I continue to be amazed by the financial media and some of the horrible analysis being done on the precious metals arena.  It is amazing to me to keep hearing how gold is a commoditly and is now in a bubble.  In a bubble?  As compared to what?  The 80% rise in the stock market over the last 15 months?

It seems like common sense that gold is now acting as a currency and not just a commodity.  Look around the world and ask yourself, do you really believe things are all better?  Gold smells this right now.  Gold knows that the absolute only option left for the west in particular is to print money with abandon and try to keep the fiat system afloat long enough to inflate debt away for both the public and private sector.

Most people with common sense know that.  Why can't the talking heads just say it?

Here we are coming in to the last week of February 2010.  From all appearances it would seem that things are getting better. 

Indeed if you listen to the main stream media and the Obama administration they would have you believe that the worst is over and recovery is nigh. 

"The next Depression has been avoided" is what we hear.

The only thing I can say about that is I truly hope for their sake they are correct.  If things play out the way I think they are going to play out, Mr. Obama will end up being a one term president. 

I understand that much of the economy is based on confidence.  But that can only take you so far.  When you have over 6 million people considered to be long term unemployed, it does not really engender confidence. 

The fact that weekly new claims are still hovering close to 500K every single week helps to keep things in perspective.  The labor market is not really improving.  It is only getting worse at a lesser rate.  Unless or until we actually see a turn around in jobs, forclosures will continue to rise which will only add more and more stress to an already weak economy. 

The question is, what will trigger that jobs turn around?  In the late 90's it was the tech bubble.  We know how that turned out.  In the early 2000's it was of course the housing/credit bubble.  Again, nice result there.  So what will be the catalyst for a new boom in jobs? 

The irony is that as technology continues its relentless march forward, the need for human interaction becomes less and less important.  As productivity increases at a geometric rate, the need for human's in manufacturing becomes less and less.  This is only going to get worse as technology continues to advance.

Maybe this time it will end up being different.  I fear that we are looking at a generation or so of stagnant to declining standards of living for those of us in the west.  The global nature of business now means we must compete with others who are willing to work for much less that Americans and Brits and all of us in the developed west are accustomed to.

I can only hope that I am wrong. 

The study of economics is characterized by the domino effect. This means that in the study of economics, one has to consider various variables and players in the economy that affect each other, however remote they are from each other, because of a series of relationships connecting each variable or player. Thus, the economic term called inflation can be viewed in relation to other variables or factors in the economy.

In order to understand fully the concept of inflation in relation to other economic forces or factors, it is essential to distinguish it first from other economic terms that are often mistakenly associated with the meaning o inflation. Hyperinflation is very high and rapid increase in the prices of goods and services. This terms is often differentiated from inflation in the sense that hyperinflation involves an increase in the price of goods and services in such a way that it is almost like out of control. The increase in the prices is extraordinary since it is very high and the increase happens very fast. Hyperinflation often occurs during times of war or after a war, during political and social uprisings and instability, and during times of economic depression. Another term that has to be distinguished from inflation is deflation. Deflation is the decrease in the overall prices of goods and services. Basically, it is the opposite of inflation. Deflation occurs when the supply of money goes down and the supply of goods goes up. Based on the law of supply and demand, if the supply is higher than the demand, prices will decrease.

Inflation in relation to foreign currency reserves is an ubiquitous phenomenon. This means that countries all over the world are experiencing inflation in relation to the foreign currency reserves. This can be attributed to the fact that globalization is rapidly increasing all over the world. Globalization is defined as the increasing worldwide interconnectedness in all aspects of life. Globalization, in turn, affects the foreign currency reserves of a country. The rule of thumb is that inflation occurs when foreign currency reserves are low while deflation or no inflation occurs when foreign currency reserves are high.

There is no doubt that inflation is unfavorable to development. At some stage in times of inflation, both consumers and firms are adversely affected. In fact, inflation can absolutely cause an expansion in the poverty incidence of a nation and indirectly cause elevated unemployment rates. There are several proposed methods in order to solve the challenge of inflation. Basically, these solutions require government intervention. Finished are the days when the prices and the tide of the economy is left to the market forces. This point of view, which is advocated by Adam Smith, is no longer applicable to the contemporary setting especially with the advent of increasing globalization between countries. The role of the State according to Adam Smith is intended to be confined into three functions. The number one function is that it must defend a nation against attacks. The next function is that it should create an administration of justice. The third function is that it ought to provide for collective benefit projects. All of these three functions are still important and pertinent these days but certain functions have to be added in order for the state to become effective. This is especially true in the situation of inflation, which can be solved through government intervention.


To solve inflation, governments have different tools at their disposal.. The government can control the reassignment of foreign currency reserves. The government can impose restrictions on the shift of foreign currency reserves outside of the country. This will diminish inflation since the depletion and reduction of the foreign currency capital will be prevented. An additional act that the government can figure out to solve the conundrum of inflation is to rescind particular import controls. By lifting import controls, a nation is able to enhance the supply of particular products and services since more foreign products will be able to enter the domestic marketplace of a country. This will result in the balancing of supply and demand.


The government plays a major role in the development of the economy and in the fight versus inflation. Therefore, it is imperative to allow the government to execute regulatory acts that will prevent or eliminate inflation.

Oh that is rich.  I guess if you close your eyes and wish hard enough maybe you can make someting happen or make the boogeyman go away..  I am reading this story about Capital One and I just have to laugh. 

"Capital One Financial, an issuer of MasterCard and Visa credit cards, said Friday U.S. credit card defaults fell in April as the company changed its customer bankruptcy accounting.

In a regulatory filing, the company said the annualized net charge-off rate for U.S. credit cards — debts the company believes it will never collect — fell to 8.56 percent in April from 9.33 percent in March.

Under the accounting change, Capital One is waiting longer to declare the debts of bankrupt customers uncollectable.  The company said the change has improved its charge-off rate by 60 basis points. Excluding the change, defaults were in line with March data."

My question to all you fine people out there is are we really that stupid?  At what point do we realize this is all just one giant shell game?  I guess based on this info it is time to run out and buy some COF stock!

 

Do you get the feeling that something is just wrong out there?  It seems like there is a big disconnect between what you hear on TV and what you see for yourself in real life.  Seems like every week more and more stores close, less people on the road, and just a general sense of unease.  It's hard to describe but it just feels a little wierd out there.  I am not a negative person by nature but it is hard to see the supposed "green shoots" we keep hearing about. 

I hope I am wrong.  I wonder if it is just me or does anyone else feel even remotely like me?