Bud Conrad's Blog

Chief Economist
info [at] caseyresearch [dot] com ()

Author of the new book Profiting from the World's Economic Crisis, Bud Conrad holds a Bachelor of Engineering degree from Yale and an MBA from Harvard. He has held positions with IBM, CDC, Amdahl, and Tandem. Currently, he serves as a local board member of the National Association of Business Economics and teaches graduate courses in investing at Golden Gate University. Bud, a futures investor for 25 years and a full-time investor for a decade, is also a regular lecturer for American Association of Individual Investors. In addition, he produces original analysis for Casey Research, including unique charts and research on the economy and investment markets. Bud's commentary may be found in The Casey Report every month.

Despite Declining Deficit, Foreigners Aren’t Bailing Us Out, So the Fed Will Keep QE Going

The basic imbalance driving our economy is the government deficit, which spun out of control as a result of the Credit Crisis of 2008/9. But the sequester, improving tax base, lower interest rate, and elimination of stimulus spending have caused the big government deficit, while still extreme, to drop to half its previously nosebleed levels.

The Fiscal Cliff: An Opportunity Avoided

The label "the fiscal cliff" evoked the fear that something terrible was about to happen if the previously legislated spending cuts and tax increases came into effect. From my point of view, our nation's deficits and debt are growing at an alarming rate and need to be cut back.

Will the Crop Crisis Trigger Inflation?

Our news media have not given enough attention to the very serious heat problems of this summer's growing season for grains. The heat and drought have seriously damaged the corn crop during the early July period of tasseling.

The Fed Resumes Printing

The Federal Reserve balance sheet expanded dramatically as the credit crisis became acute in 2008. The Policy Tools (shown below in black) grew by $2 trillion with the QE1 purchase of mortgage-backed securities and the QE2 purchase of long-term Treasuries. This was an unprecedented effort to support those markets, provide liquidity, and drive rates down to zero. A simple extrapolation of similar expansion policies to the end of 2014 suggests that the Fed may require an additional $2 trillion to extend its goals.

Foreigners Losing Confidence in Holding US Debt

Looking at the data on a monthly basis (and then multiplied by 12 to give the annual rate), here is the dramatic picture of how foreign central-bank purchases of our debt have shifted, from buying $500 billion to selling off $1 trillion.

The Coming Currency Crisis

Poor Ben Bernanke. The greatest financial train wreck in history is going to happen on his watch, and it will be mostly his predecessor’s doing. But not the work of Alan Greenspan alone.

Japan’s Stock Market Crash

The Japanese quakes are the worst in decades and serious. The Nikkei 225 dropped from 10,500 to a low of 8,200 Tuesday, or by 22% in two days. It crashed over 1,000 points after a recovery from a low point of 1,400 points down. As the world’s third biggest economy with close ties to China and our own economy, we will all suffer the consequences.

The “Recovery” in Consumer Loans Isn’t Real

The amount of loans being provided by our banking system is a good reflector of the strength of our economy. Below is a big-picture view that shows the total loans in the U.S. as the Fed reports in its H.8 each week. We can see that loans outstanding declined at a rapid rate at the beginning of the current great recession, but there seems to be a recovery in the little jump at the end of the chart, as highlighted by the two small black arrows. A little closer look shows that the Consumer Loans segment is the source of the optimism that we see in the total.

Quantitative Easing 2 as Projected and Announced

With all the rumors since early fall that the Fed would be adding liquidity with Treasury purchases, I developed a projection of what the future Fed balance sheet would hold, and we published the graph below in...

Bernanke Is Making the Crisis Worse

The Fed is a corrupt and powerful institution, and Chairman Bernanke is making the global crisis worse. His new speech given last week in Europe was terribly misguided and will upset markets as the Chinese and Germans won't ignore his challenges. Bernanke’s interpretations of the markets have been wrong since before he was appointed to head the Fed, and his actions are doing nothing but aggravating the situation.

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