Archive for April 2008
Wages of Sin
By Bill Bonner
for the Daily Reckoning 4/18/2008
Capitalism is a panacea, after all. It cures symptoms of affluence as well as poverty.
We file this report, coincidentally, from Manchester…where, according to legend, the industrial revolution began. Modern tools, steady money, and fossil fuel were put together, creating so much gas, it lifted mankind out of the mud of the Middle Ages and carried him aloft. Thrifty Scottish economists – notably Adam Smith and Adam Ferguson – saw what was happening and took note of the moral lesson: by foregoing the satisfaction of current consumption, savings could be invested in factories, machines, and new discoveries that increased the output from human labor. Read the rest of this entry »
The Madness of Ben Bernanke
http://www.spiegel.de/international/business/0,1518,547317,00.html
By Gabor Steingart in Washington
The dollar is in a tailspin, the trade deficit is growing and a recession is on the horizon. The American way of life is in serious danger. But the head of the Federal Reserve keeps on pumping easy credit into the system — a crazy policy that will worsen the crisis.
Ben Bernanke at the G7 meeting of central bank governors over the weekend.
Alan Greenspan and Ben Bernanke have more in common with the big cat entertainers Siegfried & Roy than any of us can be comfortable with.
The Las Vegas magicians call themselves “Masters of the Impossible” and have been fascinating audiences for decades by getting snow-white tigers to leap through burning rings. Read the rest of this entry »
The cost of food: facts and figures
http://news.bbc.co.uk/2/hi/in_depth/7284196.stm
Explore the facts and figures behind the rising price of food across the globe.
Asian Inflation Begins to Sting U.S. Shoppers
BAT TRANG, Vietnam — The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries — first Japan and Korea, then China, and now increasingly places like Vietnam and India.
But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too.
“Inflation is the major threat to Asian countries,” said Jong-Wha Lee, the head of the Asian Development Bank’s office of regional economic integration.
It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing their rising costs on to customers. Read the rest of this entry »
Inflation or Deflation – An Interview with Bud Conrad
The following interview, conducted by Louis James, a senior analyst and editor with Casey Research, appeared in the March 08’ edition of Casey’s International Speculator.
Louis James (LJ): The first question we think most readers will want to know about is this: if the U.S. is headed for recession – if not already sliding into one – do you really think we’re facing more inflation in the near future, or could falling spending power cause deflation?
Bud Conrad (BC): There are strong deflationary pressures in a credit collapse because as housing prices drop and defaults rise, some of the ability to buy new items is lost. Traditional analysis suggests that we could have deflation such as that which occurred in the Great Depression in the U.S. in the late 1920s, early 1930s. I would point out, however, that in the Great Depression the dollar was linked to gold, limiting the amount of money printing that could be done, a limitation that does not exist today. In addition, with $100 oil it is hard to argue for deflation. My base prediction is that we are heading into an inflationary period.
LJ: If there was any doubt about inflation vs. deflation, has it been settled by the central banks of the world as they responded to last summer’s credit crunch with greater liquidity?
BC: Yes. That is the point. The governments and their central banks have no limit on how much money they can create since there is no tie to gold or anything else. It is only logical to expect them to take the easy road and print money. The result is predictable. New government bailouts for whatever problems arise are going to continue.
LJ: With war spending, ballooning entitlements, a crisis of confidence in the U.S. financial system stewing, along with many other woes, do you think there’s any chance that the U.S. will not try to inflate its way out of its current economic predicaments? Read the rest of this entry »
