Fed

The credit cycle that normally drives advanced economies through boom and bust is turning out to be different this time round

The US monetary inflation rate continues its downward drift. As at the end of December the year-over-year (YOY) rate of growth in US True Money Supply (TMS) was 7.2%, its lowest level since November of 2008.

The Fed’s mode of operation has drastically changed over the past 12 years.

We occasionally see articles where the monetary base is wrongly discussed as if it were akin to the money supply or as if the change in the monetary base indicated the amount of monetary inflation in the economy.

Both Keynesians and monetarists believe that increased government spending, or more money injected into the economy, is sometimes necessary.

The US government usually admits to “price inflation” of about 2%/year. As far as we can tell, the actual rate is probably at least 5%/year, but no more than 7%/year. Let’s say 5%/year for the sake of argument.

The Fed continues to pump aggressively

Gold price below $1,700? But the Fed have just doubled QE, isn’t gold supposed to go up?

According to a recent comment by a well-respected analyst, one of the problems with using gold as money is that the supply of gold could experience large swings due to changes in mine production.

The Federal Reserve will hold a two-day policy meeting on July 31 that is expected to yield no change in U.S. interest rates, but markets will analyze and dissect every word of Chairman Ben Bernanke for any clues that the central bank will do more to promote economic growth.