Deflation

The End of QE2

Today we say goodbye to QE2- a failed program that brought few desirable results. Unemployment is down marginally, but home prices double dipped and commodity prices surged, contributing to the inflation we see today. The dollar and bonds are down, which indicates that quantitative easing has adverse consequences for a country riddled with debt. Remember, there was a debt crisis in Europe led by Greece, so the dollar should have…

Will Higher Interest Rates Derail Gold?

Over the past couple of years, a lot of popular theories related to the demise of gold have been proven false. A popular theory in 2009 was that a “green shoots” economic recovery would cause gold prices to collapse. That was a good one. Then there was the popular “contrarian” argument that the real threat was deflation, and that gold would sell off as a result. That theory is now…

Record Job Cuts in States

In further evidence that our economy is in the process of slowing, states are projected to make record job cuts in the 3rd quarter. As I’ve said before, states in the U.S. are indistinguishable from Greece. The arguments that the U.S. won’t suffer a huge crisis since we own the reserve currency and can print our way out of this just do not apply to the states. States need to balance…

Disagreeing With Deflationists

The ability to change your position at the blink of an eye is very important in investing. While you all know I am a gold bug, I would turn bearish on gold if we found a mounumental gold mine that quintupled the supply of gold. Yes gold will still be an anti-government trade. Yes gold will still be a currency. However, the massive supply spike in gold will probably counteract…

Rising Assets in a Downturn

As someone who shuns economic orthodoxy, I’m sure I say a lot of confusing things. When I view the economy, I try to be as objective and independent-thinking as possible. I don’t label myself and then pull out a checklist of everything I’m supposed to be bullish or bearish on. I mentioned yesterday that I believe not many people are going to invest profitably in the turbulent years ahead; and…