Because most people know so little about economics, TPTB don’t knock out the alternative econ-news sites so quickly as the others. That’s a good thing if you know economics, but it’s opaque to the sheeple. What little they do know is mostly mythology.
Vox Day has been predicting for quite some time we should end up in deflation, not spiraling inflation. The key is credit. It won’t matter if the Fed “cranks up the presses” because the actual physical currency comes out of the US Mint. What the Fed does it create imaginary money to loan. What happens if no one borrows? It won’t matter how liquid the banks are if no one is using that liquidity. Over the past few years, consumer debt, new and old, has dropping like a rock. The government can’t borrow fast enough to counter that drop, and businesses only borrow when consumers spend. Consumers in America only spend when they can borrow, and they don’t have any reason to do so.
Yes, I’ve oversimplified, but it should help you understand things happening in the background, and out of the MSM. For example, did you know the price of gold dropped a bit the past few days? It’s not as important as it seems. The greatest single item to indicate economic trends is copper, and the price of copper is really plunging right now. That means businesses are not buying, because they aren’t producing, and they are getting ready to lay off more workers, etc. Gonzalo Lira tells us what should be stinking obvious:
[T]his fall in the price of copper confirms this notion that the general economy is going down.
And remember: Market sentiment can not only be a predictor of future economic performance, but its determinant. If today the markets feel that the economy is going to suck tomorrow, often that very sentiment is what makes the economy suck canal water…. [T]he fall in the price of copper is deflationary: Less demand means that the prices fall — meaning the dollar acquires purchasing power….
Ben Bernanke is famous for being terrified of deflation… Deflation is supposed to be bad because it shrinks an economy…. Notice: It’s not that Bernanke will do anything to alleviate deflation — he will do anything to alleviate his fear of deflation….
This dramatic fall in the price of copper signals that the markets do not believe reactivation is anywhere near eminent — not for at least 9 to 18 months. To the traditional twin Federal Reserve mandates of price stability and full employment, Bernanke has added a third mission: That of “growing the economy” — whatever it takes, however unorthodox or reckless the measures.
He notes in passing, “the fall in the price of gold … was just a combination of options expiration coming up, and gold positions being sold to cover losses in other asset classes”. Don’t watch gold and silver; watch copper. Watch Bernanke go absolutely berserk. Watch it all come crashing down around his ears. Lira thinks it could come as early as next month.
I tend to think Lira knows what he is talking about.
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