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All Gain, No Pain
Daily Rap 03-08-2013
Before I discuss today's drama du jour, that being the ramifications of the nonfarm payroll report, I would like to reiterate a point I have made often in the past, but not recently. That is, the NFP report is a terrible data point from which to try to extrapolate decisions, since it is full of errors, from faulty seasonal adjustments to incorrect birth/death calculations. Thus, it is subject to massive revisions. On top of that, from an economic standpoint, all jobs are not created equal, and NFP data do little to shed light on the subjective side of job creation.
With that preamble out of the way, by now most readers are probably aware that supposedly 236,000 jobs were created in February versus expectations of 165,000. However, January was revised...more
Last year's posts for Ask Fleck
Q: Should we order our hats yet?
Fleck: What a moron. Why does anyone allow these people any notoriety? They have shown they don't know how the financial/economic system works.
I just wanted to put the Sequestration and owning gold into perspective. Please share with your readers if you feel led (thanks for all you do. You are a light in the darkness of the investment world):
Refresh my memory. So why do we own gold again?
Recently our congress in their infinite wisdom, moved to address our fiscal problem by identifying $85 billion of automatic government spending cuts (the infamous "Sequester"), which by the way would take place over a 10-year period. So our government is actually only cutting about $8.5 billion per year for 10-years. In other words, the annual spending cuts our government worked so diligently to identify and put into action would only stop the national debt from increasing for 2.3 days! (As a comparison to the average household budget, the sequestration cuts would be similar in size, significance, and impact as the price of a stick of gum.)
Unfortunately though, after 2.3 days of "sequestration", the debt clock would march on as if nothing had ever happened. So as we can all see, the sequester fiasco was nothing but political theater. Nothing responsible or serious was accomplished to address the fiscal problems that lie ahead.
In today's environment, the Federal Reserve's policies are setting the stage for an eventual collision course with hyper-inflation and a collapse in the US dollar. At a time when the stock market has been on the rise and gold has been on the decline, owning gold may not be as popular as it was just a few short months ago (how quickly we forget). However, the state of the country's fiscal house continues to deteriorate at an alarming rate, which only reinforces the reasons for owning gold.
For the time being, think of gold as insurance or a hedge against what inevitably lies ahead. As in all types of insurance, I wish not for the day that I need it but but do not have it.
Fleck: Well stated by you, and your point survives, despite the fact it's $85 billion a year, not $8.5 billion a year.
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