Great article. Looking forward to checking out Energy Transfer Partners.

As far as I can tell, you are describing the results of America trying to reduce its trade deficit with China. The trouble China is facing is a natural consequence of its economic policy, which is basically to turbocharge international sales by having the government subsidize costs of production at individual companies, allowing them to undercut the international market prices. This kind of policy allows China to accumulate foreign currency (lots of dollars), and they spend the excess on dollar-denominated securities (like treasuries). The dollar shortage you describe stems from the reality check on this false business model, now emanating from American government. It's not that China isn't getting the dollars they need; it's that they're being restricted from continuing to inflate their sales using unbalanced business practices, reducing the amount of dollars they were bringing in from these inflated sales. A decade of artificially inflated business cannot go without natural consequences, as China now pays the price for its economic abuse.

While I agree that the above reasoning explains the lack of dividend, it's also important to point out that dividends should logically be paid out when a company cannot reinvest earnings at higher rates of growth. In the case of Netflix, its entire progression defies basic economics, since the stock price does not reflect the economic reality of the company. Netflix is questionably profitable, and has deepening debt. It is true that it shouldn't pay dividends, since it doesn't have earnings to pay out. More to the point, however, is that the valuation of Netflix is way beyond any economic/business justification. It's simply a popular stock, who's share price is driven by popularity, and not by fundamental economics. This makes it a speculation, and a potentially dangerous one.

This article is great, deeply reflecting the author's grasp of the different aspects and drivers of economics. It was very thought-provoking, and interesting. My only caveat to the ideas themselves are the predictive strength of the author's views. Mr. Macleod has a thesis of prediction, and is describing, deeply, and at length, how his predicted outcome would come to pass. It's important to always remember that predictions are fraught with failure, and the best we can do is learn from the ideas, without assuming the prediction will necessarily come true, just because the ideas make logical sense. It's smart to plan for the possibility of the outcome, without committing to the certainty that it will actually happen this way.

My feelings with Bitcoin price flux is that because the technology is so nascent, it's normal for it to have these kinds of supply/demand oscillations. Stocks face wildly chaotic price movements, as the composite of all the buyers and sellers moves through different currents (emotional, personal, and also market-based currents). Bitcoin (and Bitcoin Cash) are like stocks that have an uncertain public body of buyers and sellers (myself included), in that it's hard to say how the currencies will fare in the short term. In the long term, it seems pretty safe to assume that these technologies are extremely valuable, and that should be reflected in the demand for and subsequent price changes in these assets over time.

Good, true points. This article is a refreshing voice of reason in a world of more extreme, tilted perspectives. My favorite observation was how "traditional Asset Allocation" obviously did well in the past, because of the massive market volatility associated with the Great Recession. The market and the economy has been in the current upswing for some time, and it is to be expected that the growth patterns of the last few years are not sustainable. That's the whole idea of Asset Allocation- you reallocate, as things change, prices fluctuate, and assets move from being under- to overvalued, and back again. Asset Allocation cannot decline, because the quality of "decline" applies to assets themselves, not to the allocation process.

Thanks for sharing.

Great article, and I fully agree that overpromising is the main cause for pension obligations ballooning. It’s such an obvious and classic issue, it’s almost disturbing that it’s so ubiquitous (since it appears in many individual businesses as well). The idea that there is no comparison to GDP growth is so silly that it’s laughable. It’s unfortunate that as human beings, we are all prone to ignoring the future because it’s “later”. This type of unbalanced mess will ultimately resolve when states and other promising entities default on these obligations, with all the ensuing consequences.

Interesting article and interesting company. Their business results, especially in a somewhat besieged industry, also illustrate a management team that is thinking efficiently and effectively on its feet, yielding solid results from a less-than-ideal business situation. I also like that it’s a little bit of a contrarian pick, as an investment, which means the market sentiment is going slightly against the buyer of the shares. That can often lead to better investment results as well.

Looks like this leader is intently focused on driving his country into the ground.

Lots of very interesting points here. I loved the depth of the analysis. I especially appreciated the statistic of how significant amounts of the money supply are being held by foreign bodies, explaining the lack of inflation despite the massive expansion in the money supply. I also feel that the credit imbalances described will probably lead to some kind of massive correction in some form in the relatively near future.

My only critical comment is really directed at the distinction between time preferences and Keynesian perspectives. I believe it's true that there's not as much impact by central banks on the credit supply through interest rate manipulation, but there is definitely some impact. The reason is in synchrony with your point, which is that the banks and other institutions borrowing and lending with the Fed are all part of the world of "consumers and borrowers" who are delaying preferences on the time scale you mentioned. In other words, so much of the money that's being borrowed, lent, and "spent", is flowing through the Fed and connected institutions, and then secondary institutions and individual citizens are also impacted. The pricing for money will be adjusted according to the actual rates being utilized between these different bodies, just like with any other product, so the Fed does leave a mark.

Your chart from the 80's is striking, and definitely illustrates that there are many factors at play, and that the Fed's control is overemphasized.

Thanks for the intensive thought!