#Daughters Deemed Disorganized Deserve Discussion

Do you have a daughter whose bedroom floor is a mine field?

daughters_bedrom

Well, you are not alone.

My wife and I were fed up with stepping on toys and papers in our daughter’s bedroom.  We stood over her while she cleaned it up.

But a week or so later, we found her room in the same condition.  This time we warned our daughter that we were serious and the next time we would confiscate everything that we found on the floor.

Her behavior did not change.

So the third time came and my wife and I scooped up everything into a big box and put it in the master bedroom.

Our daughter let out the loudest and longest cry.  It was the biggest fake cry I have ever heard, even to this day.

For fear of losing all her stuff, she begged us to give it back.  She made a long list of promises.

A day later I walked her to her room and whispered that if she just pushed her things under the bed or into the closet, so they were out of sight, we would not have a problem.

When our daughter once again promised to keep her room clean, we gave her back the box of her belongings.  From that day forward, her room looked a lot better.  There was stuff under the bed and in the closet, but we could walk around the room without stepping on anything.

Everyone lived happily ever after.

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#FederalReserve Is In A Pickle

Here is the status of the Federal Reserve Board (Fed).

bbpickle

Background

Over a year ago the Federal Reserve Board (Fed) stopped Quantitative Easing, aka the buying of securities in order to pump money into the economy to stimulate it.

Feeling the economy was stable, the Fed just raised the Fed Funds Rate.  That is the interest rate the Fed charges banks.

Today

However, several other nations continued to lower their interest rates  and some have a negative interest rate policy, NIRP.  Here is more info on NIRP.

https://michaelekelley.com/2016/01/31/japan-why-negative-interest-rates/

Now the Fed is in a pickle because the Fed will look foolish if they reverse course and lower the Fed Funds Rate.

What Is Normal?

https://michaelekelley.com/2015/02/11/fed-inflation-target-is-abnormal/

According to the above website, if the Fed wanted the Inflation Target to be 2%, then the Fed Fund Rate should be 2% plus 1.44% or 3.44%.  Then 3.44% should be the normal Fed Funds Rate.

What Are The Fed’s Options?

How does the Fed get back up to the normal 3.44% Fed Funds Rate?  It can do one or both of these:

1.  Set the long-term interest rate to set a goal OR

2.  Keep unchanged or raise the Fed Funds Rate OR

3.  Offer another round of QE.

The best option is to have another round of QE which has the most influence and least fear while leaving the Fed Funds Rate alone.

Kelley Monetary Policy Rule

The Taylor Rule involves raising the Fed Funds Rate 1 percent for each 1 percent in inflation.  We have no inflation so the Taylor Rule is of no help.

The Kelley Monetary Policy Rule states the Fed Funds Rate will be increased gradually (such as .25% each quarter) and QE will be reduced gradually to zero at a rate inversely proportional to the Fed Funds Rate.

When the Great Recession hit, the Fed lowered the Fed Funds Rate AND offered QE at the same time.  Why can’t the Fed raise the Fed Funds Rate AND offer QE at the same time?

This should eliminate any fear by the Fed or the financial market and get us back to normal.

Good luck.

#Valentine Viewpoint

I sometimes see myself in a totally different light than others.

valentines_viewpoint

My wife puts up with me despite the following:

o  Losing money in the stock market.

o  Misplacing my checkbook.

o  Trying to be funny.

o  Taking on too much.

Who would have known.

Hope you all have/had a great Valentines Day!

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Why GLD Is Bad and GOLD Is Good

Friends, here is why the GLD fund aka ETF is the worst investment if you like GOLD.

gold2confetti

1.  GLD Is Paper Gold

GLD is actually the SPDR Gold Trust Electronic Traded Fund.  It is a promissory note for GOLD.  It is backed by physical gold but the real ratio is controversial.  See

http://www.forbes.com/sites/afontevecchia/2011/11/15/is-gld-really-as-good-as-gold/#7b10e4f93ca1

2.  GLD Is Supported By The Fed Which Wants the US Dollar High and Gold Low

In a previous post, I discussed how the US Dollar and GOLD move in opposite directions.

In that post, I explained that the Federal Reserve wants to keep the dollar high so to do that, it depresses GOLD prices by encouraging the sales of paper GOLD.  See

https://michaelekelley.com/2015/07/20/dear-fed-plz-raise-gold-price/

3.  GLD is a CDO aka Tranche

Remember the Great Recession of 2008?  It was brought on by CDOs and tranches based on bundled mortgages.  GLD is a tranche aka a bundle of paper gold.

Statistics prove that 13% of CDOs before the Great Recession were sold to multiple buyers.  It is like selling an acre of land in Florida multiple times.

https://michaelekelley.com/2015/01/28/remember-cdos-theyre-baaaack/

4.  Paper Gold is rumored to be oversold by 200 times

You need to read this.

http://www.zerohedge.com/news/2015-11-30/paper-gold-dilution-hits-294x-comex-registered-gold-drops-new-all-time-low

5.  GLD Has Lagged Gold Mining Stocks Year To Date

NEM, a gold mining stock, is up 34% from 01/01/2016 to 2/5/2016.

Meanwhile GLD is up only 10% from 01/01/2016 to 2/5/2016.

That is probably because investment companies are avoiding GLD.  So NEM is a GOOD investment right now not GLD.

 

Here are Solutions when a Recession Comes

https://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/

 

Here is Some More Information

Lessons From How The Great Recession Happened and What A CDO Is

http://www.ase.tufts.edu/gdae/Pubs/te/MAC/2e/MAC_2e_Chapter_15.pdf

Good luck!

PS  I own NEM and care about you but I cannot be held responsible for your decisions.

Japan – Why Negative Interest Rates?

A number of countries have implemented a negative interest rate policy (NIRP).  Why?

neg_int_rates

Generally Central Banks try to stimulate their country’s economy by lowering interest rates.  This encourages banks and businesses to issue loans or take out loans.

Japan had a +0.1 interest rate and had nowhere to go but negative to lower interest rates in order to stimulate their economy.

Here is how it works.  Banks usually pay interest to use your money.  Instead a negative interest rate works like a safe deposit box. You pay to have the bank hold your money.

Unfortunately, people would rather have cash which results in hoarding and does the opposite of stimulating the economy.

For more information, see this website:

http://www.bloombergview.com/quicktake/negative-interest-rates

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In A New York Minute, #GlennFrey Was Gone

Everything can change and it hits hard when it involves someone you care about.

glenn_frey

Life is precious, so try to do these few things.

1.  Forgive someone.

2.  Help an elderly person in need.

3.  Contact someone you almost forgot about.

4.  Teach a child something you wish you had learned.

5.  Have some fun and play a game.

We all have only so many minutes.

Sisters Successfully Sail to Seashore

Syrian sisters with scarves no less.

syrian_sisters

There is hope for these lucky girls who crossed the Aegean Sea on a dinghy and landed near the town of Mytilene, Greece.

One could grow up to be a Greek politician fighting for immigration rights.

The other could become a Greek nurse taking care of hospice patients.

You never know.

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Climate Change Contest – Pick Door #1 or Door #2

Arnold Schwarzenegger posted a note on Facebook on Monday.

makeadeal

He made a very good point about climate change and renewable energy: It really doesn’t matter what you believe.  Here is what he said.

There are two doors. Behind Door Number One is a completely sealed room, with a regular, gasoline-fueled car. Behind Door Number Two is an identical, completely sealed room, with an electric car. Both engines are running full blast.

I want you to pick a door to open, and enter the room and shut the door behind you. You have to stay in the room you choose for one hour. You cannot turn off the engine. You do not get a gas mask.

I’m guessing you chose the Door Number Two, with the electric car, right? Door number one is a fatal choice – who would ever want to breathe those fumes?

It’s a strong point, but even more importantly, it’s a bipartisan point.

Here is the real deal.  You pick a door and we agree to never argue about climate change again. Agreed?

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[Thanks to ThinkProgress.org and to Arnold.]

Refugees Refuse to Relinquish Resourcefulness

You have to see this Lucify graph that illustrates the extent of the refugee situation.

refugees_graph

We are talking about half a million migrants in 2015 alone.

Go to the middle of this MarketWatch.com website. Click on the speed bar and the time bar, then click on the gray rectangle above the graph between these two bars.

http://www.marketwatch.com/story/the-refugee-crisis-captured-in-one-staggering-animated-graphic-2015-10-28?dist=tbeforebell

You will be amazed at the number of people fleeing the Middle East for Europe.

Here is a ground photo of a different kind of hope. A hope for a better life for kids and family somewhere, anywhere.

refugees_collage

Amazing.

Yogi – Better Than the Average Human Being

Ouch!  That is gonna hurt!

yogi

No I am not talking about the picture.  I am talking about the loss of a great man – Yogi Berra.

In this picture, Berra leaps into the arms of pitcher Don Larsen after Larsen struck out the last Brooklyn Dodgers batter to complete his perfect game in Game 5 of the 1956 World Series.  (Thanks to the Associated Press)

Yogi gave us colloquialisms like “It ain’t over til it’s over.”   But he was more than a wordsmith, he was a soldier, athlete, manager and, more importantly, an honest, caring human being.  He knew he was lucky and felt a desire to share his luck through his philanthropic work.

Unfortunately for Yogi, it’s over.  But for us the memories live on.

For more on this incredible human being, see this website.

http://www.usatoday.com/story/sports/mlb/2015/09/23/yogi-berra-dies-loss-hits-home-the-hill/72711216/