Casey Research
How to Speculate your Way to Success
Everybody Forced to Speculate?
According to an interview with Doug Casey, “Everybody is going to be almost forced to be a speculator to try to stay in the same place. Speculating means capitalizing on politically caused distortions in the marketplace.” ~editorHow to Speculate your Way to Success
Source: JT Long of The Gold Report (4/20/12)
So far, 2012 has been a banner year for the stock market, which recently closed the books on its best first quarter in 14 years. But Casey Research Chairman Doug Casey insists that time is running out on the ticking time bombs. Next week when Casey Research’s spring summit gets underway, Casey will open the first general session addressing the question of whether the inevitable is now imminent. In another exclusive interview with The Gold Report, Casey tells us that he foresees extreme volatility “as the titanic forces of inflation and deflation fight with each other” and a forced shift to speculation to either protect or build wealth.
The Gold Report: You told us about two ticking time bombs last September, Doug—the trillions of dollars owned outside the U.S. that could be dumped if the holders lose confidence, and the trillions of dollars in the U.S. created to paper over the 2008 liquidity crisis. It’s been six months since then. Have we averted the disaster or are we closer than ever? Continue reading
Why Deficits Are Politically Convenient
Deficits
Terry Coxon of Casey Research discusses the effects of deficits on the economy and politics. ~editorHow Far to the Wall?
By Terry Coxon, Casey Research
Decades of manipulation by the Federal Reserve (through its creation of paper money) and by Congress (through its taxing and spending) have pushed the US economy into a circumstance that can’t be sustained but from which there is no graceful exit.
With few exceptions, all of the noble souls who chose a career in “public service” and who’ve advanced to be voting members of Congress are committed to chronic deficits, though they deny it. For political purposes, deficits work. The people whose wishes come true through the spending side of the deficit are happy and vote to reelect. The people on the borrowing side of the deficit aren’t complaining, since they willingly buy the Treasury bonds and Treasury bills that fund the deficit. And taxpayers generally tolerate deficits as a lesser evil than a tax hike.
Deficits are politically convenient for a second reason. They can take a little of the sting out of a recession. That effect is transient, and it’s not strong – more like weak tea than Red Bull. But it can be enough to help a struggling politician get past the next election.
Yes, sometimes there’s a big turnover in the personnel, such as with the 2010 election, when a platoon of self-styled anti-deficit commandos parachuted into Congress. As soon as they had taken their seats, they began offering proposals to deal with the government’s trillion-dollar revenue shortfall. But none of the proposals were serious. They were merely tokens intended to make politicians wearing anti-deficit uniforms look less ridiculous. Cut a ginormous $2 billion out of this program and a great big $500 million out of that program. Reduce spending by half a trillion dollars… over ten years. Balance the budget to the penny, but later. No one proposed anything close to dealing with the deficit now. Continue reading
What Happens to Gold if We Enter a Recession or Depression?
By Jeff Clark, Casey Research
Mayan prophecies aside, many of the senior Casey Research staff believe that economic, monetary, and fiscal pressures could come to a head this year. The massive buildup of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly tipping point. What happens to our investments if we enter another recession or – gulp – a depression?
Here’s an updated snapshot of the gold price during each recession since 1955. Continue reading
Is Gold Backwardation Now Permanent?
By Keith Weiner, Casey Research
Worldwide, an incredible tower of debt has been under construction since President Nixon’s 1971 default on the gold obligations of the US government. His decree severed the redeemability of the dollar for gold and thus eliminated the extinguisher of debt. Debt has been growing exponentially everywhere since then. Debt is backed with debt, based on debt, dependent on debt and leveraged with yet more debt. For example, today it is possible to buy a bond (i.e., lend money) on margin (i.e., with borrowed money).
The time is now fast approaching when all debt will be defaulted on. In our perverse monetary system, one party’s debt is another’s “money.” A debtor’s default will impact the creditor (who is usually also a debtor to yet other creditors), causing him to default, and so on. When this begins in earnest, it will wipe out the banking system and thus everyone’s “money.” The paper currencies will not survive this. We are seeing the early edges of it now in the euro, and it’s anyone’s guess when it will happen in Japan, though it seems long overdue already. Last of all, it will come to the USA.
The purpose of this article is to present the early-warning signal and explain the actual mechanism to these events. Contrary to popular belief, it will not happen because the central banks increase the quantity of money to infinity. The money supply may even be contracting (which is what I expect).
To understand the terminal stages of the monetary system’s fatal disease, we must understand gold. Continue reading
Exploring the Not-So-Altruistic Aspects of the “Buffett Rule”
By Robert Ross, Casey Research
This week, President Obama released his $3.8-trillion budget for fiscal year 2013. The plan calls for new taxes on the wealthy, a restructuring of the tax code, and short-term infrastructure spending aimed at boosting the economy (albeit artificially).
Also included in the budget are limitations on subsidies for oil and gas companies, an end to the Bush tax cuts, and a proposal to raise taxes on dividends, which could be as high as 39.6% for households making over $250,000 per year.
Although Senate Minority Leader Mitch McConnell (R-KY) dismissed the proposal as “a campaign document,” the White House claims the measure would generate $206 billion in revenue over 10 years.
One of the most interesting aspects of the plan is the inclusion of the Buffett Rule as a replacement for the alternative-minimum tax (AMT).
The AMT was originally implemented to ensure that high-income Americans paid their taxes. But, alas, the geniuses in Washington “forgot” to index the AMT for inflation, rendering it useless and unintentionally ensnaring an increasing number of middle-class taxpayers into a system meant for the wealthiest of Americans.
Unintended consequences abound, but I digress… Continue reading
The Fed Resumes Printing
By Bud Conrad, Casey Research
The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words:
- The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
- The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory mandate. In the most recent projections, FOMC participants’ estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent.
- The Fed released FOMC participants’ target federal funds rate for the next few years.
Immediate Reactions Continue reading
How Does the Value of the U.S. Dollar Fit Into the Big Picture for the Economy?
Robert Prechter discusses his views on the credit crisis and the U.S. dollar
More credit is denominated in U.S. dollars than any other currency. What does this mean for the value of the dollar as the credit crisis continues its strangle-hold on the world economies?
Enjoy this video clip of Bob Prechter from an October interview with The Mind of Money host Douglass Lodmell, in which Bob discusses the debt implosion and the value of the U.S. dollar.
You can watch Prechter’s full 45-minute interview here — no sign up required!
 | Watch the full 45-minute interview FREEGet even more valuable insights as Mind of Money host Douglass Lodmell interviews Elliott Wave International’s President, Robert Prechter, about how to keep your money safe, the deflation versus inflation debate, and many more topics that are critical to your financial future. Start watching the free 45-minute interview now — no sign up required! |
The US Government Is Bankrupt
By Doug Casey, Casey Research
Everyone knows that the US government is bankrupt and has been for many years. But I thought it might be instructive to see what its current cash-flow situation actually is. At least insofar as it’s possible to get a clear picture.
As you know, the so-called Super Committee recently tried to come up with a plan to cut the deficit by $1.5 trillion and failed completely. To anyone who understands the nature of the political process, the failure was, of course, as predictable as it was shameful. What’s even more shameful, though, is that the sought-after $1.5 trillion cut wasn’t meant to apply to the annual budget but to the total budget of the next 10 years – a fact that is rarely mentioned.
Now whenever the chattering classes talk about cuts, it’s always about cuts over the course of 10 years. Which is a dodge, partly because most of the supposed cuts will be scheduled for the end of the period, but also because new programs, new emergencies and hidden contingencies will creep in to offset any announced cuts. So the numbers below aren’t a worst case; they’re the rosiest possible scenario. People have thought I was joking when, asked how bad the Greater Depression was going to be, I answered that it would be worse than even I thought it would be. But I haven’t been joking. Continue reading
Another Way to Measure Inflation
In this article Jeff Clark shows us how to think about prices and purchasing power in a different way. The true measue of inflation is in relation to how much stuff your money can buy and in reality it is also related to the return you can get on your investment. If you can get 10% on your money a 5% inflation rate isn’t so bad. But if you own any assets and they are only appreciating at 1% (or worse yet depreciating) and prices are increasing at a 5% rate the value of your assets are declining (i.e. they are being insideously and secretly being stolen by the government printing presses).
In this article Jeff will give you another way to look at the issue of prices and perhaps open your eyes to something you hadn’t thought about before.
The US’s Education Bubble
By Doug Hornig and Alex Daley, Casey Research
In the world of finance, there is always talk of bubbles – mortgage bubbles, tech stock bubbles, junk bond bubbles. But bubbles don’t develop only in financial markets. In recent years, there’s been another one quietly inflating, not capturing the attention of most observers.
It’s an education bubble – just not the one of student debt that has graced the pages of the New York Times and so many other publications in recent months.
The problem is not that we are overeducating ourselves as many would have you believe. Rather, it’s that we are spending a fortune to undereducate ourselves.
The United States has always been a very educated country. But it is becoming less and less so, especially in the areas that matter to our individual and collective economic futures. Our undereducation begins with a stubbornly high dropout rate among secondary education students. About a quarter of those who begin high school don’t finish.
In an educational system where graduation from high school at a minimum level often means no grasp of mathematics beyond basic arithmetic, no training in basic personal finance, and no marketable professional skills, this is an obvious problem We can and should do more to prepare high school graduates for the world they now live in. Continue reading
