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Disasters Can Happen

Alan Greenspan’s Pickled Economy

Economyby MN Gordon

Economic Prism

Former Federal Reserve Chairman Alan Greenspan resurfaced this week.  We couldn’t recall the last time we’d heard from him.  But, alas, the old fellow’s in desolate despair.

On Tuesday, for instance, he told Bloomberg he hasn’t been optimistic for “quite a while.”  Obviously, this is in contrast to the perennial Goldilocks attitude he had during the 1990s.  So what is it that has the Maestro playing a low dirge?

China, the dollar, Dodd-Frank, and associated unknowns are all part of his negative outlook.  But the long winter of his discontent is something else.  Greenspan said he “won’t be [optimistic] until we can resolve entitlement programs.”

“Nobody wants to touch [entitlements].  But it is gradually crowding out capital investment and that is crowding out productivity and that is crowding out the standards of living,” said Greenspan.

Indeed, funding (Read More....)

. . . → Read More: Alan Greenspan’s Pickled Economy

The Fed’s Stars Never Aligned

Price Fixingby MN Gordon

Economic Prism

On Wednesday, following the two day Federal Open Market Committee meeting, Fed Chair Janet Yellen will likely announce that the Fed will do something they haven’t done in nearly a decade.  They will raise the federal funds rate.

Obviously, a lot has happened since June 29, 2006.  For example, on June 29, 2007, precisely one year after the Fed’s last rate increase, the first generation Apple iPhone was released.  What this has to do with Fed, we really don’t know.  But it does offer perspective on just how doggone long it has been since the world has known a rising federal funds rate.

As far as the economy goes, the last 10-years haven’t all been peaches and cream.  Several notable (Read More....)

. . . → Read More: The Fed’s Stars Never Aligned

This Market’s Bound to Bust

Ground Hog Day Stock Marketby MN Gordon

Economic Prism

Sporting events are overrated. Think of the latest Mayweather vs Pacquiao fight. What a dud that turned out to be…twelve rounds of pat-a-cake. We’ve seen harder hits watching the squirrels go at it along the back fence.

For any real action these days, you must turn elsewhere than professional sports. Some prefer reality television for kicks and titters. Others like to keep up with the gossip on Facebook. Here at the Economic Prism we have other hankerings.

For the greatest show on earth, we set our sights to the stock market with eager anticipation. We don’t know what will happen next. But we do know something big – like a massive meltdown – is coming.

On Tuesday, for instance, the stock market took a nose dive. The S&P 500 lost a full percent. From what we gather, good news for the economy was perceived as bad news for stocks.

New home sales data exceeded forecasts. Orders for capital equipment rose in the U.S. for a second month. In addition, regional manufacturing was (Read More....)

. . . → Read More: This Market’s Bound to Bust

The Inmates Are Now In Charge Of the Lunatic Asylum And Madness Is The ‘New Normal’

The Inmates Are Now In Charge Of the Lunatic Asylum And Madness Is The 'New Normal'Guest Post Peter Wood

I have written several articles on the coming global, systemic collapse of fiat currencies and so this will probably be my last article before what I write about becomes reality. The world stands on the brink of a catastrophe – an (Read More....)

. . . → Read More: The Inmates Are Now In Charge Of the Lunatic Asylum And Madness Is The ‘New Normal’

Central Bankers Unite

Bankers, Elite, Federal Reserve - Picture Credit Pixabayby MN Gordon

Economic Prism

Government planners float the economy up on a sea of credit. Financial markets rest on an eroding base of wet sandy debt. With all the funny money sloshing around…no solid footings remain.

Here at the Economic Prism we long for a concrete foundation we can stub our toe on. The resulting pain would be comforting. For it would provide confirmation that consequences still exist. Thus we’ll begin today’s supposition with some perspective…

“Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump,” noted 20th century economist Ludwig von Mises.

But what happens if a credit expansion is followed with an additional expansion of credit? Does the debt ever have to be repaid? With enough credit based money, can’t the economic depression be postponed ad infinitum?

“If the credit expansion is not stopped in time,” said Mises, “the boom turns into the crack-up boom; the (Read More....)

. . . → Read More: Central Bankers Unite

Hold On To Your Gold

Stock Market Crashby MN Gordon

Economic Prism

Something befuddling’s going on. It is quite the brain twister. As night follows day and day follows night, should not price inflation follow the massive $4 trillion Fed balance sheet expansion that’s happened over the last 6-years?

Simply connecting the dots quickly leads one to a ‘yes’ conclusion. More money chasing a static number of goods and services should result in price inflation. For prices must rise to balance out all the new money.

This, of course, makes good practical sense. In fact, it might even lead someone to sell dollars and buy gold. Certainly they’d have a bullet proof rationale guiding their decision.

Yet the world isn’t always a practical place. Often time things happen that don’t make sense. Sometimes the exact opposite of what should logically occur ends up happening.

Gold’s price peaked around $1,900 an ounce in 2011. Gold’s currently at about $1,180. That’s over 37 percent off its high. What is going on?

Currency Debasement

The U.S. (Read More....)

. . . → Read More: Hold On To Your Gold

Why You Should Prepare Now for the Fed’s Next Money Pumping Scheme

Pixabay Bailouts, USA Debt, by MN Gordon

Economic Prism

Late last week something remarkable happened. The Fed announced it would close out its quantitative easing program…and stocks went up. This occurrence is what a psychologist would call cognitive dissonance.

We’ll have more to say on this in a moment, but first a review of some of last week’s other key happenings. First off, the dollar rallied and commodities were obliterated. Given the inverse relationship between commodities and the dollar this price action makes sense.

This relationship was clearly at work on oil and gold prices. Oil dropped below $80 per barrel and gold fell to $1,172 per ounce. Obviously, the Fed putting a stop to its mad money creation scheme should be positive for the dollar.

With fewer digital monetary units being credited to the financial system each existing dollar should retain its value or become more valuable. Accordingly, items priced in dollars, such as oil and gold, should become cheaper. However, this is only part of the story…and last week’s feat (Read More....)

. . . → Read More: Why You Should Prepare Now for the Fed’s Next Money Pumping Scheme

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