How Big A Problem Is Inflation For Stock Markets?

Inflation caused  by increases in economic demand predicted by the law of Supply and Demand.

Inflation caused  by increases in economic demand predicted by the law of Supply and Demand.
Wikimedia Commons / SilverStar at English Wikipedia

One often mentioned explanation  for plunging stock markets has been the specter of inflation raising its ugly, grisly head. With the American economy rousing from its slumbers, many expect rising demand for goods and services to motivate the Federal Reserve to raise interest rates.

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The Federal Government’s Projected Bankruptcy

Which Way Can We go!

Which Way Can We go!
(c) Can Stock Photo / svanhorn

There is no doubt about it!  Unless the federal government drastically reduces mandatory entitlement expenditures in the near future, it will soon be bankrupt . What can be meant by “bankrupt” in terms of a nation? In terms of a person or a private organization, the dictionary meaning of the word is that the person or organization is declared in a court of law unable to pay outstanding debts. Whether or not a court will ever declare the United States government as being incapable of paying outstanding debts, I would settle for the definition that the U.S, government in fact can not pay its outstanding debts. And the time when that will be true may be a lot sooner than you think.

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How a Bursting Stock Market Bubble Will Hurt Everyone

OOPs! A Bear!

OOPS! A Bear!
(c) Can Stock Photo

Approximately eight years ago,  progressives were screaming that capitalists had with their avaricious, dishonest and selfish behavior thrown us into another Great Depression. The reaction of a Democratically controlled Congress was the Dodd-Frank Act, which has bedeviled the U.S. economy ever since. Yet noting this just barely scratches the surface of all the misdeeds of the executive and legislative federal government branches that are progressively weighing down our economy. One of the major effects of government discouragement of economic activity has been the inflation of a stock market bubble. Continue Reading…

The Threat of the U.S. Stock Market Bubble

The New York Stock Exchange
Wikimedia Commons

The last time we were hit with a devastating recession,  the Great Recession of 2007-2009, it was caused by the bursting of a real estate bubble created by federal government policies. Now we are facing the possibility of another gut-busting disaster from the inflation of another financial bubble, but this time it is a stock market bubble.  Continue Reading…

U.S. Economy and Stock Markets, October 2016

The time evolution of the Atlanta Fed's GDPNow statistic for Q3 2016

The time-evolution of the GDPNow statistic  from the Center for Quantitative Economic Research of the Federal Reserve Bank of Atlanta.
Image Credit: Federal Reserve District Bank of Atlanta/Center for Quantitative Economic Research

The graph above  of the GDPNow statistic produced by the Atlanta Federal Reserve confirms what the bulk of economic statistics are saying to me. By now it should be obvious to even the most dense that something is very, very wrong with our economy.  Continue Reading…

The Japanese Economy is Stalling Out

Shinzo Abe, Prime Minister of Japan
Wikimedia Commons/US Embassy, Tokyo

From the Wall Street Journal we learn that Japanese economic growth nearly sputtered out in the second quarter of 2016. Their exports are falling and, just like the United States, they are suffering from weak corporate investment. That is not terribly surprising, since they have been using the same Keynesian ideas to direct their policies as the United States. What is surprising is how faithful the Japanese have been to Keynesian doctrine in the face of the unremitting bad results of their policies. Continue Reading…

U.S. Economy and Stock Markets, August 2016

US real GDP growth from Q1 2009 to Q2 2016

Real quarterly, annualized GDP growth rate in percent from Q1 of 2009 to Q2 of 2016
Image Credit: St. Louis Federal Reserve District Bank/FRED

It is time for me to take one of my periodic looks at the condition of the U.S. economy and stock markets. As has been my practice, every time I do one of my general surveys on the economy, I update my Leading Economic Indicators and Coincident Economic Indicators, so be sure to take a look at them.

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Where the Left Is Leading the World: Catastrophe

Storming of the Bastille, 14 July 1789 during the French Revolution

The storming of the Bastille, 14 July 1789 during the French Revolution
Wikimedia Commons/Bibilothèque Nationale de France

If you have read any of my posts and detected a somewhat gloomy outlook, I must plead guilty. Right now the fortunes of liberal democracy are being threatened by the increasingly wide acceptance of Leftist world-views. Also, I have repeatedly written about how the continued centralization of economic power in the national government leads inevitably to tyrannical government, a process to which I have referred as traveling down the Road to Serfdom.      Continue Reading…

Dismal Economic Numbers

US real GDP growth from Q1 2009 to Q2 2016

Real U.S. GDP growth rate from the first quarter of 2009 to the second quarter of 2016. The maroon curve is a linear fit to the data from Q1 2014 to Q2 2016.
Image Credit: St. Louis Federal Reserve District Bank/FRED

Today the Commerce Department announced the GDP growth rate was a very disappointing 1.2 percent for the second quarter of 2016. This is considerably below the 2.6 percent growth expected by economists. To make matters even worse, the first quarter GDP growth rate was revised downward to 0.8 percent, making the average annualized growth rate for the first half of the year 1.0 percent.  This is a very far cry from the U.S. historical average of 3.22%.

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Economic Freedom in the United States

World Map Of WSj/Heritage Foundation Index of Economic Freedom for 2016

World Map of the WSJ/Heritage Foundation Index of Economic Freedom
Image Credit: Heritage Foundation

It would distress many Americans to learn the United States does not have the greatest economic freedom in the world. Indeed, in the latest 2016 rankings by the Wall Street Journal/Heritage Foundation Index of Economic Freedom, the U.S. ranks eleventh behind tenth rank United Kingdom. In fact, the U.S. is currently declining in economic freedom, having fallen 0.8 points from the previous year’s ranking.

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The Fed Hangs Fire on Interest Rate Rise

Janet Yellen, Chairman of the U.S. Federal Reserve System

Janet Yellen, the Chairman of the Federal Reserve Board of Governors
Wikimedia Commons/U.S. Federal Reserve

As widely expected, the Federal Reserve Open Market Committee (FOMC) hung fire on raising the Fed Funds interest rate yesterday. The Fed Funds rate is the interest charged by the Fed to member commercial banks overnight for borrowing funds from the Federal Reserve. Inevitably it becomes the short-term interest rate charged to banks’ best, most credit-worthy customers.

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The Thoughts that Haunt Me

A profligate spending your money!

A profligate government bureaucrat with you behind him!
(c) Can Stock Photo

More and more, the words haunting me are the ones I wrote in the final sentence of my last post:

The federal debt may be the single biggest threat to national security — bigger even than Russia, China, Iran, or North Korea.

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The Fecklessness of the U.S. Federal Reserve

From Top Left Clockwise: Janet Yellen, Federal Reserve Chairman; Haruhiko Kuroda, Governor, Bank of Japan; Mario Draghi, President, European Central Bank

From Top Left Clockwise: Janet Yellen, Federal Reserve Chairman; Haruhiko Kuroda, Governor, Bank of Japan; Mario Draghi, President, European Central Bank
Wikimedia Commons/ US Federal Reserve, World Economic Forum, Asian Development Bank

My last report on the value of the Atlanta Federal Reserve’s instant prediction of what first quarter 2016 annualized GDP growth will be was 0.7 percent. A quick look on the Atlanta Fed’s web page publishing this number from their GDPNow forecast model shows that on April 18, the forecast fell to 0.3 percent, and the next update of GDPNow will be on April 26. Yet, I have picked up a disturbing rumor from former congressman and presidential candidate for the Libertarian Party, Ron Paul, that the next GDPNow estimate will be even worse.      Continue Reading…

Stock Investors’ BIGGEST Enemy: Central Banks

The Shiller CAPE: The most trustworthy index on stock valuations
Image Credit:

The question for the day is whether or not we should invest in the stock market. This should be an overwhelmingly important question for all of us! Investing in the stock market, either through 401K accounts or Individual Retirement Accounts (IRAs), has evolved into the primary (and for most people the only) way to save for retirement.      Continue Reading…

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