Category: Economics & Investing

“Inflation fighting”, Hugo? Venezuela introduces Cuba-like food card. This is like something out of Kim Jong-Il‘s playbook. Reader Phil. J. wrote ask: “The news people say that we are in a deflation. What proof do you have that inflation is coming?” First, don’t confuse commodity deflation and currency inflation. In the short term, both can happen simultaneously. This chart from the St. Louis Federal Reserve Bank shows that there will be plenty of consumer inflation in the near future. The Federal Reserve more than doubled the money supply in less than two years. Eventually, this rapid expansion is sure to …

Reader B.B. recommended this piece at Washington’s blog: Government Economic Leaders Surprised that Real World Isn’t Responding to their Magic Pixie Dust I warned you, folks! It started with little more than rumors. But now here is something substantive: US Departments of Labor and Treasury Schedule Hearing on Confiscation of Private Retirement Accounts. The government is desperate for sources of revenue, so there is a high likelihood that they will ramrod this through. I recommend that you run the numbers for your age and consider your personal circumstances. Determine wehther or not it makes see to cash out before the …

Deflation Delusion Continues As Economies Trend Towards High Inflation Reader Kimberly S. notes: “I noticed a dramatic increase in the cost of butter at Costco. Last summer the combination package of 4 one-pound boxes of butter was about $4.49. That was the lowest that I had ever seen butter at Costco. Today, the same 4 pound package was $8.99.” UN calls meeting on food price concerns How Hyperinflationary Hell–And Commodity Heaven–Will Happen Before the End of 2011

Unemployment Rate Rises to 9.6%. That is the official figure from the BLS. But the really telling number is for under-employment. That is buried down in line U-6 in Table A-15. Alternative measures of labor underutilization. And again, that is the official figure. A 2004 article suggested that the real world numbers are probably substantially higher. (Somehow I doubt that this under-reporting has been rectified.) Sue C. sent us this: Bernanke: Shut down banks if they threaten system 120 Days to Go Until the Largest Tax Hikes in History. Items from The Economatrix: Global Collapse of the Fiat Money System: …

Pearl wrote me to mention: “We homeschool and therefore I stock up on supplies when they go on clearance after public school children have started. I still have boxes of Papermate pens left over but couldn’t resist picking up a couple packages when I noticed they were on sale. When I got home I compared the clearance tags… Last year, I purchased boxes of 12 Papermate pens for $.35. This was 30% off the original price of $.50. This year, I purchased packages of 10 Papermate pens (no box) for $.70. These were also 30% off the original price of …

May I recommend the article titled The Correlation Curse by Howard Hill? Mr. Hill explains in very simple terms why, during a meltdown itself, it is critical to not be in debt. His thesis is simple – during a collapse, the primary asset at the center of the collapse simply cannot be sold so people begin selling everything else to cover their debts. This includes gold, silver and precious metals and is precisely why precious metals will ultimately fall when the final collapse comes. Now the good point is that precious metals will rapidly regain their value on the other …

G.G. sent this from Forbes: Bernanke Out Of Bullets But Not Bombs: Federal Reserve’s ability to buy assets and spark inflation is unlimited. Ambrose Evans-Pritchard reports: Société Générale tells clients how to prepare for ‘global collapse’ G.G. mentioned this guest article posted over at Zero Hedge: A Termite-Riddled House: Treasury Bonds Buried down in the fine print of the New York Times we read that the FDIC is $15.2 billion in the hole. But gee, who’s counting, and who cares, when Uncle Sugar can create unlimited money out of thin air? The Daily Bell asks: Bank Run 2011? (Thanks to …

More about the inflation riots in Mozambique How Hyperinflation Will Happen The Federal Reserve reported that the M2 Money Supply expanded 5.3% in just three months from April 2010 to July 2010. And the M3? Who knows. They stopped compiling that data 2006, after it had become too embarrassing. Meat price surge fuels fears of food inflation News from Bangladesh: Food prices push inflation up again

Oil Should Be Around $10 a Barrel: Analyst. here is a quote: “I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn’t be anywhere near where it is,” Beutel said. Jeff Nelson opines at The Street: U.S. Government Prepares for ‘Crisis’. (Thanks to G.G. for the link.) The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions. Its all about maximizing tax revenue. G.G. suggested this by Martin Hutchinson: Combining the Worst A bellwether event? …

Mozambique Police Fire At Crowds Protesting Prices The National Inflation Association reports: The U.S. Path to Collapse Russian Panic Buying Fuels Food Price Speculation

Gold Rallying to $1,500 as Soros’s Bubble Inflates. (Thanks to B.B. for the link.) From The Daily Bell: WSJ Discovers the Austrians & Boettke – but not the Mises Institute Mort Zuckerman bemoans BHO‘s band of fools: The Most Fiscally Irresponsible Government in U.S. History. (A hat tip to Patrick S. for the link.) Oregon man pleads bankruptcy fraud, hiding gold. Apparently, he failed Cache Construction 101. From K.A.F.: Problem bank list climbs to 829 Items from The Economatrix: Top Economists: The Second Great Depression Has Arrived Struggling Cities Shut Firehouses in Budget Crises Mish: 10 Leading Retailers Close Stores; …

You’ll pay 6 to 7% more this weekend for your steak and hamburger. This one is from Pravda (so my usual jaundiced eye proviso applies) Doomsday Scenario: Food Prices to Shoot Through the Roof. Some more about the CPI hedonics trickery that I mentioned: Chris Martenson on fuzzy numbers. Reader Jim P. mentioned that his local politicos in the Shenandoah Valley are doing away with a decal but keeping the fee! County Decals No More; $20 Fee Will Appear On Personal Property Tax Bills JP Morgan: Food Prices Are Actually Rising, It’s Just That Retailers Haven’t Passed It On… Thanks …

Bernanke: Fed Will Take “Unconventional Measures” If Needed. “…the Fed will consider making another large-scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare.” (A hat tip to Deborah M. for the link.) Its Official: China is Unloading its Treasury Bonds John Williams of ShadowStats Says Economic Data Will Get Much Worse. Trapper Mike sent this: Ron Paul questions whether there’s gold at Fort Knox, New York Fed. To clarify, part of his concern is that physical gold may indeed be stored there, but that it might actually belong to other …