Editor's Note: Often people are skeptical about the Government's Inflation numbers and I frequently get questions like "Are they fudging the data?" And to some extent they might be. Since Gold is the original money and it is freely converted to cash, it is still a reasonable scale to gauge other prices against. If gold was a true inflation indicator, the gold price in dollars would progress steadily upward with very few downward periods and the inflation adjusted price of gold would be constant. Although this is not the case, never-the-less gold is a good scale to use for comparison purposes. So the following article on Gold vs. the Dow Jones Industrial Average is a good place to … [Read more...]
Deflation: Micro vs. Macro
Deflation By Joshua Burnett If you’re anything like me, one of the problems you run into when trying to convince someone that the hyperinflation scenario will occur is an argument that revolves around us currently being in a deflationary period. People (and those involved with the economy and stock market especially) have a hard time seeing looming hyperinflation (that might occur as soon as a year and a half away) when what they’re currently seeing is… deflation. But wait a second; how in the wide world of sports are we seeing deflation when we’ve been printing money like our lives depend on it? Let’s return to market fundamentals, and the ever-present difference between macro and … [Read more...]
Inflation is Not Coming…It Has Arrived!
By Jon Herring Don’t be deluded into thinking that inflation “might be coming” in the future and that once you see the signs you can protect yourself. Inflation is already here. And if you wait too long to take precautions, this silent thief will most certainly steal your wealth and savings. You must act NOW if you wish to protect what you have worked so hard for. Take the right actions today, and you can not only insure your wealth against erosion by inflation… you can generate life-changing profits as well. First, it is important to have a proper understanding of inflation. Most people believe that the definition of inflation is rising prices. This is not true. The definition of … [Read more...]
Zimbabwe Hyperinflation and the U.S. Dollar
The (Zimbabwean) Dollar - The Point of No Return By John Lee, CFA Last week, Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country's central bank announced in late January. The government instituted price cuts to arrest inflation. As time went by, it became apparent the forced price cuts cause bare shelves in shops and many businesses to close. "Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation's currency, so as to safeguard our national identity and sovereignty... Our national currency is a fundamental economic pillar of our sovereignty," … [Read more...]
In Inflation Everything is More Expensive
Not Even Crack Heads Can Escape this Economy By Charles Delvalle Everyone’s having a hard time in this economy, even crack heads. We’ve all been talking about how wicked inflation has been over the past two years. Apparently Gus Young Jr. of West Palm Beach wasn’t listening. In a fit of rage, he destroyed a DVD case and a Plexiglass counter after his friendly neighborhood drug dealer told him that the price of a rock of crack cocaine had gone from $10 to $20. And get this: on the way to jail, he shared his displeasure of the inflated crack prices with officers. Let this be a lesson that nothing escapes the reach of inflation. Not milk, butter, or in this case, crack. This … [Read more...]
Why the Bailout Won’t Work
By Andrew Gordon The economy is now staring eyeball-to-eyeball with an activist U.S. government. It will legislate, reform, supervise, bully, give out money like cotton candy and get concessions in return. It will encourage technological development in environmental and other “future” industries. It will seek sources of energy other than the oil and gas we get from Mexico, Canada and OPEC. And it will put generous sums of money behind these initiatives. The Obama government emphatically does not want banks to sit on the money they get from the government. Nor do they want it to go to shareholders in the form of dividend payments. This is why I look for more companies to cut their … [Read more...]
The Inflation Beast is About to be let out of its Cage
By Andrew Gordon How bad is it going to get? Our reference point is the 1930’s and the Great Depression. But people in Russia and Asia only have to recall events of a little more than a decade ago. The “Asian Contagion” actually began in Russia in 1998 when the country defaulted on its national debt. The crisis then hit Thailand and within a year had spread to all of Asia with a few exceptions (Malaysia and China being the main ones). I had a front row seat. At the time, I ran a technology-transfer business in Southeast Asia and our central office was in Jakarta, Indonesia. For a while it looked like the crisis might skirt Indonesia. But it didn’t. And when it hit, it hit with a … [Read more...]
Is the United States Bankrupt?
"This is a job for the printing press." Hyperinflation here we come By Jon Herring There are so many headwinds and cross currents in the market today, it is all but impossible to predict what will happen in the short term. There is too much volatility and noise. So, it pays to keep your eyes on the horizon, focused on the long term and the biggest trends. Today, I want to tell about the biggest of all possible financial trends: the eventual bankruptcy of the United States government. Or should I say the existing bankruptcy of the U.S. government? The United States government is facing an impending fiscal crisis. Former Comptroller General David Walker calls it a “cancer … [Read more...]
Inflation Moderate? Who Does The Fed Think They Are Fooling?
By Charles Delvalle Just when you thought reality was setting in at the Fed, you get reminded how silly that idea really is. I say that because lately the Fed has been talking about how bad inflation is, and how they need to be ‘vigilant’ so that inflation expectations don’t deteriorate. If you talk to anyone on the street, I bet they have noticed that prices are higher for just about everything. I don’t know about you, but I sure think that inflation expectations are already pretty bad. So, you would think they’d be really hawkish about inflation at the meeting. Maybe that’ll happen at another meeting, because it sure didn’t happen at the one on Wednesday. … [Read more...]
Cheaper Fuel (Gas) Prices Ahead
By Andrew Gordon The stimulus package has come and gone. And retail sales are once again feeling the pinch. So, should the government put together a second package for exhausted consumers? After all, if the government can afford to throw $300 billion at Freddie and Fannie, certainly the government can spend another $145 billion to boost spending going into the holidays, right? But with gas prices going down, maybe we don’t need another stimulus package. I was asked yesterday by CNBC if lower gas prices would help spending and boost the economy. I said it wouldn’t help much. A quick look at the numbers might suggest otherwise. After all, every penny increase for a gallon of gas … [Read more...]
