Podcast 252

The Gathering Storm. Business and Economic News. The latest headlines include a Mayor who throws alleged gang signals to curry favor with unsavory characters, a video of an MIT Obama Care ‘architect’ who says the law was poorly written to fool ‘stupid’ voters (what a surprise!), and the mainstream media election 2014 chatter is increasingly vapid. Time to turn to an issue no one seems to be paying attention to, save for the financial and market watchers. As commodity and housing prices decline the mainstream media tells us deflation is bad, because falling prices mean people will ‘wait’ to make purchases. Never mind we have had deflation (dropping prices) for things like flat screen TV’s and tech for years, and people keep buying. The real problem with deflation is that governments need inflation to pay off their debts. Inflation is how governments have robbed Americans of purchasing power and hidden the ill effects of profligate spending for decades. Central Banks and governments all over the world are trying, and failing, to create inflation. Now they are terrified that slow, or no economic growth may finally be creating a deflation, which means debts will become more difficult to repay. What the mainstream media isn’t telling you about lower oil prices is, major economies all over the world are stalling, lowering demand for energy and everything else. The EU, Japan, China, Russia, India, Brazil, even the US have anemic economic growth, or they are contracting. Housing is not cooperating with efforts to stimulate. Half the people in this country make less than $28,000 a year, the average college graduate has at least 26,000 dollars in debt, making some wonder what the millennials will be buying houses with. Years of anemic economic growth is taking its toll in people out of the labor force, stagnant wages and substandard job creation. The statistics look good, but don’t tell the real economic story in the United States and the rest of the world; Things aren’t going so well. The gathering storm isn’t deflation, it’s the political reaction to it. Bill Gross said recently, stimulative efforts by governments and central banks aren’t ‘working as well as they used to’. The cure? More of the same! What about the idea that what they’re doing just isn’t working? Politicians aren’t addressing this issue at all, whether they be democrat or republican. Does this mean a disaster is brewing? Democrats want to double down on failed economic policy  (basically print and borrow more money) and Republicans don’t seem to have an agenda which will lead to the growth we need. Add to this, chaos in the world as the US withdraws … a confused foreign policy … and you have a recipe for disaster; A gathering storm. Sponsored by Ryan Plumbing and Heating of Saint Paul and by Depotstar. 

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Podcast 238

Economic Doom. Inflation, Deflation, Disinflation. Is the economy booming, or crashing? In the fantasy world created by the media, there are only winners or losers. The reality is somewhere in between. What is inflation, deflation and disinflation? Do we have inflation in the United States, or not? Despite the Federal Reserve pumping trillions into the banking system in America, we’ve seen only slow growth at best; Not enough growth to bring out self-mothballed workers from the ranks of those who have given up looking for work. Yet, we are told the US is reaching ‘full employment’, and that the economy is ‘roaring’ back. With only 76 percent of our industrial capacity utilized, a significant amount of that capacity in the oil, and mining sectors, the concern is disinflation, and perhaps deflation. In the Euro Zone, the ECB is worried about Deflation. In China they’re worried about a slow down. In Japan, huge inflows of cash from the central bank and government has produced mixed results. Yet, with a new set of economic numbers this month, economists, reporters and political cheerleaders are saying the US economy is ‘set to grow’ and we’re back to the Rosy Scenario. When things don’t pan out as they predict, it will be ‘unexpected’ or ‘surprising’. Reporting like this is devoid of context, and grossly misinforms the public, leaving them confused and angry when they can’t get a higher paying, better job. For instance, the much vaunted consumer is constantly told he accounts for 70 percent of the US Economy. Not true. We are being told new housing construction is up. In fact its apartment houses. We’re told the housing market is back, but a closer look reveals many cash buyers who are buying homes to rent out. A recent drop in housing sales is attributed to cash buyers pulling out of the market because homes are ‘too expensive for cash buyers’. Inflation and Deflation have both been associated with stagnant growth in various countries, sometimes disaster. We’re told ‘cheaper gas’ gives consumers the where-with-all to spend, and yet gasoline has only been somewhat less expensive for about a month. (Editors Note: Yeah gas is cheaper, but I’m not taking the money I’ve ‘saved’ on a shopping spree.) With Europe and China and other parts of the world in a seeming synchronized slow down, oil and commodities dropping, the markets moving and up and down wildly, suddenly some are alarmed and concerned. Is it possible that years of government borrowing and spending, and central bank intervention in markets have added so much malinvestment, the chickens are finally coming home to roost? Why do governments and big debtors love in inflation, and fear deflation? The takeaway is, it’s time to start thinking about what we expect these sclerotic and expensive governments to actually do, and start demanding they operate with as little debt as possible, and that our money be based on something stable like, uh…Gold or Silver. The reason? When governments can print their way out of debt, citizens actually pay the cost in higher taxes and inflation. Sponsored by Depotstar.  

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