Inflation likes to get off to an early start, if the chain-price inflation
measures in the U.S. gross domestic product (GDP) and personal income reports are any indication. These reports often reveal substantial seasonal strength in inflation
in the first quarter of the year. That's mainly because of cost-of-living adjustments (COLA) for the year in labor contracts
and government-entitlement programs that aren't fully offset by seasonal factors. The effect is concentrated in the government
sector, but emerges elsewhere as well.
"This raises the obvious question of what credit rating PIMCO believes U.S.
government debt actually deserves? A triple A rating basically implies a zero probability of default. Since this paper argues
that default is all but inevitable, it would imply that not only should U.S. sovereign debt not be AAA rated, but that it
should fall into the category of junk."
In the wake of unrestrained U.S. federal spending, U.S. conservatives are no longer talking
so loudly about how they brought down the Soviet Union – by making it spend the nation into national bankruptcy. But the marketplace
is speaking as loudly as conservatives once did, as reflected in the continued plunge in the international value of the dollar.
"Today the state -- using absolutely legal market mechanisms -- is ensuring its interests.
I consider this perfectly normal," Putin said during his annual Kremlin news conference.
"We all know perfectly well how privatization at the beginning of the '90s was conducted
and how some market participants got multibillion state assets using different tricks, including some violations of then-existing
As the economy slowed sharply from rapid growth at the start of this year, many economists
dismissed the possibility of a recovery led by domestic demand and reasserted a view that Japan's fortunes are dependent on
Yukos made the emergency filing for Chapter 11 protection on Tuesday in U.S. Bankruptcy
Court in Houston, after management for the company that pumps a fifth of Russia's crude oil decided there was no way the halt
the process through the Russian legal system.
Earlier release of minutes will give financial markets more timely information about Fed
thinking before the subsequent policymaking session. Thus, when the minutes of yesterday's meeting are published on Jan. 4,
the world will have much more knowledge about what went on in the Fed boardroom than could possibly been conveyed in the FOMC's
brief statement issued after the meeting.
"The Fed really has to get moving here,'' said Ken Mayland, the president of ClearView
Economics LLC, who was the best overall economic forecaster for the 12 months ending June 2004, according to a Bloomberg analysis
of predictions. "I do believe there are a lot of inflation pressures in the pipeline and there is no question there is increased
ability to pass through.''
The ongoing severe US dollar bear market, is, or should be, a central theme for all investors
in dollar assets, whether they are domestic or foreign. In this regard it is especially important that US investors do not
allow themselves to be lulled into a false sense of complacency, due to living in a large country that is almost a continent,
and into thinking that a plunging dollar doesn't matter - IT DOES MATTER. All investing is an opportunity cost game, and if
the currency of your country is plunging it means that your international purchasing power is dwindling.
The answer is “gold.” If you can look back that far, you will realize that there never
was “an energy shortage” in the United States prior to the long-lines and price controls that followed Aramco’s quadrupling
of the world oil price in 1973. Never!! The reason is the 1944 Bretton Woods gold standard that Richard Nixon ended in 1971
-- and all the previous “gold standards” that kept the dollar as good as gold dating back to George Washington and Alexander
If there ever was a
sequence of events to prove GATA’s importance, it is what we are witnessing at the moment. Let’s get right to it! This email
from a Café member corporate executive came to me early last evening:
This smells to high heaven!
went down by 15 tons in a fairly even gold market. I would guess they used it to slow the gold rise!
The US Economy, stock & bond markets, futures contracts leveraged to
them, and great derivative gears hold together the USDollar, the US Treasury Bonds, mortgages, major metals & energy commodities,
and more. Many devices are designed to keep a limiting cap on prices and rates, like a huge rooftop atop a house or giant
pyramid shrubs surrounding it. The entire system grows to become tremendously complex. It has evolved over several decades,
and has responded to numerous unintended disturbances. Central banks provide the backdrop fail safe in a highly visible
overt fashion. Derivatives provide the foundation underpinning in more secretive collusive fashion.
The latest quarterly report of the Bank for International Settlements spoke of a “subtle
but notable” shift out of the dollar from Opec member countries over the past three years. Opec’s dollar deposits fell from
75 per cent of its total deposits in the third quarter of 2001 to 61.5 per cent in the third quarter of this year. Over the
same period euro holdings rose from 12 per cent to 20 per cent.
For almost two decades, economists have worried about America's current-account deficit
and predicted a plunge in the dollar and a hard landing for the economy. The dollar did indeed fall sharply in the late 1980s,
but with few ill effects on the economy. So why worry more now? One good reason is that the current-account deficit, currently
running at close to 6% of GDP, is almost twice as big as at its peak in the late 1980s, and on current policies it will keep
widening. Second, in the 1980s America was still a net foreign creditor. Today it has net foreign liabilities and these are
expected to reach $3.3 trillion, or 28% of GDP, by the end of 2004 (see chart 2).
The Smart Growth research collection of our resource library constitutes a unique array
of information and strategies for the kind of planning and commercial economic development that provides for growth and competition
while preserving local community character.
If an exchange between two parties
is voluntary, it will not take place unless
both believe they will benefit from it. Most
economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.
If you ask me to name the proudest distinction
of Americans, I would choose- because it contains all the others . . . the fact that they were the people who created
the phrase "to make money." No other language or nation had ever used these words before; men had always thought of
wealth as a static quantity . . . to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were
the first to understand that wealth has to be created.