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Can the Second Coming of Paul Volcker Save the Dollar? (China's hand on the switch)
Financial Sense ^ | December 14, 2006 | Antal E. Fekete

Posted on 12/14/2006 9:00:00 AM PST by GodGunsGuts

Can the Second Coming of Paul Volcker Save the Dollar?

Thoughts on the eve of high level talks in Beijing

by Antal E. Fekete, Professor, Intermountain Institute for Science and Applied Mathematics

"Dismal Monetary Science"

December 14, 2006

History replaying

One of the most frequently asked questions from my readers is the title above. Conventional gold-bug wisdom holds that in 1979 the new Chairman of the Federal Reserve, Paul Volcker, raised interest rates drastically, thereby putting an end to the galloping inflation then raging, and aborting the bull market in gold. Volcker’s high-interest policies are credited with the feat of turning the dollar back from the brink where it looked into the chasm of worthlessness, the chasm into which the French assignat, the German Reichsmark, and the Chinese yuan (of 1949 vintage) among countless other national currencies have fallen. Conventional wisdom goes on to conclude that Bernanke, hopelessly committed as he is to a regime of low interest rates, will be fired. A new chairman with the outlook and resoluteness of Volcker will be named who will repeat the feat of his tall, cigar-smoking predecessor, in saving the dollar once more in a nick of time. History will replay itself.

Lessons of Kondratieff

My view of the events then and now is quite different. History is not made by men, tall or short; rather, events are the product of cycles, in particular, Kondratieff’s long-wave cycle (K-cycle). By that standard the situation we find ourselves in now is diametrically opposite to that thirty years ago. In 1977 the world was approaching the end of an upswing in the K-cycle that had started in 1947. It took prices and interest rates to unprecedented heights. Now we are approaching the end of a downswing in the K-cycle. As a rule turning points in the K-cycle are calamitous events, resembling a blow-off. So it was in 1979. At that time interest rates and prices were sky-rocketing and hyperinflation appeared likely. But these events were just a smoke-screen camouflaging an incipient deflation that burst on the scene unexpectedly, bringing dramatically lower interest rates, wide-spread bankruptcies, and the folding of firms that have lost pricing-power. This deflation has not run its course yet. The worst is still in store.

The replay of history in 2007 will be similar except with the opposite signature. Interest rates are still declining, and so are prices adjusted for inflation. Deflation is being imported into the United States from Japan, through the mechanism of the carry-trade. It appears to confirm and surpass Bernanke’s worst fears. Lethargy is spreading. Businessmen decline to take the loans offered at historically low rates. Production keeps contracting; unemployment may follow with a lag. We may even see, horribile dictu, some genuinely falling prices! Yet these events could be just a smoke-screen camouflaging an incipient hyper-inflation that would wipe out the dollar for once and all.

The China-enigma

I admit that China is in the position to render these predictions worthless. She could initiate a cascading of the dollar here and now, wiping out its value before a deflationary scenario could unfold. To the extent that this is a real possibility, my deflationary predictions are, of course, conditional on the outcome of the recent negotiations in Beijing. However, I would expect that Treasury Secretary Paulson and Federal Reserve Chairman Bernanke would cut a deal. Most likely the deal would save the dollar from an ignominious collapse just now. The dollar would get a new lease on life. All this would be in keeping with my motto: “expect the unexpected”. The U.S. will go to any length, pay any price, and meet any challenge to defend the dollar. On the other hand China has the power, and the skill, to extort a bribe. No bribe is too high. After all, it is just a matter of printing it, Bernanke-style. Considering the alternative, it is still cheap.

This is not to suggest that China is not in an incredibly strong bargaining position. She is. Even after a complete collapse of the dollar that could cost China up to $1 trillion, her economy could emerge relatively unscathed, more so than any other economy on the face of the globe. Inflations and deflations could rage around; China could feel safe inside of a cocoon of autarky. She has done it before; she can do it again. You say that China cannot insulate herself from a world-wide depression? Oh yes, she can. By allowing the wage level to creep up, she could keep producing for her domestic markets without any major setback. China has the potential to absorb everything what she can produce domestically.

True, it is no fun to write off as worthless a $1 trillion bank account. This is why a deal between China and the U.S., vastly favorable to China, is the most likely outcome of the current negotiations under way in Beijing. It would be naive to expect that details of the deal will be revealed to the public. But we may guess that no genuine progress towards stabilization would be made.

Bond conundrums

I think most commentators on the bond market got it wrong. They take it for granted that any new bonds issued by the U.S. Treasury will be received negatively from now on, in view of the fact that the saturation point for dollars at large, in their opinion, has now been reached. The only thing foreigners consider worse than owning dollar balances is owning dollar bonds: promises to pay dollars in the future. Yet the bond market shows irrational exuberance in the face of persistent dollar weakness, even in the face of dollar-devaluation as part of the deal now being cut in Beijing. If there has ever been a true conundrum, the bond market it is.

A typical commentary is Peter Schiff’s, dated December 8, on “So what is really holding up the bond market? It could be foreign central bank buying; Fed monetization; hedging by the mortgage industry; speculative hedge-fund strategies; a combination of all these factors; or something entirely different. However, whatever the prop may be, it will not be there forever. The longer it remains, the bigger the deluge will be when it finally gives way. The bond market is in fact a powder-keg. The fuse is lit; we just don’t know its length. But when it blows, carnage in the bond market and, by implication, in an economy addicted to low rates will be brutal.”

No, I don’t think the fuse has been lit. What then is the explanation of the mystery? It is the $400 quadrillion derivatives market growing exponentially. That’s what. It represents a latent demand for new bonds, unlimited quantities of it, so that the game of musical chairs could go on and on. Moreover, demand is further fueled by the carry trade. The carry trade sells the high-priced Japanese bonds and buys the low-priced U.S. bonds. As I have pointed out, it is the mechanism whereby deflation is imported from Japan to the United States. This arbitrage results in a narrowing of the interest-rate spread. But that spread is still far from disappearing and, as long as it is positive, the carry trade will thrive and interest rates in the U.S. will keep falling. Bond speculation on the long side of the market will continue, giving further boost to the game of musical chairs. All this means deflation, even depression. Bernanke will keep stoking its fires by printing more dollars, hoping that the new money will go into commodity speculation, ending the depression. It won’t. The new money will go into bond speculation, deepening the depression. That’s where smart money is made. In the bond market. On the long side. This is what makes the depression feed upon itself.

It is not likely, although neither is it impossible, that China will pull the rug from under the bond market. The game of musical chairs will probably go on, possibly for several more years. The sky is the limit for derivatives, and for the monetization of the U.S. government debt.

Part of that scenario is the price of gold. It will not be allowed to escape the gravity of earth, as it would do in the absence of clandestine official intervention. Although they will be able to limit the rise in the gold price, the powers-that-be will not be able to limit the rise in its volatilility. Gyrations of gold will assume galactic dimensions, increasing uncertainty in its wake. Enormous fortunes will be made — and lost — both by the bulls and the bears betting that “the trend is their friend”.

The second coming of Paul Volcker is a myth. In 1979 the United States was in a much stronger financial and economic position than it is now and it could take the strong medication of high interest rates without danger of succumbing to the ‘sudden death syndrome’.

Presently, the United States economy is on a life-supporting system. China’s hand is on the switch. Paul Volcker’s regimen of high interest rates would be tantamount to turning the switch off.

© 2006 Antal E. Fekete Professor, Intermountain Institute for Science and Applied Mathematics Missoula, MT 59806, USA


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS: china; deficits; dollar; doomed; doomeditellyou; volcker; woeisme
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1 posted on 12/14/2006 9:00:06 AM PST by GodGunsGuts
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To: GodGunsGuts
"A new chairman with the outlook and resoluteness of Volcker will be named who will repeat the feat of his tall, cigar-smoking predecessor, in saving the dollar once more in a nick of time. History will replay itself."

Well, the Red Chinese certainly hope so. If the Dollar falls against the Yuan, then Chinese exports become more expensive.

2 posted on 12/14/2006 9:02:31 AM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: TigerLikesRooster; Thunder90; lizol; Tailgunner Joe; ex-Texan; Pelham; djf; RobRoy; durasell; ...

ping


3 posted on 12/14/2006 9:03:06 AM PST by GodGunsGuts
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To: GSlob


4 posted on 12/14/2006 9:03:33 AM PST by GodGunsGuts
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To: Southack

What exactly would a weaker dollar/yuan exchange rate do for the US? Chinese goods would be slightly more expensive (still cheaper than US goods) so US firms would buy slightly less from China and slightly more from Cambodia, Vietnam, Taiwan, and South Korea. Big deal.


5 posted on 12/14/2006 9:05:40 AM PST by Alter Kaker ("Whatever tears one sheds, in the end one always blows one's nose." - Heine)
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To: Alter Kaker
"What exactly would a weaker dollar/yuan exchange rate do for the US? Chinese goods would be slightly more expensive (still cheaper than US goods) so US firms would buy slightly less from China and slightly more from Cambodia, Vietnam, Taiwan, and South Korea. Big deal."

It is indeed a big deal, especially if the Dollar falls against the currencies of Cambodia, Vietnam, Taiwan, and South Korea, too.

If you import too much, then your currency must drop to make importing goods more painful. This has the impact of making domestic goods more attractive.

It's a big deal, but few people can grasp the concept.

6 posted on 12/14/2006 9:08:03 AM PST by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Southack

This is an area I don't understand very well, but with a corporate climate that does not want to produce anything in the states and a government that cannot exercise any form of fiscal responsibility, we are bound to be in a world of hurt sooner or later.


7 posted on 12/14/2006 9:13:48 AM PST by DonaldC
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To: GodGunsGuts
Paul Volcker ain't gonna do it. Bush is going to save the dollar by adopting the "Amero."

http://www.wnd.com/news/article.asp?ARTICLE_ID=53350

LOL, LOL, LOL!

8 posted on 12/14/2006 9:18:42 AM PST by ex-Texan (Matthew 7: 1 - 6)
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To: GodGunsGuts
How can this person postulate that if China breaks the back of its largest customer, and if you are honest, the provider of most of the funds China is now making threats with, that its (China's) economy will escape mostly unscathed? Whom will China sell anything to?
9 posted on 12/14/2006 9:22:07 AM PST by thinkthenpost
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To: thinkthenpost

China will sell to richer Chinese, Japanese, Canadians and Russians. Canada and Russia are rolling in oil money. Not to mention the Saudis, Iran, Pakistan, and Syria.


10 posted on 12/14/2006 9:26:54 AM PST by ex-Texan (Matthew 7: 1 - 6)
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To: GodGunsGuts

Tea leaves....tea leaves

Just keep in mind that China is a Communist state, and as such, will always be at a disadvantage on the world stage.


11 posted on 12/14/2006 9:28:12 AM PST by bobjam
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To: GodGunsGuts

My SWAG is that China does it's best to hold everything in place up through the 2008 Olympics.

After that, things get interesting.


12 posted on 12/14/2006 9:37:12 AM PST by glorgau
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To: thinkthenpost

I think he's saying that Red China could revert to a police state/command economy with minimal disruption as compared to the affect her rendering the dollar worthless would have on the West. I for one firmly believe that Red China is still a committed enemy and is using the West to build Communism (the "Great Leap Forward"...but for real this time). Red China has managed to build itself up (not to mention the Eurasian Alliance as a whole) to a place where it can confront the West in ways were are only just beginning to imagine IMO.


13 posted on 12/14/2006 9:40:30 AM PST by GodGunsGuts
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To: glorgau

I hadn't thought of it from that angle. But you may be onto something there...


14 posted on 12/14/2006 9:41:41 AM PST by GodGunsGuts
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To: GodGunsGuts; expat_panama; Mase; nopardons; Moonman62; snowsislander; misterrob; SierraWasp; ...
by Antal E. Fekete, Professor, Intermountain Institute for Science and Applied Mathematics

Your source, Antal E. Fekete, as I've already shown, is an idiot.

The Institute for Science and Applied Mathematics (IISAM) fosters cross-disciplinary research and educational outreach in science and applied mathematics.

That's some fancy website they have there. Must have cost them $10 or $15 to create.

Conventional wisdom goes on to conclude that Bernanke, hopelessly committed as he is to a regime of low interest rates, will be fired.

Conventional wisdom among goldbugs?

The replay of history in 2007 will be similar except with the opposite signature. Interest rates are still declining, and so are prices adjusted for inflation. Deflation is being imported into the United States from Japan, through the mechanism of the carry-trade. It appears to confirm and surpass Bernanke’s worst fears.

Fekete thinks deflation is coming, but he criticizes Bernanke for being committed (hopelessly) to a regime of low interest rates.

Production keeps contracting

Where?

We may even see, horribile dictu, some genuinely falling prices! Yet these events could be just a smoke-screen camouflaging an incipient hyper-inflation that would wipe out the dollar for once and all.

Huh? Deflation or hyper-inflation or both? What a joker!

I admit that China is in the position to render these predictions worthless.

Predictions? I thought they were guarantees, by the Professor from the Intermountain Institute for Science and Applied Mathematics.

The dollar would get a new lease on life.

Before the deflation and hyper-inflation or after the deflation and hyper-inflation?

This is not to suggest that China is not in an incredibly strong bargaining position. She is. Even after a complete collapse of the dollar that could cost China up to $1 trillion, her economy could emerge relatively unscathed

Right, as long as they don't have to export anything.

You say that China cannot insulate herself from a world-wide depression? Oh yes, she can. By allowing the wage level to creep up, she could keep producing for her domestic markets without any major setback. China has the potential to absorb everything what she can produce domestically.

And they'll pay for the raw materials they need with what, exactly?

I think most commentators on the bond market got it wrong.

He's projecting again.

They take it for granted that any new bonds issued by the U.S. Treasury will be received negatively from now on, in view of the fact that the saturation point for dollars at large, in their opinion, has now been reached.

As shown by the 10 year bond yielding below 4.6%.

The only thing foreigners consider worse than owning dollar balances is owning dollar bonds: promises to pay dollars in the future.

Foreigner hate bonds. That must be why they keep buying them.

What then is the explanation of the mystery? It is the $400 quadrillion derivatives market growing exponentially. That’s what.

LOL!

The carry trade sells the high-priced Japanese bonds and buys the low-priced U.S. bonds. As I have pointed out, it is the mechanism whereby deflation is imported from Japan to the United States. This arbitrage results in a narrowing of the interest-rate spread.

I remember, the arbitrage that results in capital gains in the triple digits. That I debunked here .

Bernanke will keep stoking its fires by printing more dollars, hoping that the new money will go into commodity speculation, ending the depression. It won’t. The new money will go into bond speculation, deepening the depression.

That's the funny thing about newly created money, even if it buys bonds, the bond seller now has the new money. It's obvious, by this statement alone, that "Professor Fekete" doesn't know anything about how the money supply works.

That’s where smart money is made. In the bond market. On the long side. This is what makes the depression feed upon itself.

Yeah, because low interest rates cause a depression.

In 1979 the United States was in a much stronger financial and economic position than it is now

Yeah, nothing like massive inflation and high unemployment to prove we were stronger in 1979.

15 posted on 12/14/2006 10:07:48 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot

Goldbug rule: If you can't find an expert to support your pitch, make one up.


16 posted on 12/14/2006 10:09:16 AM PST by Petronski (I just love that woman.)
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To: Petronski

But he's a professor!


17 posted on 12/14/2006 10:09:57 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
Do you remember "Dr. Science" from public TV?


"Ask Dr. Science. He's got a master's degree . . . . in science!"

18 posted on 12/14/2006 10:15:26 AM PST by Petronski (I just love that woman.)
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To: Petronski
Do you remember "Dr. Science" from public TV?

No.

19 posted on 12/14/2006 10:21:30 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
Isnt' there an end to what Central Banks can do to depress the gold price. Once they have sold what they have what other levers do they possess.

I realize they lie systematically about their holdings. Perhaps this is the secret of their unending ability to hold gold down?

20 posted on 12/14/2006 10:36:52 AM PST by Jack Black
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To: Jack Black
Once they have sold what they have what other levers do they possess.

If they deflate the money supply, all hard asset prices would decline.

21 posted on 12/14/2006 10:39:42 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
"Production keeps contracting"

==Where?

The signs of economic contraction are all over the place...that includes production. Wake up and smell the coffee, Toddster.


22 posted on 12/14/2006 10:57:12 AM PST by GodGunsGuts
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To: GodGunsGuts
M3 Money Supply: reporting of this was suspended in 05 by the Fed.


23 posted on 12/14/2006 11:04:27 AM PST by Jack Black
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To: GodGunsGuts
The dollar doesn't need to be "saved". Yes it broke down (chart below in the Euro, so dollar is inverse to that) recently, but it is quickly coming back as robust U.S. economic has been released in the past week.


24 posted on 12/14/2006 11:19:05 AM PST by montag813
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To: GodGunsGuts; Toddsterpatriot
The signs of economic contraction are all over the place

ROFL!!

U.S. consumers revive spending in November

Investors Bullish on Commercial Real Estate

...that includes production.

Obviously, this contraction is killing manufacturers profits. LOL!

Wake up and smell the coffee

You're sniffing something but it sure isn't coffee.

25 posted on 12/14/2006 11:27:44 AM PST by Mase (Save me from the people who would save me from myself!)
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To: GodGunsGuts

That was a whole bunch of charts that didn't prove that "Production keeps contracting".


26 posted on 12/14/2006 11:42:08 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: GodGunsGuts
And thanks for your substantive response to the rest of my lengthy rebuttal of your clown professor.
27 posted on 12/14/2006 11:44:26 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot; Mase

Fekete and all his colleagues commute to work together in a tiny little car.


28 posted on 12/14/2006 12:05:40 PM PST by Petronski (I just love that woman.)
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To: Mase; Toddsterpatriot
Apparently, you didn't even bother to read your own article. Talk about spin! Of course you are going to see a bounce going into Christmas. These guys are simply trying to puff up consumer confidence. However once you get past all the Pollyanna BS, the real state of our economy begins to emerge in the typical dribs and drabs the MSM tries to sandwich between all the sweetness and light. Here are the relevant counter arguments buried in the article that YOU posted. One thing's for sure, your article's headline certain does not capture all the conflicting information contained in the story (and let's not forget, the Clinton/Greenspan changes inflate the GDP and understate the CPI...so it's even worse than the official stats would suggest):


..."In another encouraging sign, the government revised the October sales performance to show a 0.1 percent decline rather than the 0.4 percent drop first reported."

..."The November rebound was surprising given anecdotal evidence from retailers that sales had tapered off following a strong weekend after Thanksgiving."

..."But gasoline prices are well below summer levels and job growth has stayed strong despite the economic slowdown."

..."The economy began 2006 with a sizzling 5.6 percent growth rate, then slowed to 2.6 percent in the spring and 2.2 percent in the summer."

..."We think it is very likely that sales will either be revised down or there will be a hefty drop in December,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics."
29 posted on 12/14/2006 12:10:13 PM PST by GodGunsGuts
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To: Petronski
Fekete and all his colleagues commute to work together in a tiny little car.

Does anyone know where the Intermountain Institute for Science and Applied Mathematics (LOL!) is located? For some reason I'm hearing banjo music.


Professor Fekete, Is that you?

30 posted on 12/14/2006 12:16:05 PM PST by Mase (Save me from the people who would save me from myself!)
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To: GodGunsGuts
(and let's not forget, the Clinton/Greenspan changes inflate the GDP and understate the CPI...so it's even worse than the official stats would suggest):

You have some proof the revisions were inaccurate?

..."The economy began 2006 with a sizzling 5.6 percent growth rate, then slowed to 2.6 percent in the spring and 2.2 percent in the summer."

Slower growth is still growth, silly.

However once you get past all the Pollyanna BS, the real state of our economy begins to emerge in the typical dribs and drabs the MSM tries to sandwich between all the sweetness and light.

What are you smoking?

31 posted on 12/14/2006 12:17:11 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Mase; Petronski
Does anyone know where the Intermountain Institute for Science and Applied Mathematics (LOL!) is located?

The founder is in Montana. I think Fekete is in Canada.

32 posted on 12/14/2006 12:18:35 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot

==You have some proof the revisions were inaccurate?

I already posted it to you. You were just too lazy to read it.


33 posted on 12/14/2006 12:20:03 PM PST by GodGunsGuts
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To: GodGunsGuts
I already posted it to you.

Your "proof" that the revisions revised the CPI is not the same thing as proving the revisions made the CPI less accurate.

34 posted on 12/14/2006 12:23:43 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
==Slower growth is still growth, silly.

It means the economy has slowed by 61%. This should have gotten your attention a long time ago. And when you subtract out the Clinton/Greenspan changes to the GDP, we have already entered negative growth/recession.
35 posted on 12/14/2006 12:25:42 PM PST by GodGunsGuts
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To: GodGunsGuts
(and let's not forget, the Clinton/Greenspan changes inflate the GDP and understate the CPI...so it's even worse than the official stats would suggest)

Here's some more in case you run low:

The November rebound was surprising given anecdotal evidence from retailers that sales had tapered off following a strong weekend after Thanksgiving.">

Wow. Facts trump anecdotal evidence. You could learn something here. Maybe the experts will also be surprised by retail sales in December...and January, and...

But gasoline prices are well below summer levels and job growth has stayed strong despite the economic slowdown

Wow again. Crude prices are dropping and our economy keeps creating jobs. That's really some economic slowdown you're touting.

The economy began 2006 with a sizzling 5.6 percent growth rate, then slowed to 2.6 percent in the spring and 2.2 percent in the summer

And with consumer spending remaining robust, we could achieve 3.5% annual economic growth in our $12 trillion economy. Like I said before, that's some disastrous economic slowdown you goldbugs are seeing.

..."We think it is very likely that sales will either be revised down or there will be a hefty drop in December,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics."

Is this the same guy who predicted a hefty drop in consumer spending for November? LOL!

36 posted on 12/14/2006 12:35:30 PM PST by Mase (Save me from the people who would save me from myself!)
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To: GodGunsGuts
It means the economy has slowed by 61%.

No it hasn't silly.

You are driving 50 mph. You accelerate 10% / sec to 55mph. You continue to accelerate 5% / sec to 57.75 mph.

Only a gold-bug would say 57.75 mph is 50% slower than 55 mph.

37 posted on 12/14/2006 12:40:36 PM PST by Fan of Fiat
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To: GodGunsGuts; Petronski
It means the economy has slowed by 61%.

Are you claiming GDP shrunk by 61%?

38 posted on 12/14/2006 12:45:03 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot

psst..., looks like another record close for the Dow. I'm gonna ask Santa for a better economy. He's gonna say ho, ho, ho.


39 posted on 12/14/2006 12:49:19 PM PST by groanup (Limited government is the answer. Now, what's the question?)
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To: groanup

What do you think of this stupid article? And my post #15?


40 posted on 12/14/2006 12:56:05 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: GodGunsGuts
It means the economy has slowed by 61%

LOL

OMG, that's funny.

Please don't ever stop posting this crap.

41 posted on 12/14/2006 12:56:24 PM PST by Petronski (I just love that woman.)
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To: Petronski
the economy has slowed by 61%

BUY GOLD!!!

42 posted on 12/14/2006 12:58:00 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot; Mase

I have already provided the proof, Toddster. What's your proof that the Clinton/Greenspan revisions make the CPI/GDP more accurate? I think it's funny that you are so completely pollyanish on the economy that you are even willing to rely on Slick Willie's changes to the CPI/GDP.

"As former Labor Secretary Bob Reich explained in his memoirs, the Clinton administration had found in its public polling that if the government inflated economic reporting, enough people would believe it to swing a close election. Accordingly, whatever integrity had survived in the economic reporting system disappeared during the Clinton years. Unemployment was redefined to eliminate five million discouraged workers and to lower the unemployment rate; methodologies were changed to reduce poverty reporting, to reduce reported CPI inflation, to inflate reported GDP growth, among others."

http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=35446


43 posted on 12/14/2006 12:59:55 PM PST by GodGunsGuts
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To: Toddsterpatriot

No. I'm claiming that our GDP/economic growth shrank by 61% numbskull.


44 posted on 12/14/2006 1:01:38 PM PST by GodGunsGuts
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To: GodGunsGuts
...our GDP/economic growth shrank by 61% numbskull.

Just like some lying leftist claiming reductions in the rate of growth of medicare are mediscare cuts.

45 posted on 12/14/2006 1:05:24 PM PST by Petronski (I just love that woman.)
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To: GodGunsGuts

BTW, I love your honesty re: starting to sign your posts "numbskull." It's a healthy new level of self-awareness.


46 posted on 12/14/2006 1:07:16 PM PST by Petronski (I just love that woman.)
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To: GodGunsGuts

Remember that the Russians are also dumping the dollar for the Euro.


47 posted on 12/14/2006 1:17:52 PM PST by Thunder90
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To: GodGunsGuts

Russia is also using the method that you described here, but in a different way. Russia actually uses Western funds to build its military. And, Russia and its sattelites are preparing to return to a Soviet command economy, per the latest oil seizure.


48 posted on 12/14/2006 1:19:27 PM PST by Thunder90
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To: Petronski
Get lost 1TPedro. You are like a fly that is at most a nuisance, and easily brushed off. Although, I'm sure, given enough time, you will annoy just enough people to go from being merely brushed off to getting yourself swatted and crushed.

PS You still have yet to make a valid point (and back it up)...loser.
49 posted on 12/14/2006 1:24:25 PM PST by GodGunsGuts
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To: GodGunsGuts
Get lost 1TPedro.

Hmmm, let me think about that.



No.

PS You still have yet to make a valid point (and back it up)...loser.

You're so illiterate, you wouldn't understand a valid point if I carved it into a block of oak and used it to bash you over the head.

I must say, though, that although I liked it when you signed your posts "numbskull," I must admit that "loser" is an accurate self-identification for you too.

50 posted on 12/14/2006 1:28:50 PM PST by Petronski (I just love that woman.)
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