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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Aubie Baltin
September 21, 2010
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All we have been hearing from Obama, Bernanke and Geitner lately is the steps that they will take to prevent deflation; the Government’s current favorite "Straw Man." So it was interesting to note that the Producer Price Index for July was just reported to have gained more than 4% year over year; which as everybody knows comes from a source that intentionally, always, understatesinflation. That is not to say that there are no price drops, but most price decreases are the result of innovation and productivity improvements such as TVs and cell phones etc. that have been declining in price for 25 years. On the other hand, sugar, grain and virtually all commodity prices across the board are soaring toward records highs as world demand expands along with the expanded living standards in the newly booming developing nations.  This has pushed up the cost of a broader range of foodstuffs, including rice, coffee, cocoa, as well as non-edible products, such as cotton, so these also have been soaring in price. Doesn’t this sound a lot more like INFLATION?

On the other hand, by sifting through all the misinformation coming out of Washington, it looks like we will most likely be using the latest vernacular; a Double Dip RECESSION before the end of the third quarter.  After all, the revisions are in and it will probably be determined that there never was any real recovery and that all we really had was a Dead Cat Bounce.

STAGFLATION

It seems more probable that we are headed for the worst of all possible situations, a period of Stagflation, which is an entirely different world from Deflation. A much more logical outcome will likely be an ever increasing QE2 and a rapid deleveraging of both the public and private sectors, especially by the bankrupt States. Even though nobody seems to know what, in words, is actually unfolding, business and the public see it coming; why else would they be “hoarding” so much cash. Investing in Treasuries given today’s yields is a fool’s game unless Capital Preservation is of prime importance.  That also makes sense in light of companies such as IBM who do not need any money, yet are nevertheless borrowing $1 trillion at 3% for 10 years just because they can.

DEFLATION, STAGFLATION AND HYPERINFLATION

I have explained the difference between the three on numerous occasions and if you don’t remember, please go to the archives at Gold-Eagle.comBut the main point that I want to impress on you is that we have already entered a period of Stagflation, only this time around the Administration’s methods of combating the high unemployment and slumping GDP are mostly political and will do more to destroy the value of our currency than it will to increase employment.