Financial Sense Blog

Inflation is generally viewed as a monetary phenomenon (print money excessively and you get inflation), but let's use a very simple definition: any loss of purchasing power. If your income buys fewer goods and services, for whatever mix of reasons (geopolitical, weather, monetary, fiscal, etc.), that's inflation "on the ground."

I have long stated the eurozone will breakup. Historically speaking, no currency union has ever survived in the absence of a political union.

The world received a clarifying statement from President Mahmoud Ahmadinejad during his Sept. 26 speech at the United Nations headquarters in New York...

The following charts are assembled from data published in the Federal Reserve's Z.1 release of Flow of Funds Accounts of the United States. The data for the second quarter of 2012 was released on September 20, 2012, so the charts reflect data through June, 2012.

We can see that the recent price highs were not confirmed by the Rel-to-52 Index, which means that there are fewer stocks pushing into the high side of the envelope.

Oil prices, the economy, and stock market tend to move closely in tandem with each other. They all reacted positively to QE2 and 'operation twist'. But, oil prices have plunged 11% in the last two weeks after QE3. Is it that the Fed's action (and that of the ECB) were already factored into oil prices this time, in the rally on hope from the June low? Or maybe that global economies are in such slides that the actions are too little toolate to prevent a global recession? In any event are plunging oil prices predicting a stock market decline?

Stocks got off to a weak start after the run up yesterday. Selling intensified after September Chicago PMI numbers were weaker than expected. Expectations called for a number of 52.9. The actual number was 49.7.

History has shown faster economic growth has been accompanied by higher domestic investment. The end result is higher productivity, higher living standards and of course higher revenue for the US government and states. Between the early 60’s and the present, the spread between net business fixed investment and mandatory entitlement spending has never been wider, I.E., entitlement spending increasing and business investment shrinking.

U.S. DOLLAR gold prices hovered near seven-month highs above $1780 an ounce for most of Friday morning's London trading – a few Dollars up on where they started the week – while stocks failed to hold early gains after a analysts interpreted Spain's budget as "laying the groundwork" for a formal bailout.

Three weeks ago the Wall Street Journal published my OpEd piece about concern that China may try to make the rebalancing process less painful by allowing the RMB to depreciate. In the piece I argue that this isn’t as obvious as you might think.