Remember our discussion of prices yesterday? Here at The Daily Reckoning, we have nothing against higher prices…and nothing against lower prices. It's dishonest, misleading, and treacherously false prices that we don't like. They send the wrong information. They may tell us that an item is plentiful, for example, when it is actually in short supply. They may cause us to invest our money in the belief that profit margins are increasing when they are actually shrinking. They may also induce us to expand production, when the world already has far too much of what we have to offer.
[Read more...]Hedonic Adjustments and the Mulligans of Monetary Policy
August 2, 2010 By Leave a Comment
I knew it was going to be “one of those days� when, on the very first fairway, this new guy Bob says that he thought my tee shot had landed over there behind those trees, and how he is surprised to see that my golf ball is now sitting on the fairway, and another twenty yards further towards the hole, too.
[Read more...]Three Out of Four Economists are Wrong
July 30, 2010 By Leave a Comment
What does an economist think…when he adjourns to the local bar…or is hauled away to the asylum? In the dead of night or the quiet of a confessional, does he laugh sourly at having fooled most of the people most of the time? Or does he curse his trade and feel like hanging himself?
The thing economists said was nearly impossible actually happened last week. Yields on 2-year US debt hit a record low just as the Treasury prepares for another record-setting deficit. The supply of Treasury debt and the demand for it hit new highs – together. Stranger things have happened. But the strangeness of this event has caused a furor loquendi amongst economists. Usually, there are only two major ways of misunderstanding current events. Now there are at least four of them.
[Read more...]Hooray for the Economic Recovery!…of 2016
July 28, 2010 By Leave a Comment
Last week, the price of gold again broke below its new base at $1,200, and the US stock market was again under strong pressure, due to a confluence of fears, most of which point to a deflationary double-dip. The fears were fanned by disappointing second quarter results, by the latest CPI reports that show inflation continuing to moderate, and by yet another poll revealing faltering consumer confidence.
[Read more...]US Money Supply Prompts a Hard Goodbye
July 26, 2010 By Leave a Comment
The way that federal taxes are going up next year by huge percentages is Very Interesting News (VIN) for gold-bugs like me, and probably the Founding Fathers who wrote the Constitution, too, if they were still alive, as we all think that gold-as-money is the only “way to go� because it absolutely precludes rapid increases in the supply of money, which is important because increases in the money supply cause increases in prices, which is important if you think that paying $1,000 for a loaf of bread is important or if milk costs $2,000 per gallon, and pretty soon the rest of the world is going to wake up to that fact, too.
[Read more...]For the Last Time, Is Gold in a Bubble?
June 26, 2010 By Leave a Comment
While a few mainstream outlets are coming around to at least acknowledging gold's stellar run, most remain skeptical or outright bearish. And the blasphemy they purport is that gold is in a bubble.
Let's settle it, right now, and shut these naysayers up.
Fed Credit, Inflation and the Idiots in the Middle
June 25, 2010 By Leave a Comment
A whole series of alarms occurred after I got the news, although I lost the source, that “food stamp usage just soared to a new record high� of 40.2 million persons.
This number is alarming in itself because it means that the economy is so bad that more and more hungry people cannot afford to even feed themselves, sort of like teenagers, but with hopefully better manners and dietary choices.
[Read more...]Heavenly Recovery or Hellish Correction?
June 11, 2010 By Leave a Comment
Time alone, yes time will tell
You think you're in Heaven but you're really in hell
– Bob Marley
Yes, dear reader, time alone will tell.
Are we really in the heaven of a recovery…or the hell of a Great Correction?
Well, actually, we think we know the answer already. It's a Great Correction. That's what we thought when it began in '07. Everything that has happened since merely confirms it.
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How Much Gold is Enough?
“Should I buy gold now, or wait for a pullback?�
I get that question a lot…and it's a valid question. For nearly two years, gold hasn't had a serious decline. There have been pullbacks, of course, but nothing assumption-challenging. In fact, since October 2008, gold's largest price drop is 10.6% (based on London PM fix prices), and yet the average of all declines since 2001 is 13% (of those greater than 5%). The biggest pullback we've seen this summer is 8.2%. Technically the summer's not over, but I'll admit I'm surprised we haven't had a better buying opportunity.
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