September, 2009

The Myth of Managing Inflation/Deflation

The referenced article is a talk given at the Chicago Fed. It discusses the Monetarist vs. “Output-gappers” views on inflation and deflation. Monetarists are probably represented best by the late Milton Friedman. Output-gappers are best represented by Keynesians such as Paul Krugman. I favor Friedman as opposed to the output-gap position. Implied in the output-gap position is the “incorrect” definition [...]

How "Rent an Economist" Results in Bad Policy

Below is an article suggesting that the Federal Reserve has corrupted the economics profession. While I don’t disagree, I think the academic profession has been even more damaging. There are two primary forces that have caused the profession to lose their independence. First is the grant process where money flows to research that is acceptable to the grant provider — [...]

Inflation Simplified by Walter Williams

Walter Williams provides some historical and economic perspective on inflation.http://townhall.com/columnists/WalterEWilliams/2009/09/09/inflation_and_deficits

Massive Deleveraging Necessary Across the Economy

 Comstock Partners provides a report on deleveraging the Economy and the implications of doing so (slow economic growth). It also deals with interest rates and inflation risks. For this article: Comstock Partners A permanent link under More Economic Analysis in the margin of this blogsite is available to review some of their other analyses. Comstock Home Page

The Notion of Green Shoots is Laughable!

There cannot be a recovery without the consumer. The consumer cannot increase his spending from recent years without increasing his credit load. But he is overleveraged and is in the process of correcting that, despite what the government might want him to do. Consumers seem to be more intelligent, at least in their actions, than our government. Another rapid response [...]

US Government Has Become Fannie and Freddie

Jeff Nielson in “U.S. government the NEW sub-prime lender” details the government’s role in the housing crisis and how FHA will be the next government entity to become insolvent.

Is This Inflation or Deflation?

Inflation is usually misdefined as a period of generally rising prices. Inflation, properly defined, is an expansion of the money supply. The problem is what we mean by “money supply.” Traditional definitions such as M1, M2, etc. have become less useful as a result of technology and financial innovations. Currently traditional measures of money are increasing while private sector debt [...]

China Continues to Position Against Currency Chaos

China continues to position itself to become independent of the US dollar. Just more evidence of the building strains in the currency markets. . http://www.businessinsider.com/new-dollar-challenge-china-selling-yuan-bonds-for-the-first-time-2009-9

Stock Market Overvalued?

Corporate Insider Selling continues at a record pace. What do they know about their own companies that you don’t? Now news is that Warren Buffet is lightening up on his stock holdings.

The Inevitability of Higher Interest Rates on Treasury Bonds

Interest rates on Treasuries must increase. China, India, Russia and many other countries have admonished us on our profligacy. They have reduced their purchases and rearranged their holdings to the short-end of the curve. At the same time our funding requirements have soared. Official projections (probably understated) indicate these excessive funding needs will  be with us for at least a [...]

Power Politics

A discussion of Washington politics and ethics by Thomas Sowell that is troubling to anyone that believes in “The One” or government as an impartial, benevolent referee.

Is Gold Breaking Out?

This morning Gold broke through $1,000, supposedly a magical number for some. Barry Ritholtz at The Big Picture provides a nice discussion today.