Tag Archives: consumer price inflation

The value of a currency is determined by a number of variables. In this article, I will focus on the dynamics of demand, supply, current account deficits, and aggregate government debt.

The Fed and the bond market are responding appropriately to declining risk aversion and a somewhat improved economic outlook. There is no reason to fear the end of QE or the beginning of higher short-term interest rates. Let me explain further.

QE3 looks like a desperate act to feed money to large banks, offload MBS toxic waste from their balance sheets, devalue the dollar against houses, commodities, and other currencies and create significant collateral damage in the form of consumer price inflation according to a number of respected economists and critical thinkers on the subject of QE3. [Let's take a look at what they have to say.] Words: 1661

Economist Gary Shilling, excellent forecaster of past recessions and chief pooh-pooher of today’s market enthusiasm, thinks consumers are in worse shape than they’re letting on ...[and,] while his general pessimism puts him very much at odds with the market for the first few months of the year, it looks like he’s gaining some followers. [Take a look at his] point-by-point explanations of his opinions, [supported by charts , and see if you, too, come to the same conclusions.] Words: 740

The market believes that there is more profit to be made in speculation than in new business investment - and speculation is what you get when you weaken the incentives to invest in productive activities for the long haul. In fact, fear and uncertainty are inhibiting growth [- almost everywhere - as shown in graphic form in the 8 charts below]. Words: 1000