When the United States closed the gold window in 1971, the world entered a new era in which nearly all money was supported by nothing more than the full faith and credit of the governments issuing it.  If one looks back to the history of paper money, no government has had the discipline to maintain [...]

Jim Grant is definitely not in the deflation camp. He believes a robust policy response and enormous expansion in the Fed balance sheet is storing up monster inflationary forces which could take holding a recovery. As a result, he is quite bearish on treasury bonds. He also says “the dollar is not the [...]

This is a re-post that I hope serves as a reminder that although we are NOT talking about a liquidity crisis in the financial sector, but rather a solvency crisis, liquidity remains very much a concern. This post, despite being 6 months old, should highlight this issue in terms that are equally true today.
The original [...]

This post is a contribution from Rob Parteneau of MacroStrategy Edge about fiscal expansion, printing money, avoiding debt deflation, and U.S. treasuries. He has some great insights on deflationary spirals, the paradox of thrift and the desire of foreign investors to dump dollars. He also argues that the “Blame Asia Meme” is misguided as the ultimate source of credit growth in the United States is domestic. The crux of his statements is that the only way to avoid a deflationary spiral when household savings is increasing is through fiscal expansion, which is one reason I support fiscal stimulus. But, there are consequences.

Paul Kasriel thinks the Fed announcement that it is monetizing the U.S. Federal Government’s deficit is very important. He ends his article at Northern Trust with these words:
In the coming months, the federal government is going to be increasing its debt issuance to finance its increased spending as a result of the recently-passed fiscal [...]

You probably saw this one already, but a pair of suspected narcotics traffickers threw gads of money from their car window while being pursued by the Drug Enforcement Agency (DEA) in a car chase in San Diego. Basically, it was free money for any other drivers willing to risk death picking up the money [...]

Quantitative easing is now the main policy course for the U.S. Federal Reserve. The U.S. Federal reserve is buying $300 billion in long-term U.S. government debt in order to keep interest rates low. As a result, the rally I in Treasuries that I have long anticipated is upon us – it is the most powerful rally I have ever witnessed.

As Marc Faber has said, “don’t underestimate the power of printing money.”

I was just re-reading my November post on quantitative easing when I got an alert about Pimco’s inflation call.  While I still see downside risk for the economy, and, consequently, deflation, I have grown more worried about inflation — one reason for re-reading the post.  Pimco is not the only one here, Warren Buffett and [...]

Morgan Stanley Asia head Stephen Roach believes that Asia will weather the economic storm with a less severe downturn than the West. However, as the economies are predominantly export-led, he also believes that the countries are followers, not leaders. Translation: Asia will recover more slowly.
Asia will have a less acute impact from the global [...]

Goldman Sachs London conducted a poll of fund managers today that had interesting results. The poll demonstrated that fund managers are expecting deflation more than inflation and that they expect the U.S. or Asia to escape the downturn first (and certainly not Europe or the UK). I imagine that funds are positioned accordingly.

Here are the poll results: