This is the concluding installment in my series examining how the most reliable economic indicators during the Inflationary Era, perform during periods of deflation. I have done this by examining the Roaring Twenties, Great Depression, New Deal, and the Post WW 2 deflationary recession. The reason for doing so is that we are now in the midst of the first deflationary recession in 60 years. Most indicators used by economists and pundits do not exist or have never been tested that far back in time. Indicators which may work during inflations may not work during deflations. Having set forth the data for you, today we show exactly how two such indicators -- monetary and interest rates -- panned out, and the implications of those conclusions to our present situation.
This is shocking. Something common sense is being said by United States, Homeland Security Secretary Janet Napolitano. She wants to deport criminal illegal aliens. No complaining from the ACLU or immigrants rights groups on how that's just so racist? I'm sure we will see it! Are they undocumented criminals?
If you're a criminal and you're not entitled to be in the United States, Homeland Security Secretary Janet Napolitano wants you out of the country. Napolitano wants what she calls "criminal aliens" off American streets. She is looking at existing immigration enforcement programs to see if taxpayers are getting the most bang for their buck.
Most interesting are these figures: There are 450,000 criminals who are illegal aliens in various jails in the country.
The Congressional Oversight Panel has discovered youtube and you should too. Below is a video of Elizabeth Warren explaining, in layman's terms, the need and recommendations for Financial Regulatory Reform.
This is a direct reflection of the drop in shipping traffic.
In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.
“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%,” said Giovanni Bisignani, IATA’s Director General and CEO.” Air cargo carries 35% of the value of goods traded internationally.
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Over at CNBC blogs,
Andrew B. Busch of BMO Capital Markets repeats the falsehoods of Amity Schlaes that Bonddad and I thoroughly debunked a few weeks ago. Busch says:
The truly disturbing aspect of the stimulus fiasco is the Congressional belief that they are acting like Keynesian economists and are invoking the name of FDR to validate their actions....
As far as the comparison to FDR, I think everyone should be very careful to emulate him.
The N.Y. Times, in an article entitled "Geography is dividing Democrats over energy", makes much of an alleged split between those on the coasts, east and west, vs. those in the middle, as in the Midwest and Plains states. Somehow coal and manufacturing are grouped together, against a concern for global warming:
"There's a bias in our Congress and government against manufacturing, or at least indifference to us, especially on the coasts," said Senator Sherrod Brown, Democrat of Ohio. "It's up to those of us in the Midwest to show how important manufacturing is. If we pass a climate bill the wrong way, it will hurt American jobs and the American economy, as more and more production jobs go to places like China, where it's cheaper."
Perhaps one of the more important benefits of the financial collapse and the economic depression is that it is forcing economists to re-examine their profession. Well, OK, some economists. And maybe not so much "examine" as just plain old internecine warfare.
Previously in Part I of this series, I explained the need to re-examine economic indicators to determine how they performed in previous periods of deflation. In Part II, I looked at the year-over-year M1 vs. CPI indicator during the Roaring Twenties. In Part III, I looked at the same indicator during the 1930s and the post-World War 2 deflationary recession of 1948-49. That examination showed that, in the 1920-1950 period, the M1 vs. CPI indicator generally worked well, but missed the 1927 recession and most importantly of all completely failed to appropriately signal the beginning, duration, or end of the 1929-32 Great Contraction.
IV. Interest rates and the yield curve
In this installment, I will look at NY Fed interest rates, short term rates, and long term rates as they apply to the entire 1920-1950 period.
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