Blog

There is a prevailing view held by American policymakers that debt and resurgent consumer spending will lift the country from today’s financial morass. The thinking goes that the road to recovery will be reached only if consumers once again start to borrow and spend.

March 1, 2010 – As the financial crisis has unfolded over the last two years, the Federal Reserve has been responding in a variety of unprecedented ways.  Therefore, it is logical to assume that these never-before-used actions have altered long-established ways of viewing things.  One area that has been impacted is the US dollar moneyRead more

February 26, 2010 – There have been numerous reports about the sharp decline in bank lending since the beginning of the financial crisis.  The Wall Street Journal, for example, on Wednesday reported in an article entitled “Lending Falls at Epic Pace” that last year’s decline in lending is the biggest since 1942.  It also providedRead more

The US Treasury has taken another step on the road leading to hyperinflation. It announced that it will borrow $200 billion and leave this money on deposit with the Federal Reserve. The announcement was made with bald disinformation aimed at camouflaging the true impact of this step.

February 15, 2010 – As the debt crisis in Greece continued to unfold last week, the US dollar and US government debt instruments were being touted as a “safe haven” alternative to the euro as well as European sovereign debt.  These calls were made even though Moody’s sounded the alarm the week before by warningRead more

February 15, 2010 – An article yesterday by the Associated Press delivers a stark assessment on the crushing reality of the US government’s financial plight.  It reports: “Proposed belt-tightening steps by President Barack Obama, including a freeze on some nondefense, nonentitlement spending, would make only a small dent in the mountain of debt”, and thatRead more

February 12, 2010 – “There are rules, and these rules need to be adhered to.”  This quote could easily have been made by Sir Isaac Newton 300 hundred years ago explaining how financial discipline would be imposed by his then new invention, the classical Gold Standard.  But no, these are the words of German ChancellorRead more

February 4, 2010 – There is a popular point of view that the Reserve Bank of India put a ‘floor’ under the gold market around $1050, which approximates the price at which it bought 200 tonnes of gold from the IMF.  The thinking is that other central banks, and perhaps the Reserve Bank of IndiaRead more

January 20, 2010 – The Fear Index remains within its decade-long bullish uptrend, so we therefore know as a consequence that gold also remains within an uptrend.  But the Fear Index is also giving us another important message.  It is that gold remains undervalued. Gold’s valuation is indispensable information given its exceptional appreciation this decade. Read more

If the US government cannot attract enough savings to meet its borrowing needs, it has to ‘print’ the dollars it wants to spend, which is of course what quantitative easing is all about. But this printing comes with a cost, just like every episode of government currency creation throughout history. It is the cost of inflation, and eventually, hyperinflation.