Jim’s Mailbox

Posted at 11:51 AM (CST) by & filed under Jim's Mailbox.

Greenspan seeks redemption.

Jim

Jim/Bill,

What caught my eye were 2 comments:

1- significant inflation

2- major currencies erosion

‘Whilst interest rates are likely to rise, so is inflation which as Greenspan has previously argued, is good for gold:

“Significant increases in inflation will ultimately increase the price of gold. Investment in gold now is insurance.” [6]

Gold is not only insurance against inflationary pressures but it is insurance against the unknown whether that be the outlook for the dollar or for the survival of the euro itself which Greenspan warned about earlier this year.

Earlier interviews with Greenspan have provided insight into how often bodies such as the Federal Reserve misjudge economic situations which then results in poor policy making. Of course, no one knows how the financial future will evolve, especially as each crisis comes with new financial strategies, technology and human behaviour.

Greenspan is unable to predict when the bond bubble will burst, and many disagree that it will happen, instead pointing to a stock market problem.

The bottom line is no one has a crystal ball. We simply don’t know now how this will pan out.

But we do know that the current situation is unsustainable. Most asset markets look overvalued and the value of major currencies are slowly being eroded.

Gold will hedge and insure against these real risks.’

CIGA Wolfgang Rech

Stagflation: Inflation without growth. Stagnation with inflation.

We had that in the 1970’s (just before gold soared!)

Greenspan Warns Moving Into “Stagflation Not Seen Since the 1970s”
August 2, 2017

Greenspan warns of Bond Bubble

‘We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.’

There are a lot of warnings on Bloomberg, CNBC and other financial media these days about a bubble in the stock market, particularly in FANG stocks and the tech sector.

But former Fed Chair Alan Greenspan is not in agreement. He is continuing his message of the last two years, that there is a bond bubble and which is more dangerous than what is going on in the stock market.

He is not the only one, in recent months there has been a growing number of those who are concerned that real bond yields in the U.S., UK, EU and elsewhere are well below where growth and inflation rates seem to suggest they should be.

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Jim/Bill,

It’s no coincidence that we see these headlines back to back.

With the job market (primarily manufacturing) sliding into oblivion, drastic measures are being taken, even it means trade wars.

President Trump must save face regarding his promises to the “Rust Belt”.

And we all know where trade wars lead to…..depressions.

CIGA Wolfgang Rech

Manufacturing Loses Most Jobs Since Election As ADP Employment Growth Weakens
August 2, 2017

After April and June’s disappointment, ADP reports the US economy added 178k jobs in July (less than the 190k expectation and below June’s upwardly revised 191k). This is somewhat in line with the 180k expectation for NFP on Friday.

Two months in a row, ADP has weakened as ISM surveys suggested employment is rolling over.

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Trump Set To Retaliate To China’s “Unfair Trade Practices”
August 2, 2017

President Trump has given China six months to prove that it is committed to preventing a nuclear-armed North Korea, and it seems his tolerance for China’s dithering has finally reached its limit. Now that President Xi Jinping has established that his government is unwilling to engage in a meaningful crackdown on its neighbor, the era of using carrots like improving trade relations to coax China into helping solve the “North Korea problem” has ended. It is now time for the stick.

According to reports in the New York Times, Wall Street Journal and Associated Press, the Trump administration is planning to use an obscure 1970s law to launch a “broad-based” investigation into whether China’s trade-related intellectual property policies constitute “unfair trade practices.

The US inquiry could become an obstacle for one of the Communist Party’s top economic priorities: the Made in China 2025 initiative, while calls for China to become a “global leader” in ten industries with the help of huge infusions of state money.

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