Following my post on Weimar and the downfall of money – this was received this morning. It’s from a daily financial newsletter called The Daily Reckoning, dated November 18th, forwarded by my brother Michael in England.
Last week, Janet Yellen told the senate what everyone wanted to hear – the Fed will support the economy… which means, the Fed will support asset prices. With this option in their pockets, investors bid up the Dow to nearly 16,000 by the end of the week.
What to make of it?
We’re down at a conference sponsored by the Bonner Family Office. And we’re thinking. Thinking is the last resort. You only do it when you’re desperate. When your opinions, predictions and guesses don’t seem to be working out, you’re forced to consider alternatives.
While we have no doubt that current Fed policies will prove disastrous, we have nothing but doubts about what form the disaster will take. John Williams, who recalculates basic indicators – CPI, unemployment, GDP – based on what he believes are more honest data. What he discovers is that the CPI is higher, unemployment is higher, and the GDP is lower than the feds tell us.
He believes that there is only one outcome possible – hyperinflation. A year ago, he expected it in 2019. Now, he’s moved up the schedule. Expect hyperinflation to begin next year, he says – in 2014.
Why? Because the Fed is more aggressive than expected… and because the rest of the world is losing confidence in the dollar and its guardians. The overseas portion of the US money supply is huge – with dollars in every central banker’s vault as well as in the private accounts and hidey-holes of millions of people all over the globe. When these people lose faith, which he expects next year, the trickle of these dollars returning to the US will increase. Prices will begin to rise… slowly at first, then suddenly, in a flood.
Will John Williams be proven right? We’ll have to wait to find out!
The Daily Reckoning
Further . . . from the WSJ today
The uncertain future of U.S. fiscal and central bank policies poses a growing risk to the global economic recovery, the Organization for Economic Co-operation and Development said Tuesday.
In its twice-yearly Economic Outlook report, the Paris-based research body said the U.S. debt ceiling should be abolished, and replaced by “a credible long-term budgetary consolidation plan with solid political support.”
The report marks a significant shift in the OECD’s focus of concern, which in recent years has been centered on the euro zone’s attempts to tackle its fiscal and banking crises.
This morning, two of the world’s most famous females met.
Malala Yousafzais the 16-year-old Pakistani schoolgirl shot by the Taliban for encouraging girls to attend school. She now lives in Britain where she received life- saving surgery after being shot in the head. Today, she met the British monarch, Queen Elizabeth at Buckingham Palace.
Women have been in the news a lot this week.
After the temporary resolution of the debt crisis in Washington, news channels pointed out that the resolution owed a great deal to conciliatory efforts by women in Washington.
Janet Yellen was nominated by the president October 9th, as the new chairman of the Federal Reserve. If approved, she will be the first woman ever appointed to the post.
There is, of course, increased talk of Hilary Clinton running for president in 2016.
Meanwhile, Germany’s Angela Merkel has won another term as Chancellor of Germany. Since the 2008 financial crisis, she has led Germany to the top position in Europe. As one British paper pointed out recently she has achieved in five years what the Kaiser and Hitler failed to do – raise her nation to a position of dominance in Europe.
What is interesting about the above is that I’ve heard each of the above adult ladies at different times described as “the most powerful woman in the world.” That was a label often given Mrs. Clinton when she was Secretary of State.
Now, they can’t all be the most powerful woman in the world.
So, who is?
Queen Elizabeth is the Head of State of 16 different countries and Head of the 53-nation Commonwealth, an organization of mostly former British colonies. In 2002, on the 50th anniversary of becoming queen, an American writer observed that she had done more than any other person in the world to advance democracy. This was written at a time when the US and allies had invaded Afghanistan and were about to invade Iraq, partly to spread democracy to these countries. The article pointed out that the queen did a great deal behind the scenes to ensure all Commonwealth countries stuck to democracy and she did it without firing a shot.
However, this does not mean she is the world’s most powerful woman.
What about Janet Yellen? Is she going to be number one?
Certainly, as Chairman of the Federal Reserve, she will be very powerful. But will she be more powerful than Christine Lagarde, the head of the International Monetary Fund, another woman I seem to remember hailed as “the most powerful woman in the world?”
Presumably, if Hilary Clinton does become president after the 2016 election, she will be the most powerful? Maybe. But that will depend on US standing at that time. A report in USA Today this morning says that the US could not even handle one war right now due to military cut-backs. If the growing perception that the US is well past its “sell-by” date gathers more steam, then the international power of the presidency will also be diminished.
Which leaves Frau Merkel, the head of the German government. As Germany is now the fourth greatest economic power (after the US, China and Japan), she is very powerful. But when we consider that Germany is at the helm of the European Union, the world’s greatest single market, she is even more powerful. She has also been instrumental in resolving (some would say dictating) the financial crisis of a number of European countries, putting her ahead of both the Director of the IMF and the Chairman of the Federal Reserve.
I for one will not get drawn into this debate. I just find it tiresome hearing so many powerful and accomplished ladies all described as “the most powerful woman in the world.” They clearly can’t all be.
I will say one thing, though. Margaret Thatcher was the best British prime minister in my lifetime and is the only one since Winston Churchill to leave an international legacy.
As David Ben-Gurion once said of Golda Meir – “she is the best man in my cabinet!”
Some of the ladies above have got more guts than the average male leader.
That goes for Malala, too, daily risking her life to encourage other girls her age to go to school.