Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Profiting from Fed Policy

Stock-Markets / Financial Markets 2010 Dec 22, 2010 - 05:26 AM GMT

By: David_Galland

Stock-Markets

Best Financial Markets Analysis ArticleDavid Galland, Managing Director, Casey Research writes: These days, it’s hard to draw any conclusion other than that the train is gaining speed on wobbly tracks perched over a rickety bridge.

Most notably, unemployment has again risen – to 9.8% from 9.6% – very much not the direction things should be headed given the amount of money the government has pumped into the economy. The latest data shows that this nation of 310 million souls managed to add just 39,000 jobs in November. That, unfortunately, falls short of even keeping up with a population growth of about 1% – doing just that requires generating a net of about 250,000 jobs a month. As for eating away at the millions of unemployed and the many millions more who are underemployed… oh, well.


Of course, the mainstream financial media wastes no time in pointing to this latest dismalia as proof positive that the Fed’s recent decision to energetically restoke the money machine with upwards of $100 billion a month was the right decision. This despite the clear evidence that adding debt to debt is having no real effect, except begetting more debt.

This is a lesson that, so far, appears to be making no headway in the cognitions of Washington’s policy makers, even with the latest election results delivering a sharp rap across the knuckles to the power elite.

Evidence of that truth came to me during a recent drive to do sundry errands. After flipping through the stations, I ended up listening to a program on National Public Radio with a moderator quizzing a couple of congresspersons – one still in power and the other dismissed by voters in the midterm elections.

In conversing with the latter, the reporter asked if the Democrat congressman’s loss wasn’t a clear sign of voter frustration. To which the ex-official blathered on about the number of filibusters threatened by the Republicans over the last couple of years as a reason why the Obama Congress was unable to get its business done.

But, interjected the reporter, the Democrat-controlled Congress passed all manner of legislation – healthcare, financial reform, environmental bills, etc., etc – so isn’t it more a case of voters being upset about the quality and scale of the legislation passed, and not the dearth of it?

Whereupon the ex-Con began to illustrate his point by spouting off about some wastewater bill that was turned back by the Republicans, even though it would have unleashed another $15 billion in federal spending “so important to putting Americans back to work.”

But wait, again interjected the reporter, wouldn’t many people listening to this program say to themselves, this guy just doesn’t get it? That we don’t want the federal government to keep spending billions of taxpayer money on these make-work projects?

Without missing a beat, the ex-Con flipped like a freshly landed mackerel and argued against his position of just seconds before, saying, “This isn’t about the money! It’s about clean water for all Americans!”

At which point the reporter cleared his throat and ended the interview.

Next up was an angry Democrat of some influence. The congresswoman’s anger was directed first at the findings of the Deficit Reduction Commission that the spending cuts must be widespread if they are to be sufficient, and then at the administration for even thinking about extending the Bush tax cuts for people earning over $250K.

Oh, how I wish I was able to do proper justice to her diatribe here – I can’t, but I will do my best.

In her world view, the poor huddled masses of America – being defined as anyone with an income of under $250,000 a year – had nothing to do with the financial crisis, and so why should they be held even a little bit responsible for helping to foot the bill? No, no – it was the greedy fat cats that brought this fresh hell upon us, and so it is they, and they alone, who should be made to pay… and pay.

Of course, nowhere in the discussion was there mention of the role that the many-tentacled government  played in all of this… of the loose money, the looser spending, the wars, the unbridled enthusiasm for a steady diet of pork, and… and...

If there were some mega-computer capable of fairly allocating the financial pain based on the contribution each of us has made to this mess, and then assess taxes accordingly, I suspect the end result would leave past and present members of the Fed living in cardboard boxes, and 97% of past and present members of Congress shuffling in gutters looking for cigarette stubs… at least when they weren’t fighting over discarded clothes with executives of the big financial institutions, NGOs, and the Treasury Department.

Having wiped all of those individuals out to the bone, the burden could then shift to the military-industrial complex that has so effectively pursued its symbiotic and very, very costly “Don’t Ask (where the money went), Don’t Tell (the truth)” policy for decades now.

It could then lay the hooks into anyone who ever took a government-backed loan – big or small – without first taking the time to do a serious calculation as to their ability to repay it, or the unscrupulous lenders who knew that the loans they were originating were going to end up in default with the tab ultimately being dropped on the government.

In fact, were such a mega-computer able to do the calculation, I strongly suggest it would only be after many further layers that the pain, fairly allocated, would reach the rank and file business community, the sole real engine of growth in this economy.

I refer, of course, to the very same individuals so steadily derided by the vote-seeking politicos, despite the fact that it is these long-suffering entrepreneurs who wake up every new day to risk everything in their efforts to create new jobs, despite the heavy glop of bureaucracy on their backs every step of the way. 

Yet it is the few that succeed, against all odds and a constant battering of taxes and regulations, that this particular congressperson sees as the villains. In other words, she has pretty much reversed the proper order of accountability – as one would expect in a system where all that matters is vote gaining.

When the talk turned to the administration’s apparent willingness to accept an across-the-board extension of the Bush tax reductions as part of a compromise to also extend unemployment benefits (at 42%, the situation of the long-term unemployed is becoming a serious problem), the congresswoman was almost apoplectic. In addition to the views just exposed, about the wealthy needing to pay for their many sins, she was astounded that anyone could hold up the unemployment extension, given the poor shape of the economy.

How can anyone argue against the direct benefits to our struggling economy of putting money in the pockets of people who most need it, she asked with dismay in her voice. Adding in support of her view that it should be obvious to all that the recipients of the money will turn right around and spend it on the necessities and that will give the economy just the boost it needs.

Hmm, I thought as I drove down the road. All we need to improve the economy is to give people money.

Why, it’s simplicity itself! And now that I get it, I think people should just quit their whining about fiscal probity and all of that, and just let ‘er rip. Don’t stop with small change, encourage the Treasury to start cranking out checks in princely sums to everyone!
Thousands, millions, even! In no time at all, America’s salad days will be back.

Of course I’m being cynical. But the point I’m trying to make is important, because while I am exaggerating, the economic concept so ardently championed by the congresswoman is accepted at face value by most of the government and all of the administration’s favorite economists.

More than that, because it is accepted, it is policy.

In this construct money is, at best, an abstraction: it has reached the point that the government, and most people, actually believe the stuff falls from the proverbial tree. Money is no longer a medium for saving or transacting with the fruits of one’s labor, but instead is a commodity – albeit unique in that it has unlimited supply.

It does not, however, enjoy unlimited demand. For now, the demand is certainly there. But as the supply increases, individuals and institutions are correctly wary of the effects of dilution… debasement… inflation, pick your term.

The alternative forms of money – the sound kind – are getting a lot of attention because more and more people actually “get it.” They are beginning to recognize the fictions that the politicians and bureaucrats believe in and are taking measures to protect themselves and to profit.

Before moving on, I would mention that I know someone who works as a manager in the Department of Motor Vehicles. A few days ago she told me that, other than a relatively brief flurry during the Cash for Clunkers program, the pace of car registrations has been slow ever since the crisis began and has shown absolutely no improvement since that program ended.

In fact, the only increase in the DMV’s workload has come from the processing of suspended driver’s licenses.

As the latest unemployment figures show and my friend’s first-hand observations confirm, this economy is not recovering. And, per the rise in license suspensions, the government is becoming increasingly aggressive in fine-generating enforcement actions.
In relationship to the second of those data points, if you’re going to imbibe this holiday season, don’t drive.

Finally, please don’t misunderstand my comments above as being insensitive to the plight of the unemployed. I personally know far too many people in that situation whose prospects of ever regaining their prior lifestyles is now almost non-existent to be cavalier about the topic.

The only realistic way I can help – because I can’t and won’t put my own family’s future at risk by trying to help everyone – is doing my part to build and maintain a business that, by offering a tangible value to clients, is able to keep a lot of people productively employed.

Therefore, it angers me to no end to listen as the morons maintained in power by the equally moronic masses make rude noises about the entrepreneurial class and otherwise meddle in matters about which they have no actual understanding and, as a consequence, continue doing great damage to the economy.

Something has got to change… and will, before this is over.

[Though you can’t change the out-of-control spending habits of the government or the currency debasement they’re causing, what you can do is protect yourself… with alternative forms of money, “the sound kind,” as David says. BIG GOLD is the go-to advisory for all things gold, silver, large-cap gold stocks and top-performing funds. Try it for only $79 per year – with 3-month money-back guarantee. Details here.]

© 2010 Copyright Casey Research - All Rights Reserved

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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

6 Critical Money Making Rules