Jim Sinclair’s Commentary
Volcker won it all and Greenspan gave it all away.
China has it now.
Jim Sinclair’s Commentary
Adam Ferguson is the author of When Money Dies, which is about hyperinflation during the Weimar Republic.
Even though the reporter excerpts to modify the significance of Currency Induced Cost Push inflation of Weimar, he fails. The comparison between Weimar and the path the West is on is undeniable. The results will be comparable.
Under that scenario both the Dow and Gold will go ballistic with gold first.
Lunch with the FT: Adam Fergusson
By Jonathan Ford
Published: August 20 2010 22:30 | Last updated: August 20 2010 22:30
As befits a man who has written an acclaimed book about money and prices, Adam Fergusson starts our encounter by eyeing the menu beadily and asking who will be paying the bill. “Milton Friedman said the most efficient way of spending money is to spend your own, and the least efficient way is to spend other people’s,” he says. “If you go out to lunch and have to pay your own bill, you have what you want and can afford. If someone else is paying, you may as well have the lobster.”
As I confirm that the FT will be paying, we scan the menu but, alas, there is no lobster. I am meeting Fergusson at Belvedere, a slightly gloomy restaurant in the middle of Holland Park, close to where he lives in west London. It is a sultry day and we initially consider sitting outside on the terrace, but the closely packed tables are already filling up and it is too noisy. So we settle down, virtually the only diners in the shadowy and rather formal interior.
Fergusson, 78, a former journalist and politician, is enjoying an unexpected literary revival thanks to the republication last month of a book he wrote 35 years ago – a history of the hyperinflation in 1920s Weimar Germany. When Money Dies tells the story of Germany’s economic collapse after the first world war, which culminated in the mind-boggling inflation of late 1923 – a dreadful time when visitors to Berlin saw people starving in the streets and the number of marks to the pound was at one point equivalent to the number of yards from the earth to the sun.
Jim Sinclair’s Commentary
This is a revealing video and article. It speaks directly to inevitable Currency Induced Cost Push Inflation that few understand.
Gold will trade at $1650 and above.
"Enron Accounting" Has Bankrupted America: U.S. Deficit Really $202 Trillion, Kotlikoff Says
Posted Aug 23, 2010 07:30am EDT
by Peter Gorenstein
The Congressional Budget Office (CBO) forecasts the U.S. budget deficit will hit $1.3 trillion this year. An astronomical figure, to be sure, but that’s lower than was projected in March. It’s also less than last year’s record $1.41 trillion deficit, which was close to 10% of GDP.
And, that’s the good news.
As the deficit grows so does the national debt, which is currently more than $13.3 trillion, according to official figures.
But the situation is actually much, much worse, according to Boston University economics professor Laurence Kotlikoff.
“Forget the official debt,” he tells Aaron in this clip. The “real” deficit – including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget – is actually $202 trillion, the professor and author calculates; or 15 times the “official" numbers.
Jim Sinclair’s Commentary
Eventually yes, but for now MOPE is directed at the weak euro states to divert this occurrence.
Hussman: Bernanke’s Quantitative Easing Is About To Trigger A Collapse In The US Dollar
Joe Weisenthal | Aug. 22, 2010, 5:29 PM
In his latest weekly letter, John Hussman warns of an imminent and disorderly collapse of the US dollar, courtesy of Ben Bernanke’s move towards more quantitative easing.
The whole thing is worth reading, but here’s the key part of it:
From the standpoint of the two parity conditions, the very long-term implication of quantitative easing is a gradual devaluation of the U.S. dollar (an increase in the dollar price $/FC of foreign currency). If this increased inflation risk was reflected in interest rates (so that real interest rates were held constant), the U.S. dollar would simply move along that gradually sloped PPP line, and likewise, foreign currencies would gradually appreciate against the dollar.
However, because of economic weakness and credit strains, coupled with the demand for Treasuries by the Fed, quantitative easing instead moves U.S. interest rates in the opposite direction, falling rather than rising. From the standpoint of interest rate parity, capital market equilibrium then requires the U.S. dollar to depreciate immediately, by a sufficient amount to set up the expectation of future appreciation in order to offset the shortfall of U.S. interest rate returns.
In short, quantitative easing is likely to induce what the late MIT economist Rudiger Dornbusch described as "exchange rate overshooting" – a large and abrupt shift in the spot exchange rate that occurs in order to align long-term equilibrium in the market for goods and services with short-term equilibrium in the capital markets.
Jim Sinclair’s Commentary
Retirement age at 96 and benefits of $1 per month should save social security.
Social Security Cuts Weighed by Panel
* AUGUST 20, 2010
By LAURA MECKLER
A White House-created commission is considering proposals to raise the retirement age and take other steps to shore up the finances of Social Security, prompting key players to prepare for a major battle over the program’s future. The panel is looking for a mix of ideas that could win support from both parties, including concessions from liberals who traditionally oppose benefit cuts and from Republicans who generally oppose higher taxes, according to one member of the commission and several people familiar with its deliberations.
In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said.
On the tax side, the leading idea is to increase the share of earned income that is subject to Social Security taxes, officials said. Under current law, income beyond $106,000 is exempt. Another idea is to increase the tax rate itself, said a Democrat on the commission.
Even before the commission settles on a plan, many liberals are vowing to block any cut in retirement benefits. But the White House and the powerful senior group AARP appear open to a deal.
Republicans on the commission have mostly held their fire. One of them, Rep. Jeb Hensarling (R., Texas) said Thursday he opposes tax increases but wouldn’t rule anything out at this stage in the discussions. Otherwise, he said, "the thing blows up before it has a chance to work."
