Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
A Short Tale About the Grand Manipulation of Crude Oil Prices - 26th Nov 14
China Secret Gold Buying ... How Could It Happen? - 26th Nov 14
Gold Price Spikes to $1,467.50/oz on Computer Glitch? - 26th Nov 14
Gold - So Bad It's Good: Surviving 2014 - 26th Nov 14
TrueShopping.co.uk Real Customer Experience Review - Online Shopping Lessons - 26th Nov 14
Is There A New Global Consensus About Cheating Investors To Reboot Employment? - 26th Nov 14
EUR/USD – Currency Bulls Don’t Give Up - 26th Nov 14
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14
Currency Wars, the Ruble and Keynes - 21st Nov 14
Stock Market Investor Sentiment in The Balance - 21st Nov 14
Two Biotech Stocks Set to Double on One Powerful Catalyst - 21st Nov 14
Swiss Gold Poll Likely Tighter Than Polls Suggest - 21st Nov 14
Gold's Volatility and Other Things to Watch - 21st Nov 14
Australia Stock Market and AUD Dollar Analysis (ASX200 and AUDUSD) - 21st Nov 14
New Algae Research May Have Uncovered an “Energy Forest” Under the Sea - 21st Nov 14
The Cultural and Political Consequences of Fiat Money - 20th Nov 14
United States Social Crisis - No One Told You When to Run, You Missed the Starting Gun! - 20th Nov 14
Euro-Zone Tooth Fairy Economics, Spain Needs to leave the Euro - 20th Nov 14
Ebola Threat Remains a Risk - New Deaths in Nebraska and New York - 20th Nov 14
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

Ambrose Evans-Pritchard Apologises for Being Wrong on QE and Stimulus Spending

Economics / Quantitative Easing Sep 28, 2010 - 05:40 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleAmbrose Evans-Pritchard the head economic poncho at the Telegraph now nearly 2 years from starting his mantra of deficit spending stimulus to prevent a debt deleveraging deflationary depression turns around and says that he has been wrong all along, that central banks such as the US Fed are focused on creating inflation rather than preventing deflation.


It took Ambrose Evans-Pritchard 2 years to realise this ?

Way back in November 2008 in an in depth analysis (28 Nov 2008 - Bankrupt Britain Trending Towards Hyper-Inflation?), I specifically highlighted the flaws in the economic theory of the likes of Anatole Kaletsky and Ambrose Evans-Pritchard -

Those that advocate and support the borrowing binge in the mainstream press such as Anatole Kaletsky and Ambrose Evans-Pritchard need to take a look at the real value of their savings, properties and stocks, for they can subtract a further 20 to 30% loss of value over the last 12 months!, and there is more to come, much more, especially if the government takes the whole of banking sectors liabilities onto its books as Iceland was forced to do!

Starting with the sensible economics, the Chancellor is right to cut taxes and to spend and borrow through the recession, undeterred by rising deficit projections and the build-up of public debt. The main reason comes down to a simple proposition that almost nobody in politics seems to understand: for every saver there has to be a borrower.

Hysterical claims that Britain is on the brink of “national bankruptcy”, or that the Government has “run out of money” or that the pound is going the way of the Icelandic krona may be a normal part of political banter, but they are absurd. Britain's public debt-to-GDP ratio, at around 40 per cent, is the lowest among the G7 advanced economies and if it were to rise to 57 per cent, as suggested by Treasury projections, this would not present a serious problem. Nor would it drive up interest rates and inflation, to judge by the experience of Japan, Italy, France and Germany, all of which have public debt ratios above 57 per cent. - Anatole Kaletsky - 27th Nov 08 (Times Online)

With deep embarrassment, I plead guilty to supporting the Brown-Darling fiscal give-away - though with a clothes peg clamped on my nose. As the Confederation of British Industry and many others have warned, we face an epidemic of bankruptcies unless we tear up the rule book and take immediate counter-action. - Ambrose Evans-Pritchard - 26th Nov 08 (Telegraph.co.uk)

Now Ambrose Apologies - 27th Sept 2010 - Telegraph.

I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”

NO, NO, NO, this cannot possibly be true.

Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”,  a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).

Worse still, he seems determined to print trillions of emergency stimulus without commensurate emergency justification to test his Princeton theories, which by the way are as old as the hills.  Keynes ridiculed the “tyranny of the general price level” in the early 1930s, and quite rightly so. Bernanke is reviving a doctrine that was already shown to be bunk eighty years ago.

Actually, Ambrose and much of the rest of the mainstream press still does not get it, which is why the inflation trend has stealthily crept upon them as they fell for the Bank of England's worthless mantra of temporary high inflation for the whole of 2010. The Telegraph and the rest of the mainstream press is populated by journalists that think they are economists, though off course academic economists themselves are also usually clueless as they live in ivory towers that focus on the theory of what should happen rather than what is actually happening which can only occur when one is conditioned through the mechanism of actually having to put ones own money at risk, which is why the Telegraph got it wrong when forecasting that UK house prices would fall by another 55% in March 2009, just as they were bottoming and have subsequently risen by 10% over the next 12 months.

Inflation Forecast 2010

UK CPI Inflation at 3.1% for August 2010 is EXACTLY in line with my trend forecast for 2010 as of December 2009 that projected CPI above 3% inflation for most of 2010 and specifically CPI inflation of 3.1% for August 2010. My analysis since November has been warning of a spike in UK inflation as part of an anticipated inflation mega-trend (18 Nov 2009 - Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend ) that culminated in the forecast of 27th December 2009 (UK CPI Inflation Forecast 2010, Imminent and Sustained Spike Above 3%) and the Inflation Mega-trend Ebook of January 2010 (FREE DOWNLOAD) as illustrated by the below graph.

UK Inflation August 2010

Current in-depth analysis is under way on forecasts for the British Pound and UK Interest Rates, to receive these in your email in-box ensure you are subscribed to my always FREE Newsletter.

Comments and Source: http://www.marketoracle.co.uk/Article23053.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

N Patrick
28 Sep 10, 18:18
Analysis

Hi Nadeem

I am a huge fan of your analysis and writing style. You explain (what otherwise would be difficult) economic theories in understandable terms. Since I enjoy it so much I am a little annoyed with myself that I cannot do your analysis on my own - I did not study economics at university, I studied law, and I feel I do not have the skill set to engage in the data analysis. I was thinking of doing an MBA but I am unsure if it will give me the skills to do what you are doing - do you have any thoughts? Though it is probably too late for me to change my career, would you mind sharing what degree you did so that I can encourage my own kids (one day) too do what you're doing? I think if I can start them on the right path to learn about the world and to think independently, they'll do themselves justice.

Many thanks

A loyal reader!

Niall


Nadeem_Walayat
29 Sep 10, 03:40
Analysis / Trading

Hi

your not going to learn how to trade and accurate analysis from academia.

In my opinion the only way to learn is to be conditioned by the market through the mechanism of making money when you are right and losing money when you are wrong.

After many years this will likely lead you to the conclusion to be skeptical of all analysis and methodologies so that you don't forget the primary goal of analysis which is to arrive at an actionable high probability conclusion.

Also trading and analysis are two seperate excercises.

Best

NW


Nigel
30 Sep 10, 10:21
Inflation

I am not saying you are incorrect in your assumption of what the Fed are trying to orchestrate but I wonder how you explain away Japan. To all intents and purposes they did exactly what the US are busy doing but on an even grander scale and twenty years later they still have deflation ?


Nadeem_Walayat
30 Sep 10, 14:55
Inflation

Hi

My focus is the UK economy and then the US economy, after which I barely have enough time to peer over the english channell, let alone over to Japan.

Japan is Japan for Japanese to figure out why, what, where, when.

Best

NW


Shelby Moore
30 Sep 10, 23:03
Japan vs. now

I will be submitting an article to explain this difference between Japan's deflation and the current global deflation, which ends up being inflationary as priced in every currency except for gold and silver.

Suffice it to say that the current deflation of financed "assets" is forcing companies to lower labor costs, and 7 to 10 developing world workers for every outsourced western worker, means more basic commodities consumed (but not 7 to 10 times more, because developing world people save more).

Also Japan internally financed much from their very high personal savings rates, which is opposite of the current situation.

Keep an eye out for my new article tomorrow. It is going to explain everything about inflation versus deflation succinctly.


Nadeem_Walayat
01 Oct 10, 04:36
Japan Deflation / Inflation
I did cover some aspects of Japan about 6 weeks ago in the article -

26 Aug 2010 - Deflation Delusion Continues as Economies Trend Towards High Inflation


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014