Monthly Chart of Overall Commodity Prices 2001-2010
Monthly Chart of Gold 2001-2010
Things are getting expensive again…even though they never really ever got very cheap. With near zero interest rates and continued demand for the basics, commodity prices are trying to creep back up to the hellish levels they hit in the summer of 2008. The official inflation numbers are still low, but if commodity price increases continue, it is just a matter of time before those higher prices start hitting consumers and get reflected in the official numbers. Private credit may not be growing much, but the money already out there is looking for a place to go to protect its purchasing power. It is like there is a war between people afraid of deflation flooding into bonds and people afraid of inflation flooding into hard assets causing both deflation and inflation simultaneously in different areas. Oil has remained basically steady for a year, but who knows how long that will last. Just about the only commodity that is relatively cheap right now is natural gas. And the low price of natural gas has been murder for the natural gas etfs (and etns). Natural gas etfs have been the worst inflation hedge going, bonds and cash have performed much much better. But natural gas is a crazy, dumb, manipulated commodity that will go crazy to the upside eventually despite talk of things like a glut of natural gas due to the rise of environmentally risky shale natural gas drilling.
Overall, inflation is just a kind of mirage of economic growth. I’ll take deflation any day over inflation. But it seems we are trying to get the worst of both worlds: an overall deflationary economy with inflating prices for essential products.
In this amusing satirical interview, a zombie sits down to interview author Tom Woods on his latest book, Nullification: How to Resist Federal Tyranny in the 21st Century. The zombie interviewer, representing the average bleeding heart corporate media shill, try’s to dismiss Woods’ advocacy of the right of states to nullify federal laws by throwing out straw-man arguments suggesting that advocacy of states’ rights means you are a 19th century confederate southern slave owner instead of perhaps a contemporary American who is advocating individual freedom in the 21st century.
Under the Basel III agreement, banks will have six years starting Jan. 1, 2013, to progressively increase their capital reserves. Under current rules banks have to hold back at least 4 percent of their balance sheet to cover their risks. Starting in 2013, this reserve – known as tier 1 capital – will have to rise to 4.5 percent, reaching 6 percent in 2019. In addition, banks will be required to keep an emergency reserve known as a “conservation buffer” of 2.5 percent. In total, the amount of rock-solid reserves each bank is expected to have by the end of the decade will be 8.5 percent of its balance sheet.
We’ll see by 2013 and 2019 if there isn’t some reason to further postpone these already postponed tighter regulations.
This is a video put out in the beginning of August by success coach and motivational speaker Tony Robbins. He knows a lot of big shots since he’s coached some of them, and Robbins mentions at least one of those big shots, without using his name, who is warning of a market crash. Some speculate that Robbins is referring to Paul Tudor Jones, but Robbins also throws in some stuff reminiscent of Harry Dent. Overall, Robbins gives a good general overview of the economic situation. He talks about things like demographic changes and lack of new credit growth. We’ll see if the crash comes. Not much has happened yet this summer, and summer is basically over. Maybe the fall will be in fall. I’m personally not betting much on any direction, because it is all so rigged.
