By Doug Casey, The Casey Report Here at Casey Research, our view of the Great Depression of the 1930s is a little different from that of most people. In our eyes, Franklin Roosevelt wasn’t a hero, he was a villain. Nearly everything he did served to extend and deepen the economic downturn. With the exception of supporting the 21st Amendment for the repeal of Prohibition, Roosevelt’s involvement in the economy was an unmitigated disaster. But in popular memory, that failure is obscured by U.S. success in WW2, over which Roosevelt presided. Today, unfortunately, Obama and his minions are taking Roosevelt as a model and are straining to repeat his mistakes. Because the distortions in … [Read more...]
US Economic Situation “Intractable”
Over the last few years we've often mentioned the situation that the government has gotten itself into and wondered how it was ever going to be able to get itself out. The speculation has been that a period of hyperinflation might be the only option. In today's article David Galland editor of the Casey report discusses the economic bind the government is in and just what options it has. ~Tim McMahon, editor By David Galland, The Casey Report In describing the current situation in these United States, and in many of the world’s other superpowers, we here at Casey Research have often used the word “intractable”… as in, “impossible to resolve.” While that may not be technically … [Read more...]
The “Recovery” in Consumer Loans Isn’t Real
By Bud Conrad, The Casey Report The amount of loans being provided by our banking system is a good reflector of the strength of our economy. Below is a big-picture view that shows the total loans in the U.S. as the Fed reports in its H.8 each week. We can see that loans outstanding declined at a rapid rate at the beginning of the current great recession, but there seems to be a recovery in the little jump at the end of the chart, as highlighted by the two small black arrows. A little closer look shows that the Consumer Loans segment is the source of the optimism that we see in the total. … [Read more...]
What Most People Don’t Realize About The Fed’s Superpowers
Since its creation in 1913, the primary intended role of the U.S. Federal Reserve Bank has been that of protector. In theory, the central bank was bestowed with the power to shape monetary policy in a way that would keep both booms and busts in check. The two main tools at its disposal -- interest rates and money creation -- would provide a "ceiling of normalcy" above expansions AND a "net of safety" below contractions. To this day, the financial mainstream holds great faith in the Fed's ability to fulfill its save-the-day duties -- as these recent news items make plain: "Why Raising Fed Funds Rate Is Positive For Equities." (Seeking Alpha) "Fed's Moves Lift All Asset Classes." … [Read more...]
How to Calculate the Social Security Cost of Living Adjustment
How Does The Government Calculate the Cost of Living Adjustment (COLA) on your retirement benefits like Social Security? I recently received the following question from Jerry: What formula does the government uses to figure out COLA based on inflation for retired people each year? That is a great question! Social Security benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power due to inflation. The government uses a complex averaging system to take the average CPI index for the 3rd quarter of the previous year versus the average CPI index for the current year and calculate the inflation rate based on that. Cost of Living adjustments are … [Read more...]
Understanding the Federal Reserve Bank
What's a greater threat to the U.S. economy -- inflation or deflation? To decide that... it helps to understand what role the U.S. Federal Reserve plays. Despite so much focus on the policies of the Fed, its operations remain somewhat of a mystery to most investors -- in no smaller measure, due to their complexity. Here's an excerpt of a 35-page report that explains the Fed, its goals and, very importantly, its limitations in layman's terms. … [Read more...]
Market News
Check out the latest news on the economy in this video: … [Read more...]
Annual Inflation Eases In OECD Countries- November 2010
The following article from the Organization for Economic Development (OECD), shows a comparison of the inflation rates of several of the major countries. From it, we can see how the U.S. compares. Typically U.S. energy prices are lower than Euro areas and currently energy prices are rising faster there than in the U.S. as well (as we can see from the first chart). Overall inflation is also higher in other OECD countries than in the United States. The average for all OECD countries for all items is 1.8% while the inflation rate for the US was only 1.1%. It takes a few weeks longer for the OECD to compile the data so even though the November numbers were released in mid-December the … [Read more...]
The Long Swim – How the Fed Could Become Insolvent
By Terry Coxon, Editor, The Casey ReportYou’ve seen the proof in real time. Once-dominant industrial companies, e.g., General Motors, can run out of money. The biggest banks, e.g., Bank of America, can run out of money. Even sovereign governments, e.g., Greece, can run out of money. Yes, all those organizations are still limping along, but only after being rescued by other giant institutions, such as the U.S. government, the less unhealthy European governments, the European Central Bank, and the International Monetary Fund. So far, it’s been easy to get rescued. The people who run giant institutions seem to shudder at the thought of other giant institutions being shown up as anything less … [Read more...]
Inflation and Velocity of Money
How do you define inflation? In some ways it's a slippery thing, like trying to nail Jell-O to a tree. One common definition amounts to "a general and sustained rise in the price of goods and services." Another is "a persistent decline in the purchasing power of money." Others argue that inflation is directly tied to the money supply. That is to say, they believe a substantial rise in the money supply is the same thing as inflation. (This is one small step removed from Milton Friedman’s old assertion: "Inflation is always and everywhere a monetary phenomenon.") Why is the debate important? Because of the infamous chart you see below (courtesy of hedge fund QB Partners and the St. Louis … [Read more...]