Just one week after James Bullard of the St. Louis branch of the Federal Reserve Bank released his August 6 paper declaring that “the U.S. is closer to a Japanese-style outcome today than at any time in recent history” (meaning that the United States will likely have decades of economic stagnation, which Bullard blames on “deflation”), the news media have taken up a chorus against the bogeyman of “deflation” to explain the need for further social spending by the government and more debasement of the U.S. dollar (causing consumer prices to rise through inflation).
Item: Treasury Secretary Timothy Geithner, as reported by AP/CBS on August 3, said that “it would be ‘deeply irresponsible’ for the Obama administration to support a wholesale extension of Bush-era tax cuts, including breaks for the wealthy.”
Real U.S. Gross Domestic Product increased at a far slower pace than previously reported, according to the U.S. Bureau of Economic Analysis (BEA), which reported that second quarter GDP increased at a 1.6 percent annualized rate rather than the 2.4 percent rate it estimated back on July 30. The lowered estimate means that another recession — the infamous “double dip” — may be just on the horizon.
In an exclusive interview with Kitco News, Congressman Ron Paul (R-Texas) revealed that next year at the start of the newly inaugurated 112th United States Congress, he would introduce a new bill to audit the U.S. gold reserves, which are reportedly stored at the New York Federal Reserve and Fort Knox.
More tough times lie ahead, according to a report on the state of the economy just released by the Congressional Budget Office (CBO). Unemployment is likely to remain high, not returning to 5 percent or lower until at least 2014, while this year’s budget deficit will hit $1.342 trillion, the second highest ever.