What really makes a bubble? Are bursting bubbles inflationary or deflationary? What lessons can we learn from history? In this article Justice Litle addresses these issues. ~Tim McMahon, editor By Justice Litle, Editorial Director, Taipan Publishing Group A burst housing bubble is a harbinger of deflation, not inflation, due to massive debts incurred and massive savings lost. To really get your head around the inflation debate, it helps to understand the late great housing bubble. To that end, this description seems as informative as they come: The smell of Boom was everywhere. It caught even those who were not particularly attracted by it. A former president of Freddie Mac, … [Read more...]
Worldwide Economic Recovery Slowing
By Tim McMahon, editor The effects of the Trillion Dollar economic stimulus are wearing off and the "recovery" is looking pale and thin. So it may be time to crank up the printing presses again... According the OECD’s latest Interim Economic Assessment, the world economic recovery may be slowing faster than previously anticipated. Growth in the the seven largest developed countries of France, Germany, Italy, Japan, United Kingdom, United States and Canada is expected to be around 1½ per cent on an annualized basis in the second half of 2010 down from the OECD’s previous estimate of around 1¾ per cent in May. … [Read more...]
The Effects of Fiscal Stimulus are Wearing Thin
The following is an excerpt from Casey's Daily Dispatch... an ezine with thought provoking commentary that I thought you might find interesting. ~ Tim McMahon, Editor Words from the Wise By David Galland, I would like to share just a few snippets I think you’ll benefit from, starting with the latest posting from Ambrose Evans-Pritchard, which you can read in full here. Here’s an excerpt: Today’s release on manufacturing activity by the Richmond Fed is pretty ghastly, as you would expect given that the effects of fiscal stimulus are now wearing off at accelerating pace – before the happy handover to the private sector is safely consummated – and given that the structural … [Read more...]
Global Inflation and Double-Dip Recession Prospects
By Martin Hutchinson, Contributing Editor, Money Morning Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession. However, the truth is that the odds of a recessionary reprise are high in just a few countries - primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems. The rest of the world is recovering just fine. … [Read more...]
Deflation and Depression through the Years
By Tim McMahon, Editor Deflation has cropped up at various times throughout the nineteenth and twentieth centuries. Overall since 1913 when the Bureau of Labor Statistics began tracking inflation we have had 22 years that had one or more months when the annual inflation rate was negative (i.e. deflation). Most of those are clumped into larger deflationary periods. The six major deflationary periods are: January 1921 - February 1923 26 months July 1924 - November 1924 5 months July 1926 - November 1933 7 ½ years (with only 5 positive months and 5 zero inflation months.) March 1938 - January 1940 18 months May 1949 - June 1950 … [Read more...]
Why the Bailout Will Result in Hyperinflation
Editor's Note- In this article Olivier Garret, CEO of The Casey Report shows us the massive extent of the bailout compared to every major Government expenditure from the Revolutionary War and the Louisiana Purchase to the Iraq War in inflation adjusted terms and the results are pretty scary. Based on the magnitude of the bailout expenditures it appears Hyperinflation is already baked into the cake. You thought WWII and Iraq were expensive? You "ain't seen nothin' yet. The current bailout is larger than all the major government expenditures since the revolutionary war combined. And lest you think that is because the bailout is comparing inflated dollars against more valuable (and … [Read more...]
Why would Gold fall during an Investment Crisis?
Editor's Note-- In the article Is Gold really a good Inflation Hedge? I said, Gold is actually a "crisis hedge." So it should be performing extremely well with all the uncertainty in the markets right now. In this article Andrew Gordon explains how gold is currently in limited supply and demand is booming due to the crisis and what is currently affecting the price. -- Tim McMahon, editor Has Gold Lost its Investment Luster? By Andrew Gordon Gold dropped from $915 to $859 on Friday [October 10, 2008]. That’s not supposed to happen while the market is crashing. What’s going on? … [Read more...]
Bailout Equals HyperInflation?
Editor's Note- In this article Olivier Garret, CEO of The Casey Report shows us the massive extent of the bailout compared to every major Government expenditure from the Revolutionary War and the Louisiana Purchase to the Iraq War in inflation adjusted terms and the results are pretty scary. Based on the magnitude of the bailout expenditures it appears Hyperinflation is already baked into the cake. You thought WWII and Iraq were expensive? You "ain't seen nothin' yet. The current bailout is larger than all the major government expenditures since the revolutionary war combined.And lest you think that is because the bailout is comparing inflated dollars against more valuable (and thus smaller … [Read more...]