Janet Yellen’s Bad Idea

Posted on October 11, 2013 by MN Gordon

Yesterday something quite remarkable happened.  House Republicans and President Obama talked.  We don’t know what it was they talked about.  But, perhaps, it had something to do with raising the debt ceiling.

Wall Street was elated.  The DOW and the S&P 500 both jumped 2.18 percent.  What’s more, the NASDAQ ran up 2.26 percent.  Nonetheless, the day concluded without a deal.

There’s less than one week until the October 17 deadline to raise the debt ceiling.  What a delight it is to witness the final days before the greatest sovereign debt crackup the world’s ever known.  Not since Nero clipped coins in 64 A.D. and fiddled as Rome burned has there been such an intolerable collection of dingleberries in imperial office.

Everyone is counting on an 11th hour agreement to raise the debt ceiling…especially Wall Street.  Even so, we watch with wide eyes and a gawping jaw as the countdown draws near.  What if no grand bargain is reached and Treasury debt payments go into arrears?

Will the world financial system freeze up? Continue reading →

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How American Government’s Supposed to Work

Posted on October 8, 2013 by MN Gordon

It appears things are finally reversing course.  After years of expanding, the bull market in government may have finally hit an inflection point.  This is great news.  For a reduction in the size of government compared to the overall economy will be beneficial to everyone.

Short term adjustments and restructuring will have to occur if the shutdown continues long enough.  Federal workers will lose their jobs and will have to find new ones in the private sector.  We won’t pretend this will be easy.  Nor will we pretend it will be pain free.

Nonetheless, we’re confident many federal workers will soon find themselves in more engaging and useful endeavors.  Many of them are good, intelligent and enterprising individuals who happened to end up in a bad trade.  How were they to know that following 9/11 and the 2008 financial crisis the government would so grossly overstep their authority?  Right now could be their golden opportunity to get out with their dignity intact.

Take Lisa Braswell, for instance.  She’s was furloughed last Tuesday from her job as a management analyst at the National Institute of Health. Continue reading →

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Ground Control to Major Tom: Reserves Are in Jeopardy

Posted on October 4, 2013 by MN Gordon

Ground Control to Major Tom: Reserves Are in Jeopardy
By Jeff Clark, Senior Precious Metals Analyst, Casey Research

When you hear about the “gold reserves” a mining company has in the ground, the natural assumption would be that they’re talking about a fixed number of ounces.  After all, gold doesn’t decay, and neither does it grow legs and move someplace else.

But assumptions are dangerous.  In fact, industry-wide, reserves are likely to fall fairly significantly in the near future.

When the gold price falls, it doesn’t just have a short-term impact on producers—slashed earnings and forced write-downs—it can affect the number of economically mineable ounces a company carries on its books, or even what it can mine in the future. Continue reading →

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Committed to Mass Public Spending

Posted on October 1, 2013 by MN Gordon

Yesterday President Obama said a government shutdown “would throw a wrench into the gears of our economy.”  Here at the Economic Prism we say, “Bring it on.”  For a wrench caught in the gears is just what’s needed…especially if the wrench can then be used to bolt down the top hatch on the national debt.

You see, Congress has raised the debt ceiling 79 times since 1940.  That’s more than once per year.  Obviously, the debt ceiling hasn’t done much to control spending.  Rather, the debt keeps growing like a metastasized cancer…with a doubling time of about 7 years.

Currently, the debt ceiling’s set at $16.699 trillion.  Even so, it was shattered months ago.  The Treasury just hasn’t owned up to it yet.

In fact, the US Debt Clock shows the debt at $16.9 trillion…well over the legal limit.  But regardless of your opinion of the current debt ceiling battle between the House and President Obama, one thing everyone can agree on is that government deficits, and the massive accumulation of federal debt, will drag the prosperity of future generations down like a ball and chain attached to a prisoner’s ankle. Continue reading →

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