The days of reasonable economic forecasting are over. Today, an economic forecast is more like the analysis of a criminal mind than the evaluation of economic data. The dominating role of government overpowers markets intentionally. In the short-term that will continue. Reactions to Federal Reserve minutes referencing continuation, alteration or cessation of quantitative easing cause stock markets to move by [...]
Deflation
Quote of The Day
Doug Casey commenting on the past and the future: What we experienced in the 1930s was a deflationary depression where billions of dollars were wiped out with a stock market collapse, bond defaults, and bank failures. Inflationary money that was created since the formation of the Federal Reserve in 1913 was wiped out. Prices went down. This depression will be [...]
Inflation-Deflation Redux
Gary North has an interesting article on the deflation vs. inflation issue. He believes that we will end up in a deflationary Depression, although provides consideration for the possibility of a hyperinflation. In the short and intermediate term, which one of these occurs is critical for investors. Readers know that I expect the inflationary fires rather than the ice of deflation. [...]
The Deflation-Inflation Alternate Routes to Depression
The coming economic collapse (Depression) is inevitable but the route taken to this ending is uncertain. The road has parallel routes: Deflationary Collapse Hyperinflationary Collapse Which route is taken depends upon government. In our highly regulated and manipulated economy, economics is important but generally takes a back seat to political considerations. As Axel Merk stated (with my emboldening): Ultimately, we [...]
Gold Rising or Gold To Fall?
Is this the time to acquire gold? Or is this the time to run away from it? Either answer could be correct, depending upon what course government chooses. Government is at a decision point, one that will determine how our economic malaise next turns. It has two choices: Fight deflation by increasing the money supply by whatever amount necessary. Stop [...]
Turk vs. Prechter: Hyperinflation vs. Depression
James Turk believes hyperinflation is ahead. Bob Prechter believes massive deflation is coming. An interesting discussion between the two takes place in this audio. Ultimately, both lead to Depression. Only the route taken differs, but that is important. https://www.youtube.com/watch?v=aVm-aVA-kU8
Why Are Interest Rates So Low?
For those who think bonds are a safe place to be, you might want to reconsider. In addition to rising sovereign risk (yes, for the US as well as other countries), there is interest rate risk. Interest rate risk is what you assume when you buy a bond and do not intend to hold it to maturity. If interest rates [...]
Theft Via Counterfeiting
A heads-up for shoppers is provided by the Fiscal Times list of things that will get cheaper: 12 Things That Will Get Cheaper in 2012. Note that most of these items are electronics and made overseas. Innovation is the primary driver in the expected price decreases. Perhaps a surprising candidate is the price of wine. As discretionary incomes have declined the [...]
The Federal Reserve Undressed
Joseph Salerno, an Austrian economist, reveals most of what you need to know about the Federal Reserve, inflation and business cycles. Some interesting quotes or observations are the following: “The Fed is not an inflation fighter; it is an inflation creator.” The Fed causes recessions which are the free market’s means of striking back against government interventions and re-balancing the [...]
It Looks Like Inflation or Hyperinflation Ahead
Do Not Miss the Audio Below! Ultimately the debate as to whether this crisis ends in a deflationary or inflationary collapse will be decided by the outplay of several forces. While it is impossible to determine which way this drama plays out (it could go either way), there are reasons to believe either position. Ultimately which side one takes depends [...]
Inflation or Deflation Before The Unavoidable Depression?
The argument persists as to whether our current economic crisis will end with massive inflation or in a deflationary spiral. Ultimately, either one results in a Depression. For investors, this argument is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions [...]
The Inevitability of Another Great Depression
I have argued that we are in or inevitably headed for another Great Depression and there is no way to avoid it. Mathematically, we passed the tipping point several years ago. As Charles Hugh Smith put it in a must-read article: … the Status Quo is now addicted to unlimited flows of free credit issued by central banks. If the [...]