The biggest problem with MMT is that debt is deflationary, not inflationary.

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Robert Mugabe, MMT economist.

This post continues my series on Modern Monetary Theory (“MMT”).  You can find my previous post, where I explained how MMT works, here.  In this post, I critique various parts of MMT theory. “Countries Don’t Go Bankrupt” This idea has been in circulation before.  Indeed, Walter Wriston, the CEO of Citibank, once went all-in

on it.  "Wriston's most remarkable achievement at Citibank was persuading Washington that lending money to governments in developing countries was nearly risk-free."[1]  About these loans, Wriston notoriously said, "They're the best loans I have.  Sovereign nations don't go bankrupt."[2] The truth, as anyone with even a…

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville

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The new Benjamin?

For the past six months, Modern Monetary Theory (“MMT”) has been making heads explode all over the blogosphere and in the financial press.  Most of the commentary is from ride-or-die free market capitalists shouting about socialism and the End of Days.  Few seem to have taken the time to know

where MMT comes from or appreciate that (spoiler alert) the Federal Reserve has been practicing MMT for 10 years. Beginnings MMT has a precursor in what is known as Chartalism. The word "Chartalism" has its roots in the Latin word "charta" meaning a token or a ticket.  The term was…

Luck is the residue of design - Branch Rickey.

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Branch Rickey, one of the all-time great "portfolio" managers.

Our biggest holding, Oaktree Capital Group ("OAK"), announced yesterday that it was being acquired by Brookfield Asset Management ("BAM") for $49 per share in cash or 1.077 BAM shares, at the election of the OAK Class A unitholders.  The position was roughly seven percent of our risk asset portfolio

before the announcement. I'm highlighting this investment in order to discuss our investment process and not to brag about a winner (I've had plenty go the other way). Bantam Investment Process We tend to use diversified ETFs or to recreate them ourselves for increased tax efficiency.  (See this post on Custom…

The trope of the "stock market vigilante" is a tale told by an exhausted stock market, full of hope and yearning, signifying nothing.

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These guys are back to protect your stock portfolio.

Rarely does the market ring a bell to signal a selling opportunity, but it did yesterday.  Fed Chair Jerome Powell announced the Fed would stop its interest rate hikes and consider slowing its balance sheet reductions. Equity investors, trained over the past 10 years to buy on Fed easing, gorged

on any and all equities, sending the S&P 500 Index up 1.58 percent.  They won’t taste as good coming back up. Bond investors, a less flamboyant type with a sensitive ear for risk, quietly gathered their things and left the party, which they know is over.  They bought bonds across…

Small changes at the axis can cause enormous changes in layers further out.

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Is this the future of investment philosophy?

I have written extensively about the rising threat of environmental risks for investors.  Now The Wall Street Journal has caught up, calling the PG&E bankruptcy "the first climate-change bankruptcy", and positing that it won't be the last.  I wrote about PG&E back in November in a post about environmentally resilient portfolios. I believe

the PG&E bankruptcy is small potatoes compared to the systemic environmental costs that are coming. In this post, I want to introduce a new way of thinking about investments that utilizes a framework for time and change called “Pace Layering”.  This framework enables the easy visualization of…