The basic imbalance driving our economy is the government deficit, which spun out of control as a result of the Credit Crisis of 2008/9. But the sequester, improving tax base, lower interest rate, and elimination of stimulus spending have caused the big government deficit, while still extreme, to drop to half its previously nosebleed levels. Continue reading "Despite Declining Deficit, Foreigners Aren’t Bailing Us Out, So the Fed Will Keep QE Going"
How can we explain gold dropping into the $1,300 level in less than a week?
Here are some of the factors:
My opinion, looking at the list of items above, is that they are not big enough by themselves to have created such a large disruption in the gold market. Continue reading "Physical Gold vs. Paper Gold: The Ultimate Disconnect"
It is my contention that the 70-year debt supercycle has come to an end.
To put the current financial situation in perspective, here's a long-term history of the debt-to-GDP ratio, which reached a record high at the beginning of the current crisis. It was a dramatic change in 2009, unlike anything since the aftermath of the Great Depression. Continue reading "The Coming Crash in the Bond Market"
The label "the fiscal cliff" evoked the fear that something terrible was about to happen if the previously legislated spending cuts and tax increases came into effect. From my point of view, our nation's deficits and debt are growing at an alarming rate and need to be cut back. The reason these laws were enacted was to offer markets some hope that we would eventually work toward eliminating our serious deficits. But the prevailing opinion that such drastic decreases in our deficit would slow our economy and bring recession created the impression that this "cliff" must be avoided.
The chart below indicates the size of our federal government's budget deficit. The blue bars reflect what would have happened if there were no legislative changes, and the harsh measures of tax increases and spending cuts occurred. The red bars reflects potential tax increases, the green spending cuts, and the purple is additional interest paid on the expanded debt as a result of bigger deficits. The cliff is seen in the rapid drop of the deficit in the first few years of the blue bars. Continue reading "The Fiscal Cliff Was A Wasted Opportunity"
If you haven’t heard by now, the Fed is back at it! Bud Conrad of Casey Research has written a great article on how it is affecting current markets and what to expect in the near future. Be sure to take a look and comment below with your own thoughts. For more from Bud and Casey Research click here.
The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words: Continue reading "The Fed Resumes Printing"
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