Department blocked the merger between American Airlines and US Air.
Albert Einstein, a man who knew a thing or two about celestial mechanics, supposedly once called compound interest "the most powerful force in the universe."
A perusal of GDP revisions in the last five years reveals a clear trend: They are almost twice as likely to revise initial estimates down rather than up, and the downward adjustments have been much larger on average.
It should come as no surprise that the lessons that should be learned from the bankruptcy of Detroit, a city that once stood as the shining example of America's industrial might, are being ignored by the American political establishment and its allies in the docile press corps.
I am a well-known "gold bug" because of my strongly voiced opinion that gold has been one of the best assets for protecting yourself from the US dollar's prolonged decline. Lately, the precious metals have taken a beating, and I've been called to defend gold's future prospects in the media countless times.
Disaster struck as a result of Bernanke's mild commitments to begin easing back on permanent QE sometime later this year if the economy continued to improve the way he expected.
Although many haven't yet realized it, the financial markets are stuck in a "Waiting for Godot" era in which the change in policy that all are straining to see, will never in fact arrive.
Given all of this, anyone considering abandoning gold and giving the US markets another whirl should think twice.