Archive for the Inflation Category

An Overpriced Market Meets The Global Economic Slowdown | Bob Chapman

Posted in Debt Collapse, Dollar, Economy, Gold, Inflation, Monetary Policy, Politics, Real Estate Bubble, Silver, Stock Market, Unemployment on October 20, 2011 by JT

October 19 2011: A stock market that is still overpriced, what can leverage do for bailouts, debt is endemic worldwide, injections of money and credit cant stop the global economic slowdown, no viable solutions for Europe.

It could then be that this is the top of the stock market, which is fundamentally very overpriced. The latest rallies are the result of statements by French President Sarkozy and German chancellor Mrs. Merkel that a financial solution is at hand for Europe. This announcement named the end of the month as the date for release of this information. Thus far there has been no further comment. This was the justification for a very strong rally. In the wings there are large short and put positions, which tell us that there is a body of speculators that believe the fundaments are not in place, nor was the recent rally justified. In relation to Europe we see two possibilities; countries bailing out their own financial sectors and the use of leverage to extend bailout funds into trillions of dollars to assist the six insolvent nations. Some nations currently prohibit the use of leverage. Needless to say, rules do not impede adventurous politicians in the control of elitist interests such as the banking community. We will have to wait for this new formula, but in the meantime its results have already been discounted, or military action increases in the Middle East, perhaps in connection with Iran?

Debt problems are endemic worldwide. We all know of the problems in the US, UK and Europe, but they extend all over the world. We are in a major financial crisis, which is as bad and will be as damaging as the credit crisis of three years ago. In fact we never exited that crisis. Debt is the problem and creating more debt does not solve the problem. We have written often about debt and currency problems and as yet nothing is being done to solve these problems. It is as if these powers wanted a collapse. How long can the US dollar continue to take this thrashing? Unfortunately it is not only the dollar. Over the past 1-1/2 years nine major currencies have fallen on average more than 20% vs. gold and silver. Thus many countries and their financial institutions are going to be in serious trouble. The dollar and the euro are both overvalued and even after a 15% devaluation the Swiss franc is undervalued. It is not only going to be currencies, but everything financial that is going to be affected. That includes bonds, stocks, savings accounts, CD’s; cash value life and annuity policies. The only things that will benefit will be gold and silver related assets. For all intents and purposes in the US, the FDIC has no funds and has to have them allocated in the form of debt by the government. More debt means more inflation and higher precious metal prices. The global financial community has to be terrified because their whole world is coming unraveled around them.

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via An Overpriced Marked Meets The Global Economic Slowdon | International Forecaster Weekly Bob Chapman The International Forcaster | Economy News | Investing | US Market Information | Gold | Silver | Wall Street Bailouts | Investment Trends | Money Resources | US and Worldwide Politics.

Goldman Sach’s Hatzius: Fed to Stave Off Recession With QE3

Posted in Debt Collapse, Federal Reserve, Inflation on October 17, 2011 by JT

Did anyone think this was not an eventual certainty in the economic mess we are in?  The FED prints money…it’s what they do.  JT

The Federal Reserve will roll out a third round of quantitative easing — asset purchases from banks — and steer the economy away from a fresh recession, says Goldman Sachs Chief Economist Jan Hatzius.

The Fed, under Chairman Ben Bernanke, has already launched two rounds of quantitative easing, known widely as QE1 and QE2.

QE1 saw the Fed buy $1.7 trillion in assets from banks, mainly mortgage securities, while QE2 saw the monetary authority snap up $600 billion in Treasurys.

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via Goldman Sach’s Hatzius: Fed to Stave Off Recession With QE3.

Inflation, Money Circulation = Gangrenous Liquidity, Rising Gold Price

Posted in Gold, Inflation with tags , on October 8, 2011 by JT

According to Oxford,

Inflation, the general increase of prices and fall in purchasing value of money.

Deflation, reverse or reversal of inflation.

Stagflation, state of inflation without the corresponding increase of demand and employment.

A situation arises where the quantity of money is not as important as how far its circulation reaches. It slowly becomes insufficient to buy the needs and wants of the population at the periphery of the economy.

For instance in stagflation, there may be money around but it’s not producing the economic flows that it should. This can also be tied to the extent of the circulation and the velocity of money itself. There may be sufficient money around but is becomes locked up in Treasury bonds and not lent into the economy to stimulate economic activity (such is the case now). Asset prices rise in this environment and further make inadequate the money for purchasing such assets.

Alternatively, the reduction of money can happen in situations, like today, when mortgages are at an all-time low of 3.94%, but through fear of falling house prices (reducing creditworthiness) potential job losses and the consequential need to save for the rainy day, house buying drops off. Every situation produces a reduction in the available supply of money and precipitates liquidity crises. This is from where the major threat to monetary stability comes. In our global world, with its plethora of national currencies, a non-national asset becomes protection against inflation, deflation, and stagflation across the globe.

Why should this be good for gold? Gold is both an international asset and international cash. It’s the combination of these qualities (and the liquid nature of gold, in the most difficult of situations) that set it apart from paper money and other assets. It’s these qualities that will force the monetary system to bring gold back into the global, monetary system in one way or another.

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via Inflation, Money Circulation = Gangrenous Liquidity, Rising Gold Price –

Analysis of Financial Terrorism in America: Over 1 Million Deaths Annually, 62 Million People With Zero Net Worth, As the Economic Elite Make Off With $46 Trillion

Posted in Debt Collapse, Economy, Inflation, Monetary Policy, Politics, Unemployment, Welfare State on October 6, 2011 by JT

EXCLUSIVE: Analysis of Financial Terrorism in America: Over 1 Million Deaths Annually, 62 Million People With Zero Net Worth, As the Economic Elite Make Off With $46 Trillion | AmpedStatus.

“The Coming Devaluation of the Dollar Will be Sprung on Us Without Warning”

Posted in Debt Collapse, Dollar, Inflation on October 4, 2011 by JT

Old but relevant.


“In the years leading up to mid-2007 keen observers noted dangerous leverage in the US debt markets and some predicted that the bubble would pop. Predictions like this were contrarian while the market was rising, and they were ridiculed. But then when the bubble did pop, those same contrarians became nearly household names as network TV invited them on to explain their predictions.”

So begins a lengthy and informative article by blogger FOFOA, in which he claims that the coming devaluation of the dollar will be sprung on us without warning. If you have time, I recommend you read it (here is the link)

Your editor is in partial agreement with FOFOA. Indeed, I would say the devaluation of the dollar is already well underway. Unfortunately, the vast majority of people are currently living in a world of illusion… just this week, against all odds, the stock market rose again. When people see a rise in the nominal value of their investments, they believe they are making money. But they are wrong. Few take in that the cost of living is rising disproportionately higher… so they are actually losing. This is the fundamental strategy behind what I call the stealth devaluation of the dollar. The purchasing power of the dollar has fallen drastically since the Second World War, with a notable increase in the velocity of the fall in the last couple of years.

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via “The Coming Devaluation of the Dollar Will be Sprung on Us Without Warning”.

The Sceptical Inflationist

Posted in Inflation on October 4, 2011 by JT

Many investors pigeon-hole themselves as “inflationists” or “deflationists”, where an inflationist is someone who expects more inflation over the years immediately ahead and a deflationist is someone who expects deflation. They then latch onto evidence that confirms their side of the inflation-deflation issue and ignore, or discard after only a cursory glance, evidence that supports the opposing view. To put it another way, rather than be open-minded and willing to let the evidence speak for itself, they selectively ‘mine’ the evidence in an effort to prove a dearly held opinion. This is an unreasonable approach, because nobody knows the future. Instead of making an unswerving commitment to one side of the great debate, it is more reasonable to be sceptical of the arguments presented by both sides. Actually, this applies to everything, not just the inflation-deflation issue.

We are in the inflation camp, because the overall case for more inflation is strong. However, we would be deflationists if the case for more inflation in the US rested on an increase in commercial bank lending. The reason is that even if the commercial banks were eager to grow their loan portfolios, which they most certainly aren’t at the moment, there is a dearth of willing, credit-worthy borrowers for them to lend to.

We note, firstly, that according to recent NFIB (National Federation of Independent Business) surveys, more than 90% of small businesses claim that their credit needs are fully met at this time. In other words, less than 10% of private businesses are looking to expand their borrowings, and it is probably the case that only a small percentage of this small percentage is credit-worthy. Secondly, we note that large businesses are generally cashed up and that if they borrow in the future they are more likely to do so by tapping the corporate bond market (by tapping the existing supply of money, that is) than by taking out bank loans. This leaves the “consumer” as the remaining possible engine of private-sector credit expansion and monetary inflation. With 15%-20% unemployment, residential real estate in a secular bear market and consumer debt levels at high levels by historical standards, we would not want to hang our hat on a major new upward trend in consumer borrowing.

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via The Sceptical Inflationist.

Reagan Campaign Ad on the Gold Standard – YouTube

Posted in Gold, Inflation on October 3, 2011 by JT

Reagan Campaign Ad on the Gold Standard – YouTube.

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