Economic Stories of Relevance in Today's World -- May 26, 2013

Will It Be Inflation Or Deflation? The Answer May Surprise You - The Economic Collapse Blog - Michael - May 22nd, 2013 - s the coming financial collapse going to be inflationary or deflationary?  Are we headed for rampant inflation or crippling deflation?  This is a subject that is hotly debated by economists all over the country.  Some insist that the wild money printing that the Federal Reserve is doing combined with out of control government spending will eventually result in hyperinflation.  Others point to all of the deflationary factors in our economy and argue that we will experience tremendous deflation when the bubble economy that we are currently living in bursts.  So what is the truth?  Well, for the reasons listed below, I believe that we will see both.  The next major financial panic will cause a substantial deflationary wave first, and after that we will see unprecedented inflation as the central bankers and our politicians respond to the financial crisis.  This will happen so quickly that many will get "financial whiplash" as they try to figure out what to do with their money.  We are moving toward a time of extreme financial instability, and different strategies will be called for at different times.                       So why will we see deflation first?  The following are some of the major deflationary forces that are affecting our economy right now...
The Velocity Of Money Is At A 50 Year Low
The rate at which money circulates in our economy is the lowest that it has been in more than 50 years.  It has been steadily falling since the late 1990s, and this is a clear sign that economic activity is slowing down.  The shaded areas in the chart represent recessions, and as you can see, the velocity of money always slows down during a recession.  But even though the government is telling us that we are not in a recession right now, the velocity of money continues to drop like a rock.  This is one of the factors that is putting a tremendous amount of deflationary pressure on our economy...

The 3 Reasons Why Stocks Have Skyrocketed Over the Past Couple of Years - Washington's Blog - May 25, 2013 - Stocks have soared since 2009 because the Fed’s quantitative easing has – intentionally – pumped them up.               They’ve also skyrocketed because central banks are directly buying stocks.                      NBC News reports on a third major reason that stocks took off … corporate buybacks:

Flush with cash and a world of opportunity at their doorstep, companies have decided there’s nothing more attractive than themselves. So, they’re offering big money to buy back their own stock. This year, big U.S. companies have given the go-ahead for $286 billion of buybacks, up 88 percent from the same period last year, according to Birinyi Associates, a market research firm. If the pace continues for the rest of the year, the tally will exceed the record set in 2007.                     Every manner of company is caught up in the buying binge, including home-improvement chains, makers of farm equipment and jet engines, airlines, sellers of soft drinks and of hard liquor alike. Not one to miss a hot trend, Apple recently authorized as much as $50 billion of buybacks.                 Investors like buybacks because they suggest companies think their stock is cheap. They also help reduce the number of shares outstanding, which automatically increases earnings per share. And higher earnings per share often, though not always, lead to rising stock prices.                    But buybacks are also crucial to the rally for a reason that’s not widely known. Companies are one of the few big stock purchasers nowadays. Nearly every other big player in the stock market has been selling more than they’ve been buying.                          Pension funds have been selling. Local and state governments have been selling. Investment brokerages have been selling. And, yes, until recently, even Main Street investors.

Postscript: Max Keiser points out that quantitative easing and corporate buybacks are related.               Specifically, the Fed’s easy monetary policy means that big corporations can borrow cheaply … and then use the money to buy back their own stock.                     The bailouts and easy money aren’t going into helping Main Street or stabilizing the economy.     Of course, most of the trading is done by high frequency computers these days.



Is America’s Economy Being Sovietized? - AltMarket.com - Brandon Smith - May 22, 2013 -
The foundation of the Soviet model of trade and investment was centralization under the guise of “universal public ownership”. The entire goal of communism in general was not to give more social and political power to the people, but to extinguish alternative options and focus power into the hands of a select few. The process used to reach this end result can vary, but the goal always remains the same. In most cases, such centralization begins with economic hegemony, and it is in our fiscal structure that we have the means to see the future. Sovietization in our financial life will inevitably lead to sovietization in our political life.                       Does the U.S. economy’s path resemble the Soviet template exactly? No. And I’m sure the very suggestion will make the average unaware free market evangelical froth at the mouth. However, as I plan to show, the parallels in our fundamentals are disturbing; the reality is that true free markets in America died a long time ago.          
The Tyranny Of Planned Economy - The characteristics of a free market society defy the use of centralized planning. Adam Smith’s original concept of free market trade stood as an antithesis to what was then referred to as “mercantilism,” a select few “joint stock companies” (corporations) monopolizing production while using government ties to destroy any new competition. Unfortunately, there are to this day economists and politicians who believe that corporate centralization is a “natural” function of a free market. In reality, corporate monopolies are an unnatural creation of collusion between governments and big-money interests designed to suffocate any entrepreneurship outside of their sphere of influence. Over time, as we now see in the United States today, government power and corporate power begin to hybridize, until one can barely be distinguished from the other.                            The bottom line is that you cannot have planned structures, monopolized production or controlled capital flow within an economy and still claim it to be a “free market. There are no exceptions to this rule.                      The Soviet system was the ultimate in centralization. Every aspect of financial life was dictated by the communist government, from industrial input and output to investment to food production and rationing to wages and retail prices. Some people might argue that this structure is a far cry from what we now have in the United States, but let’s look at the fundamentals.


NC Biotech Center braces for worst as Senate slashes budget, too - WRAL TechCenter - Rick Smith - May 21, 2013 - A Senate budget calls for a 50 percent cut in funding for the North Carolina Biotechnology Center. While not as bad as Gov. Pat McCrory's 60 percent slash, the Senate's total would mean big reductions for the Center. It's also a nasty indicator that major cuts are coming with two of the three budget players supporting a substantial reduction. Can the House save the day?...



Arrow Home to close Gaston plant, cut 103 jobs - Charlotte Business Journal - May 24, 2013


Hot Trend in Automobiles: Not Owning One - CNBC - Paul Eisenstein - May 24, 2013 - Whether by choice or through financial reality, the percentage of American households without a car has doubled over the past two decades-and is now approaching 1 in 10.                   The impact of this trend could be significant, especially when it comes to alternatives to driving, such as car-sharing and mass transit, according to research by CNW Marketing.                    "While the recession was in large part responsible for the latest spurt, the trend was already clear," said CNW's research chief Art Spinella, "A growing number of Americans felt they didn't need or want a personal car."                       (Read More: Younger Americans: No House, No Car, Less Debt )                According to CNW data, the number of U.S. households without a car stood at a modest 5.7 percent in 1991. That figure stayed relatively stable through the early part of the new millennium. But it has been increasing slowly since then, with a "rapid rise" beginning in 2007. By last year, the total number of carless households hit 9.3 percent.


China's has been placed as the world's manufacturing engine by the Global Financial Cartel, but China is having a hard time dealing with the Social and Environmental factors associated with the New World Order's "Free For All" trade model, which is all about cutting costs today and maximizing profits today at the expense of a sustainable future for all of mankind.





Hickory City Alderman Brad Lail talks about Hickory Economy and a visit to Washington made by City officials, in which they discussed the Hickory Economy with local Congress members and other Washington Officials.