Blog

July 10, 2010 – I need to correct an article I wrote last month stating that banks are lending again.  Total bank loans have indeed grown as I reported, but not because banks made new loans.  Instead, the increase was a result of pure accounting. On April 1, 2010, the accounting rules for banks changed.  CreditRead more

June 17, 2010 – Banks are lending again.  After many months of sitting on their hands while trying to repair their over-leveraged balance sheets, banks are making new loans.  They also continue to buy US government paper, though those purchases tapered off over the past month. Earlier this year I noted how banks were usingRead more

Hyperinflation results when a country’s central bank turns government debt into more currency than is demanded in economic activity. It is unfortunately impossible to measure precisely the demand for currency. Nevertheless, the rate at which the government is borrowing can be used as a general guideline to determine if too much currency is being created.

June 14, 2010 – The stock market is often acclaimed for its forecasting ability.  Stock prices peak long before the downturn in economic activity that generally results in a recession and a prolonged decline in the stock market.  Then after this lull in the economy, the bear market low in stock prices leads by severalRead more

June 3, 2010 – Icelanders voted in a referendum to address their debt problem.  Germans have a problem too, but they are voting with their pocketbook.  They are dumping the euro and buying physical gold, the demand for which is soaring in Germany. The problem Germans face is a broken promise.  Despite all the rhetoricRead more

The dollar is approaching hyperinflation

April 1, 2010 – Everything is lining up for silver, which looks ready to soar.  The catalyst to launch silver like a rocket may very well turn out to be last week’s CFTC hearing, which revealed the huge naked short position in the precious metal markets.  In my annual forecast for 2010, I said: “WeRead more

Everyone should be taking note that the yield on the 10-year Treasury note this week climbed to a 9-month high. The T-note is sending a loud and clear message: interest rates are headed higher.

March 22, 2010 – Only a few decades ago, the United States was the world’s largest creditor nation.  American capital spanned the globe financing all types of investments in virtually every country.  But that dominance began to erode in the 1960s because growth in consumption in the United States was starting to outpace new production. Read more

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.