by Tim Price
On August 6, 1979, Paul Volcker as the new Chairman of the Federal Reserve was determined to eliminate the terribly high inflation that had taken hold of the system. And he succeeded.
The Fed’s primary interest rate stood at 11% when Volcker entered office. By June 1981 he had hiked them all the way to 20%.
Corporate America was not impressed. Indebted farmers blockaded his building.
But the pain was relatively short-lived. And as Volcker’s victory over inflation became more apparent, markets applauded. As bond prices started to rise, stock prices joined them.
Continue Reading at SovereignMan.com…
Gold falls as bets that the US Federal Reserve will raise interest rates in December for the first time since 2006 pushes pound below $1.50 mark
by Szu Ping Chan
Gold is on course for its biggest monthly drop in more than two years after increased speculation that the US Federal Reserve will raise interest rates before the end of the year triggered a sell-off in the precious metal.
Spot gold prices fell by as much as $4 to $1,053.29 on Monday, close to Friday’s six-year low of $1,052.46.
This puts gold on track for a decline of almost 8pc this month, which would represent the biggest monthly fall since June 2013.
Continue Reading at Telegraph.co.uk…
Barclays predicts even tighter labor market, higher wages
by Jeffry Bartash
A 4% U.S. unemployment rate? A pair of economists at Barclays say it could happen in a year or so if the Federal Reserve is intent on meeting its target for inflation.
Michael Gapen and Rob Martin argue the annual rate of inflation as measured by the PCE index, the Fed’s preferred price gauge, is unlikely to get back to 2% unless wages start to rise more rapidly. They believe the labor market has to tighten further to make that happen.
The Barclay economists project the unemployment rate, now at 5%, would have to fall to 4% or less in the next year and a half to meet the Fed’s inflation target. At present the PCE index is rising at 0.2% pace on a 12-month basis.
Inflation has been held down by forces outside the U.S., namely a strong dollar and a weak global economy. Imported goods are cheaper, as are many commodities, such as gasoline, needed to produce consumer goods and services.
Continue Reading at MarketWatch.com…
from Zero Hedge
In late 2014 we repeatedly explained why the so-called “gas tax savings” would not materialize and boost the economy via discretionary spending, as so many bullish economists were certain would happen, for one simple reason: soaring Obamacare premiums were soaking up all, and then some, of the savings. The result has been a steep drop in retail sales and consumer spending in 2015, one which even abovementioned economists have been forced to admit they never expected would happen, and as a result have been forced to cut their overly rosy outlook on the economy.
One such permabull is none other than Morgan Stanley’s Adam Parker, who notoriously flipped from bearish to bullish several years ago, only to finally admit overnight that there are numerous cracks in his upside thesis in a report carrying the amsuing mame “Feeling Worse, But Not Sure We Can Explain It.”
This is what Parker says:
Continue Reading at ZeroHedge.com…
by Jeff Thomas
It’s an unfortunate truth that, when people are worried about the future, they often put their faith in politicians to somehow make everything better.
Politicians, of course, are famous for promising panaceas for whatever is troubling voters, and they even invent new troubles to worry about, presenting themselves as the only ones who can solve these woes.
Not surprising then, that, over time, any nation may slowly deteriorate into a population of nebbishes who turn to their government to do their thinking for them and take responsibility for their futures.
In the last year, the world has seen many elections in which the top spot (president, prime minister, premier, etc.) was contested.
Continue Reading at InternationalMan.com…
by Pater Tenebrarum
Politicians are faced with quite a dilemma over the refugee crisis in Europe: on the one hand, no-one wants to simply send back people fleeing from a brutal civil war or let them freeze to death in the coming European winter. On the other hand, it is crystal clear that many so-called “economic refugees” – which include numerous people who simply want to avail themselves of the welfare state goodies on offer in Europe – are exploiting the situation by riding piggyback on the stream of genuine war refugees.
As Mish has correctly pointed out, the political leadership of Germany (and this holds for Sweden as well) has made a major mistake by telling asylum seekers to “just come”, in the process ignoring agreements on asylum policy laid down in the EU treaties. What many people apparently heard was: Welcome to our welfare state goodies, whoever you are!
Continue Reading at Acting-Man.com…