Monthly Archives: August 2014

“Management of the Money Supply is More Sensible than Linking it to Gold…”

Right, I’m doing a bit of research on fractional reserve banking. So I pulled up my old “Macro-Economics” textbook from my days at college some 21 years ago. The 12th edition of the book, written by McConnell and Brue, was published in 1993. In a section titled “money as debt” they write: Most economists feel that management of the money supply is more sensible than linking it to gold or any other commodity whose supply might arbitrarily and capriciously change. A large increase in the nation’s gold stock as the…

One Key Reason Banks Will Continue to Merge and Its Implications

In the first quarter of 1984 there were 14,400 commercial banks in the U.S. As of the first quarter this year, the number had dropped to only 5,693. During the course of about 30 years, the number of banks in the U.S. hence declined by 8,707 or 60.5%. During the same period, total assets for all U.S. commercial banks increased from USD 2.0259 trillion to USD 14.4846 trillion, an increase of 615.0%. As a result, total assets for the average bank increased from USD 0.14 billion to 2.54 billion, or…

Combining Austrian Business Cycle Theory and Value Investing: This U.S. Stock Market Risk Indicator is at an All-Time High

Strict value investors focus on company fundamentals and price vs intrinsic value and pay little, or no, attention to macro economic data and developments. Though focusing on fundamentals, and buying at an attractive price, is of the greatest importance, even great value stocks will fall during larger stock market corrections (though perhaps by less). Keeping an eye on where we are in the financial cycle driven by central bank policy and fractional reserve banking is therefore also of great importance in my opinion. As I consider myself a value investor…