Information about finance, the economy and business. Entertaining and informative. Seeking Alpha Certified Mark Sunshine Chairman & CEO

Category Archive: CPI

  1. Gold Bugs Beware Of Fed Extermination

    Today I heard it again on the car radio — an adver­tise­ment claim­ing that since gold has topped $1,500 an ounce it’s a “must buy” for every respon­si­ble saver.

    If only it were true that I could pro­tect my fam­ily from eco­nomic Armaged­don by buy­ing gold.

    Unfor­tu­nately, the hard facts are that increas­ingly since 2000 gold has been the oppo­site of an infla­tion hedge. Even worse, when inter­est rates rise in response to infla­tion, gold will fall in value, and maybe by a lot.

    The his­tor­i­cal rela­tion­ship of gold to infla­tion, i.e., that it is a hedge, is no longer true. Gold has been “finan­cial­ized” by Wall Street and its price is being dri­ven by insti­tu­tional spec­u­la­tors that buy it by bor­row­ing money at near 0% inter­est. As long as inter­est rates remain low, the cost of bet­ting on gold is very low and money flows into the gold market.

    As gold prices soar indi­vid­ual investors need to beware. One day inter­est rates will start to rise and gold prices will plum­met. Inno­cent vic­tims that buy gold because of a mass mar­ket sales pitch will be sorry.

    My strong advice to read­ers is don’t be a gold bug. It’s only a mat­ter of time before the Fed exter­mi­nates you. [read full story]

    Posted in: BLS, commodities, CPI, economy, Federal Reserve, Finance, Gold, Inflation, Investments, monetary policy, Public Policy
  2. The Inflation Monster Is Tame

    Despite the quick run up in gaso­line prices, the U.S. econ­omy isn’t about to be eaten by the infla­tion mon­ster. While it is a good bet that some­time in the next few years the Fed will have to deal with ris­ing infla­tion, now isn’t the time to change mon­e­tary pol­icy in an effort to slay […] [read full story]

    Posted in: CPI, Deflation, Economic Statistics, economy, Finance, Inflation, M2, Monetary Policy, Oil, Public Policy
  3. 7 Faint Signs That The Economy’s Bottom Is In Sight

    There are opaque and early signs that the U.S. econ­omy has started the begin­ning of a bot­tom­ing process. Just like a div­ing sub­ma­rine needs to stop its down­ward motion and reach its low­est depth before it can resur­face, the econ­omy needs to go through the steps of slow­ing its decline and sta­bi­liz­ing before it can […] [read full story]

    Posted in: BANKS, Bernanke, CPI, Credit Crisis, Deflation, Economic Statistics, economy, Federal Reserve, Finance, Fiscal Policy, Inflation, M1, M2, monetary policy, Money Supply, Obama, Politics, Public Policy, TARP
  4. Money Supply And Economic Data Weekly Watch – Deflation Hurts The Economy Like Hydrochloric Acid Burns Through Steel

    Defla­tion hurts the econ­omy like hydrochlo­ric acid burns through steel. Falling prices destroy cor­po­rate and house­hold bal­ance sheets and make it impos­si­ble for the finan­cial sec­tor to func­tion nor­mally. Demand is destroyed by defla­tion which in turn leads to more defla­tion. The weak­est sec­tors are hurt first, but defla­tion quickly burns through healthy indus­tries. This […] [read full story]

    Posted in: BANKS, Bernanke, CPI, Deflation, Economic Statistics, Finance, GDP, Inflation, M1, M2, Manufacturing, monetary policy, Money Supply, Obama, Oil, Politics, Public Policy, Retail Sales
  5. CPI Indicates" rel="bookmark">Money Supply and Economic Data Weekly Watch – Deflation Is Worse Than CPI Indicates

    Last week’s eco­nomic data is under­es­ti­mat­ing defla­tion. On Wednes­day the Bureau of Labor Sta­tis­tics (“BLS”) announced that the con­sumer price index (“CPI”) declined by 1.0% in Octo­ber which was the biggest sin­gle one month reported decline since before World War II. Broad based defla­tion exac­er­bates the already severe credit cri­sis and increases cash hoard­ing by […] [read full story]

    Posted in: BANKS, BLS, Business Environment, CPI, Credit Crisis, Deflation, Economic Statistics, economy, Federal Funds Rate, Federal Reserve, Finance, Fiscal Policy, GDP, Inflation, Liquidity Trap, M2, monetary policy, Money Supply
  6. Money Supply and Economic Data Weekly Watch – The Fed’s Next Move Will Be To Increase Money Supply

    While most of the busi­ness media is focus­ing on Lehman and trou­bled finan­cials, they are for­get­ting about next week’s Fed meet­ings and how mon­e­tary pol­icy will respond to the cri­sis. After almost 6 months of shrink­ing real money sup­ply (nom­i­nal money sup­ply adjusted for infla­tion), Fed pol­icy mak­ers are going to decide whether to push […] [read full story]

    Posted in: CPI, Credit Crisis, Deflation, Economic Statistics, economy, Federal Funds Rate, Federal Reserve, Finance, FOX BUSINESS NETWORK, Hoover Adminstration, Inflation, M2, Milton Friedman, monetary policy, Money Supply

    Start­ing this week, Sun­shine Notes will have a reg­u­lar weekly report focus­ing on money sup­ply sta­tis­tics and selected eco­nomic data. The pur­pose of this blog entry will be to pro­vide data and analy­sis that is oth­er­wise under­re­ported in the main­stream media. Money sup­ply On July 17th, the Fed­eral Reserve dis­closed that M2 actu­ally declined dur­ing […] [read full story]

    Posted in: Barron's, CPI, Credit Crisis, Federal Reserve, Inflation, Money Supply