Commodity Trade Mantra

All posts under ‘Economy’

Can The Fed Raise Interest Rates In An Election Year?

While many economic and market factors may influence when and how often the Fed hikes in the upcoming months, we do not expect the timing of US elections to play any meaningful role in the Fed’s policy deliberations. Expect the Fed to gradually tighten policy in a data dependent manner during 2016 — regardless of how the political winds may blow.

Emerging Market Meltdown May Plunge Global Economy Into Recession

When the Fed effectively telegraphed its new reaction function last month, the FOMC served notice to the world that it was not only acutely aware of what’s going on in emerging markets, but also extremely worried about the possibility that hiking rates could end up triggering something far worse than the “tantrum” that unfolded across EM in 2013.

The Reality Behind the Numbers in China’s Boom-Bust Economy

The US Federal Reserve orchestrated an artificial boom from 2001 to 2007 through artificially low interest rates, paid for it with millions of destroyed jobs, wasted labor & wasted resources, but has resumed doing so once again. The Chinese Central Bank learned nothing from the Fed’s catastrophic experiment for its economy. They will reap the same rewards.

All You Need To Know About The US Economy: True Unemployment Is Over 12%

How can an economy that is growing so slowly produce such big declines in unemployment? Something about the U.S. economy isn’t adding up. Either the unemployment data or the GDP calculation is very much wrong. Last week’s failure by the Fed to hike rates is a direct confirmation that nothing with the US economy is as strong as the 5.1% unemployment rate suggests.

The Echo Bubble in Housing Is About to Pop

Here’s the knife in the heart of the Echo Housing bubble: household income– stagnating for decades for 90% of households has declined since the Bubble Top when adjusted for inflation. Please explain how declining real income can support nosebleed home prices now that mortgage rates have bottomed & started their inevitable rise from absurdly low levels.

Take Advantage of the Fed's Uncertainty - Buy Gold or a New Home

The Fed’s decision is a wash for precious metals, oil and gas prices. A rate hike would have likely caused the U.S. dollar to strengthen even further, which in turn would have put additional pressure on commodities. Home buyers who have been sitting on the fence now have a double-incentive to act: historically low mortgage rates and a possible chance at killer bargains.

Government Shutdown & Debt Limit Questions Answered

A federal shutdown due to a funding lapse looks no less likely than it did two weeks ago. The Senate is expected to begin voting later this week on a funding extension, but the House looks unlikely to act until shortly before the September 30 deadline. Here are some attempts to answer the main questions surrounding the shutdown, debt limit & ramifications.

The Massive Debt Bubble Will Push Silver Prices Much Higher

The April 2011 peak exists in similar conditions to that of the interim high in the previous bull market. The silver price will, as a minimum, equal the 38.58 times rise of the previous bull market. That would be a minimum target of $155.86 (4.04 times 38.58). The context of this silver bull market & massive debt levels today, suggest that silver will go much higher.

Why Gold is Good and Sovereign Debt is Bad

It is easy to create debt – central banks “print” currencies by BORROWING those currencies into existence. Debt increases, currency in circulation increases, and until it crashes, life is good for the financial and political elite. But debt increasing 60 times more rapidly than gold indicates that debt is growing too rapidly and due for a reset.

The Ugly Reality of Wealth Inequality Exposed

When the tide of “prosperity” (i.e. the fake prosperity of financialization and phony statistics) recedes, the ugly realities of massive wealth/income inequality are exposed for all to see. Wealth / income inequality is significantly higher in the U.S. than in other developed nations.

Central Banks Behind Slowdown in Global Trade

Over the past decade, all central banks went into overdrive with currency devaluations. This has done more harm than good. A currency war between developing nations is likely to be more damaging than thought, leading to a reduction in global trade & possibly economic growth, rather than just reapportioning a fixed level of trade between winners & losers.

Here's Why the "Growth Dependent" Status Quo is Doomed

Status Quo only works in a world with plenty of room to expand. The real world has limits & so does the financial world of debt. When the world the Status Quo has been optimized to exploit can no longer expand, the Status Quo doesn’t just slow, it implodes. When incomes stop expanding, debt eventually stops expanding, which means growth stops expanding.

Gold Prices vs National Debt: The Big Picture

Since the peak in gold prices in 2011 the Federal Reserve has “generously” supplied the world with trillions of dollars of newly created digital and paper debt, all backed by nothing but faith and credit. Bonds have rallied and the S&P is higher by 50% or so. The US national debt has steadily increased and gold is still bumping around a bottom.

The Next Financial Crisis Won't be Like the Last One

It’s not that difficult to predict that the next global financial crisis will arise not in the banking sector but in a market that’s beyond the reach of central banks.That is, printing $1 trillion and promising to “do whatever it takes” won’t fix what’s broken. It seems increasingly likely the next Global Financial Meltdown will arise in the FX/currency markets.

Equity Markets and the Credit Contraction

Macroeconomic policy is centred on ensuring that bank credit grows continually, so since the Lehman crisis any tendency for bank credit to contract has been offset by central banks creating money. The bald fact that equity markets have now lost upside momentum and appear to be at risk of a self-feeding collapse will be viewed by central bankers with increasing alarm.

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