Hedge Fund Quiz
The only way to win a date is to become a hedge fund analyst. Your interview process requires you to analyze a real estate/mining company.
You look first at the balance sheet (Thanks Mr. Graham). You notice that this mining company bought claims under a ski resort (Park City, Utah) where it bought acres in 1907 at five dollars an acre.
Then you notice that the company issued 20-year corporate bonds when interest rates were 9% for AA corporates about fifteen years ago. Now similar companies can issue bonds at 5%.
How would you conduct your analysis? Good luck.
So how will it all end? Dollars are created by computer key stroke when the Fed buys bonds, but the dollar is backed only by bonds (and a tiny bit of gold) and the bonds are payable in Federal Reserves Notes (the dollar) or just another form of debt. So debt is created to buy debt which, in turn, is payable in debt. Whoa?! No way this could ever be a problem. It’s magic. One thing bothers me, though, why do we need legal tender laws TO FORCE people to use dollars? I got a bad feelin’ on this.
But WHAT if more and more debt creates less and less “GDP” (let’s pretend it means something–govt spending creates economic growth, Ha Ha.) until each dollar of debt creates 0 or negative GDP growth. The Fed has to print to pay interest on the debt or the tail consumes the tiger.
Hemingway: We go broke slowly, then suddenly!