The Freedom Factory

Intelligence officials say NSA exceeding legal limits on domestic spying-intercepting private e-mails and phone calls, 43% of Americans pay no taxes or actually receive money from government (i.e. receive your money!), consumer prices mixed, nationwide anti-tax protests blast bailouts and big government, Obama vows to simplify the tax code, America has its first “Border Czar,” White House pushes for new government health insurance, Federal Reserve actually considers telling the public what it’s doing, central bank claims recession may be ending soon, Homeland Security labels returning war vets as “right-wing terrorists,” and Texas governor rallies tea partiers with states’ rights agenda… Continue Reading

The verdict is not yet out as to whether we will experience inflation or deflation in the near term. The argument has been raging with pundits on both sides clinging to data they claim supports their guesses. Today marks a big day in the debate, however, with two critical pieces of news:

1) Consumer price index (CPI) rises more than expected, up 0.4% in Feb. following a 0.3% gain in Jan. This represents at 4.8% annualized inflation rate.

2) Federal Reserve committed to buying $300 billion in long-term Treasuries as part of its plan to drive consumer borrowing costs lower.

The immediate fallout can be seen in Gold, the U.S. dollar, and Treasuries today. Both pieces of news are inflationary. Rather than the feared ‘deflationary spiral’ we’re starting to see consumer prices heat up, albeit not appreciately just yet. The Fed buying Treasuries amounts to them printing $300 billion in new currency. This money is created out of thin air.

Most telling on inflationary fears is the Market Vectors Gold Miners ETF (GDX), up over 10% today, while the SPDR Gold Shares ETF (GLD) approached a 4% gain. PowerShares US Dollar Index (UUP) dropped over 3%, and the 30-Year Treasury yield fell to a low of 3.37% after the Fed announcement, settling higher at 3.57% later in the day.

In Checkmate: How the Federal Government Will Lose in 2009 I argued that our leaders were backing public finances into a predictable corner. With $2-3 trillion in budget deficit for 2009, alone, with more planned in coming years, government will be forced to increase borrowing or printing. Today’s news supports the ‘printing’ hypothesis, but I suspect this is just the beginning. The big game unfolding will be the Treasury issuing bonds to raise funds and the Fed turning around and buying them. This is a scam that will either lead to increasing bond yields or increasing inflation. There are no other options.

Government says government owns AIG, U.S. weighs invasion of Pakistan to fight Taliban, cocaine trade funds Peruvian rebellion, consumer prices jump more than expected-what happened to deflation? Obama wants more control of financial institutions to ‘protect taxpayers,’ White House readying to join war against Mexican drug cartels, Czechs end U.S. missile treaties amidst ‘large-scale’ Russian rearming…just the latest in your Freedom Under Fire Report! Continue Reading

Signs of inflation, troubles with the Taliban, Baltimore turning into Zimbabwe with ACORN crime spree, another radical preacher appointed to White House staff, nationalizing banks, find out how your state ranks in taxation, Obama halts mileage tax idea, the how-to’s of bureaucratization, and being reprimanded by Communists on poor economic policy…just the latest in your Freedom Under Fire Report! Continue Reading