Command and Control Economics

Posted on September 22, 2015 by MN Gordon

Goldman Sachs, Larry Summers, and the global financial alliance got their way last Thursday.  Fed Chair Janet Yellen rolled over and slobbered on herself like a yellow Labrador…offering more ZIRP to please her masters.  Savers, seniors, and freedom lovers the world over got sour lemons.

Here at the Economic Prism we always make lemonade when life gives us lemons.  Moreover, when the glass is half empty we reach for a smaller glass.  For it doesn’t take much to overflow a Dixie cup.

What we mean is Yellen did us all a grand favor.  By continuing the insane policies of mass credit creation she’s accelerating the Federal Reserve’s ultimate demise.  From our perspective, the sooner it’s over the better.

Some restraint by the Fed now would only extend the broken scheme out further into the future.  Perhaps there’d be another 20 or 30 years more of this charade if the Fed were to pretend it was tightening down the cranks on the money supply.  Why not get it over with now? Continue reading →

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Money—How to Get It and Keep It

Posted on September 18, 2015 by MN Gordon

Money—How to Get It and Keep It
By Doug Casey, The Casey Report

Even if you are already wealthy, some thought on this topic is worthwhile.  What would you do if some act of God or of government, a catastrophic lawsuit, or a really serious misjudgment took you back to square one?  One thing about a real depression is that everybody loses.  As Richard Russell has quipped, the winners are those who lose the least. As far as I’m concerned, the Greater Depression is looming, not just another cyclical downturn.  You may find that although you’re far ahead of your neighbors (you own precious metals, you’ve diversified internationally, and you don’t believe much of what you hear from official sources), you’re still not as prepared as you’d like.

I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create, and Speculate. Continue reading →

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The Prelude to QE4

Posted on September 15, 2015 by MN Gordon

The U.S. economy officially exited the Great Recession in June 2009.  But the recovery hasn’t done much to lift the broad population’s lot in life.  Six years into it, and the economy trudges along like a jack donkey up a muddy mountain road.

Progress is slow.  There’s an occasional backslide.  Moreover, with each slippery step there’s the danger it’ll stagger off the trail side and freefall onto the rocks 3,000 feet below.

The U.S. consumer, the primary engine of economic growth, is backsliding at the moment.  Recently the University of Michigan, Survey of Consumers, noted its consumer sentiment index fell to 85.7 in early September.  That’s down from 91.9 last month and to its lowest level in a year.

Producer prices are also in a lurch.  According to the Labor Department, the producer price index has declined on a 12-month basis for seven straight months.  This would indicate the economy’s in a rut as far as we can tell.

Yet other data points are saying something else.  As of August 2015, the unemployment rate’s fallen to just 5.1 percent. Continue reading →

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Amplified Losses

Posted on September 11, 2015 by MN Gordon

Federal Open Market Committee meetings are always a spectacle.  The forthcoming FOMC meeting, scheduled for September 16 and 17, should be particularly endearing.  For despite the Fed’s claim to provide transparency the upcoming policy announcement is cloudier than pollywog stew.

All year the Fed has hinted they’d finally lift the federal funds rate from near zero.  Yet with each FOMC meeting the Fed has pushed back the decision.  Until three weeks ago, the September FOMC meeting was to be the historic date of a small, incremental rate increase.

But that was before the stock market shuttered and rapidly dropped 12 percent.  In late August, at the moment of maximum panic, New York Federal Reserve Bank President, William Dudley, backed off on the prospect of a September rate increase.  The markets greeted Dudley’s remarks as if they were manna from heaven.

However, after the stock market settled down, it wasn’t clear if the September rate increase was still on or not.  No one seems to know.  This includes the Fed too. Continue reading →

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