The Undollar Digest

Archives of April 2010

Taxpayers and the Dodd Bill

Peter J. Wallison,, 04/26/2010

Last Thursday, at New York’s Cooper Union, President Obama promoted the Senate financial reform bill while castigating its opponents. “Now, there’s a legitimate debate taking place about how best to ensure taxpayers are held harmless,” he said of Sen. Chris Dodd’s legislation. “But what’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed. That makes for a good sound bite, but it’s not factually accurate. It is not true. . . . And nobody should be fooled in this debate.”

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Hyperinflation Looms – The Dollar Arrives at Its ‘Havenstein Moment’

James Turk,, 04/20/2010

There is an interesting article in Canada’s Globe & Mail about the lack of growth in the US money supply.  Ignoring for the moment that the quantity of dollars in circulation is significantly underreported, it observes:

“The money supply in the United States is doing something that almost never happens: it’s shrinking, after taking into account inflation.  Similar episodes in the past have usually been scary times for investors. Declines in the amount of money in circulation have coincided with recessions, and some analysts looking at the current trend say it is a harbinger of trouble. Despite signs that the U.S. is in recovery, they worry that the money supply numbers indicate the economy remains vulnerable to the feared double-dip downturn, or is close to experiencing deflation.” Read more»

Doug Noland’s Credit Bubble Bulletin, 04/23/2010

[Selected Notes]

Federal Reserve Credit jumped $20.5bn last week to a record $2.318 TN.  Fed Credit was up $98.3bn y-t-d (14.4% annualized) and $149bn, or 6.9%, from a year ago… Read more»

Deficits and Private-Sector Credit

Doug Noland,, 04/23/2010

Count me a subscriber of the “sugar high” thesis.  The combination of double-digit (to GDP) deficits, protracted near-zero rates, and the Fed’s unprecedented Trillion-plus monetization has worked wonders.

Economic recovery is thus far having little impact on deficits specifically because the current expansion is financed chiefly through government borrowing and spending. Read more»

U.S. Food Inflation Spiraling Out of Control

National Inflation Association,, 04/22/2010

The Bureau of Labor Statistics (BLS) today released their Producer Price Index (PPI) report for March 2010 and the latest numbers are shocking. Food prices for the month rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years. NIA believes that a major breakout in food inflation could be imminent, similar to what is currently being experienced in India. Read more»

Unchartered Waters

Time to Drop the Incredulity Over Fraud in the Gold and Silver Markets

Over the past several weeks, a flood of new evidence has surfaced which supports the long-held claims of gold and silver investors like myself that the world’s major bullion banks have been operating a shell game using paper instruments to generate illusory supply well beyond the sum of physical backing, and that these banks then use that fake supply to establish massive concentrated short positions on the major exchanges to limit the upward scope of price movements in gold and silver… and to knock those prices down decisively at every opportunity. Read more»

Doug Noland’s Credit Bubble Bulletin, 04/17/2010

[Selected Notes]

One-month Treasury bill rates ended the week at 15 bps…Five-year T-note yields sank 16 bps to 2.44%. Ten-year yields fell 12 bps to 3.77%.  Long bond yields declined 6 bps to 4.67%… Read more»

It’s About Trust

Doug Noland, www/, 04/17/2010

Perhaps today will provide somewhat of a needed market wakeup call:  Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets.  There are, however, myriad financial and economic aspects to the bust that will not be disappearing anytime soon.  Trust in Wall Street and the marketplace is these days anything but impenetrable.

Irrespective of today’s allegations and market pullback, reflationary forces have attained considerable momentum; massive government borrowings and ultra-loose financial conditions have incited a self-reinforcing stampede into risk assets. Almost $50 billion exited money market funds the past week alone, boosting the 15-week outflow to $380 billion.  Money Fund assets are down an incredible $900 billion in just 12 months, a historic wall of finance unleashed upon global risk markets.
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It’s Official – America Now Enforces Capital Controls

Submitted by Tyler Durden,, 03/28/2010

It couldn’t have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration’s millionaire cronies to abbreviate as HIRE.

As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions – Subtitle A—Foreign Account Tax Compliance, institutes just that.

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