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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (50871)	6/3/2009 7:15:44 AM
From: Maurice Winn	7 Recommendations Read Replies (1) \| Respond to of 217574

While I haven't read much of anything if anything of what Milton Friedman actually wrote, I don't believe you about the debt: <An economist who is willing to tell politicians that rapid debt creation is the foundation of prosperity is a rare treasure who they will glamorize with all of their effort. Many who knew him assure me Friedman would have been just as eager to promote witchcraft if that had made him more popular. > That seems like envious people rather than honest ones. Do you really think he would have adopted something just to be popular? Do you have any links to back up what seems doubtful at best? I don't care what somebody else said about him and witchcraft - that's just sandpit insult showing more about the accusers than about Friedman. You quoting them makes the rest of your commentary dodgy at best. Mqurice

To: Elroy Jetson who wrote (50871)	6/3/2009 9:13:10 AM
From: TobagoJack	Respond to of 217574

just in in-tray Niall Ferguson: A history lesson for economists in thrall to Keynes - This is a timely item fullermoney.com , published in the Financial Times. Here is a brief section: Credit for averting a second Great Depression should principally go to Fed chairman Ben Bernanke, whose knowledge of the early 1930s banking crisis is second to none, and whose double dose of near-zero short-term rates and quantitative easing - a doubling of the Fed's balance sheet since September - has averted a pandemic of bank failures. No doubt, too, the $787bn stimulus package is also boosting US GDP this quarter. But the stimulus package only accounts for a part of the massive deficit the US federal government is projected to run this year. Borrowing is forecast to be $1,8400bn - equivalent to around half of all federal outlays and 13 per cent of GDP. A deficit this size has not been seen in the US since the second world war. A further $10,000bn will need to be borrowed in the decade ahead, according to the Congressional Budget Office. Even if the White House's over-optimistic growth forecasts are correct, that will still take the gross federal debt above 100 per cent of GDP by 2017. And this ignores the vast off-balance-sheet liabilities of the Medicare and Social Security systems. It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every US undergraduate) could such a tidal wave of debt issuance exert "no upward pressure on interest rates". My view - While at the Hay-on-Wye literary festival last week, Mrs Fuller and I attended Niall Ferguson's lecture: The Ascent of Money - The Descent of Democracy. Having seen some of his televised lectures, I expected a lively, erudite performance and was not disappointed. Unlike many academics, he made a number of specific market comments with which I agreed. Among stock markets he is bullish of China and Brazil; he was also bullish of commodities and expects eventual inflation in response to the dramatic monetary reflation. In response to the inflation comment, I asked Niall Ferguson for his forecast on the price of gold, which he had not mentioned. He mentioned that he would have like to have bought gold around the time Gordon Brown was selling over half of the UK's bullion reserves at the bottom of the market (some subscribers did buy then), but was not that keen on it today. His reason: "Central bank sales." He preferred industrial metals, copper fullermoney.com in particular, to gold fullermoney.com . They are not mutually exclusive, of course, and Fullermoney is also bullish of industrial metals. However in a discussion I would have pointed out that gold is the lead monetary metal and closer to its 2007-2008 highs than any other asset, except government bonds which Ferguson and Fullermoney agree are the last bubble to burst. I would have also mentioned that copper, while increasingly scarce in terms of future supplies, is highly recyclable. Additionally, there are cheaper substitutes such as aluminium and plastics for many of copper's industrial uses. Gold is also recyclable but the increasing source of demand in this decade is coming from investors, in response to the flood of fiat currency. Meanwhile European central banks have largely sold their gold and China is buying. Where China leads, other Asian central banks with large surpluses are likely to follow. The prospect of IMF gold sales could remain a psychological restraint on bullion's overall advance for a while longer. However, the IMF is not talking about selling more than one-eighth of its gold and is required to undertake any disposal in a manner which does not disrupt the market, according to its own fact sheet: Gold in the IMF imf.org . Moreover, this recent item from The Wall Street Journal online.wsj.com : The IMF's Gold Gambit, shows the controversial nature of pending sales. A bigger timing problem for gold would be if the USA decided to sell some of its bullion reserves. That really would be controversial but I have not yet heard any rumours or stories to this effect.