by John Browne – Senior Market Strategist, Euro Pacific Capital
The U.S. economy is in uncertain times. Analysts are split between those seeing recovery and those fearing a second downturn. This confusion is being echoed in the highest levels of government as President Obama simultaneously speaks about the need for more federal spending and warns of the dangers of increased debt. As the volatile markets indicate, investors are not only confused – they are seriously concerned.
The country appears to be going through a period of buyer’s remorse over the election of Barack Obama. The majority cobbled together by the President one year ago included the Democratic base, independents hoping for “change,” and many disaffected Republicans betrayed by the Bush Administration’s big-government neoconservatism. It is unlikely that most of these voters favored an overt push toward socialism; however, this is what they have received. As the ‘tea parties’ illustrate, voters are not only confused – they are seriously concerned.
Ron Paul introduced a substitute amendment to replace Mel Watt’s amendment that would have “gutted” HR.1207’s intent. Dr. Paul’s substitute was later passed by the committee over the ‘nay’ votes of both Barney Frank and Mel Watt. It was passed by voice vote. The roll call vote is scheduled for this afternoon.
This was an important step in the process, but the amendment is going to be tacked on to the larger regulatory reform bill being deliberated now.
Watch Ron Paul introduce the bill earlier today in the committee in the video below.
Ron Paul took his anti-Fed, anti-regulatory, pro-transparency message to the CNBC Squawk Box crew today. This is another winning appearance from Ron Paul. He outlines his views fairly well and makes extremely good arguments for his side of the Fed transparency debate.
His appearance was so positive that they end up telling him that he should come on the show as a special guest (as they have from time to time) for the full 2 hours of the show. Paul makes a joke in response. Check it out below.
Earlier today Judge Andrew Napolitano was the guest host on the Glenn Beck show. Four liberty-loving guests appeared on the show with the Judge. Peter Schiff, John Stossel, Ron Paul, and Rand Paul all appeared. When the Judge hosts Beck’s show it almost turns into an episode of Freedom Watch.
If you don’t know what Freedom Watch is then please check out http://freedomwatchonfox.com/. It’s an online only show hosted by the Judge catering to freedom-loving people everywhere.
Check out the excellent discussions from the show today below.
Ron Paul appeared on Fox Business News tonight with David Asman on the “Nightly Scoreboard”. They discussed several topics in a nearly 10 minute segment. As usual, Ron Paul just delivers the truth.
Ron Paul questioned Treasury Secretary Timothy Geithner today on Capitol Hill. Both men seemed to be talking past each other a bit. Geithner reminds me of a friend who never gives you a concrete answer; thus, he is perfect for his position as tax collector. I cannot resist asking the question… what is going on with his hair? Did it always look like that or is it just due to poor video quality?
by John Browne – Senior Market Strategist, Euro Pacific Capital
Over the past two years, the federal government and the Federal Reserve have dispersed trillions of public dollars, run up enormous deficits, and kept interest rates at zero. In just about any economic textbook, this combination of policies would be described as the perfect recipe for inflation. Yet, with the exception of the usual increases in health care and education, prices by and large are not rising. Many have concluded that our economic leadership has simply outsmarted the textbooks.
The benign CPI figures are serving as a rallying point behind which the financial talking-heads are forming a parade of optimism. The low CPI is their ‘proof’ that inflation is not a pressing concern. This view is two dimensional.
Inflation is classically described simply as an increase in the money supply. Although these changes will impact price levels, it doesn’t necessarily follow that prices will rise when inflation is high. Instead, inflation may merely result in stable prices at a time when prices would otherwise be falling.
In the popular mentality, however, inflation is simply defined as prices rising. After decades of steadily rising prices, people seem to have forgotten that prices sometimes fall. In light of the bursting of a number of record-breaking, government-fueled asset bubbles, prices should be declining across the board (as they did in the Great Depression). The fact that prices are stable, or have even rallied in some sectors, indicates that inflation is already spreading across the economy.
For the most part, the value of the dollar is given cursory attention by the financial media. Typically, its movements are assigned an importance on par with much less determinative metrics such as natural gas futures and construction permits. It’s only when major milestones are reached that anyone really takes notice of the dollar. We are living through one of those times.
The great dollar rally of 2008-2009 has come full circle. When the financial crisis exploded in its full ugliness in mid-2008, the dollar, which had steadily declined over the previous four to five years, put in a rally for the record books. By March 2009, as investors across the world sought safety from the financial storm, the index had surged more than 25%. Since then, the dollar has steadily declined to the point where nearly all those gains have vanished. In short, the panic rally has given way to the long term trend.
So, as the dollar index makes fresh 52-week lows on a nearly daily basis, discussion on the greenback is heating up. And while real insight on the topic is hard to find, the debate centers on the battle between two conventional opinions – both of which are wrong.
The first camp, which is generally supportive of government intervention in the economy, argues that dollar’s decline is a positive for both the economy and the stock market. The second camp, which tends to fall on the more conservative end of the political spectrum, views the dollar’s decline as a problem but feels that tough talk and slightly higher interest rates are all that is needed to restore ‘King Dollar’ to its throne.
First of all, a weak dollar is no better for Americans than a lower paying job is for a worker. And although I would prefer that the dollar remain strong, I know that currency values are a function of supply and demand, not wishful thinking. The past years of reckless monetary and fiscal policy have created conditions that must push the dollar down. Vastly expanded debt levels and monetary expansion have created a greater supply of dollars, while poor investment performance and diminished industrial capacity have lessened the demand for dollars.
Ron Paul was interviewed by Tavis Smiley on his PBS show last night. I remember really enjoying Smiley’s questioning and demeanor throughout his questioning during one of the GOP primary debates during the campaign of 2008. A debate that some of us here at Liberty Maven attended.
In this interview they discuss the U.S. foreign policy in Afghanistan, Ron Paul’s new book “End the Fed“, and how the Fed can be audited and eventually abolished.
This morning Ron Paul appeared for an interview on the state of the economy and the Goldman Sachs “bailout” on CNN “American Morning”.
As usual Dr. Paul defends the free market even when asked rather convoluted questions about “how much” the government should support the market. I found the interview a bit odd. In that both the host and Paul were trying to find some kind of middle ground between a government managed economy and a free market position. The common point implied that the government shouldn’t be bailing out these big Wall Street firms like Goldman Sachs yet they continue to use tax payer money to do so.
Check out the video below. NOTE: The audio/video sync appears to be off as is custom on some videos processed by Youtube.
Liberty Maven
by John Browne – Senior Market Strategist, Euro Pacific Capital
by Peter Schiff, president of Euro Pacific Capital and author of 
“, and how the Fed can be audited and eventually abolished.
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