Welcome to Capital Account. US consumer prices rose in August by the most in three years. The Consumer Price Index increased .6 percent, with gasoline prices accounting for 80 percent of the rise. But should we even believe government statistics? And how does QE fit into the inflation calculation as central banks try to reflate asset prices? Marc Faber, Gloom Boom and Doom publisher, lays out his case for a deflationary collapse. We play the second part of our interview with him from yesterday’s show in the second half.
And yesterday, as the news of QE overshadowed all other financial news, a 500 billion dollar spending bill easily passed in the House. The spending package aims to fund federal operations until March. Meanwhile, the US government has borrowed nearly 35 cents for every dollar it has spent this year according to the Wall Street Journal. Lawmakers hope to address spending after the election. We talk to Edward Harrison, founder of Credit Writedowns, about the dangers of deficit spending.
Also, since the Fed is targeting depressed housing prices with its MBS policy, we play the game “Economic Symptom or Disease?” The Federal Reserve is trying to treat this symptom with QE, instead of addressing the disease of the high debt – debt that keeps people from buying homes or getting out of them. We talk about this new game show idea in Friday’s Viewer Feedback.