Treasuries, US Dollar Not Dead Yet
Another look at why it's still too early to write off the greenback.

An increasingly loud chorus of investors expects the imminent demise of the US dollar and US Treasuries. They also expect that an exploding monetary base and the US’s structural problems will lead to massive inflation. This opinion may prove to be correct in the very long run, but evidence continues to mount that deflationary will come first.

Believe It Or Not, In Defense of the Dollar
The fact is, there are no good alternatives to the U.S. dollar.

Inflation? Disinflation? In Your Dreams
Round two of deflation is heading this way.

On October 1, the U.S Treasuries zoomed upward as the DJIA saw its first material decline in six months. In percentage terms, the Dow's decline was insignificant -- yet bonds had one of their best single-day rallies since the summer low. Why is this important? Here's why...

Deflation: Why Are Central Banks Failing?
In the battle of inflation and deflation, deflation still has the upper hand.

Most conventional economists vigorously dismissed the very idea of deflation just a couple of years ago, but now it' a global reality. Just like the Federal Reserve Bank here in the U.S., overseas central banks have used the "quantitative easing" policy to stop deflation. And just like in the U.S., something is not quite working. Why?

Does This Look Like INFLATION To You? We Didn't Think So

Is it time to pin on those Whip Inflation Now buttons once again? According to many mainstream experts, the answer is YES. They're leading the charge for a "WIN 2" campaign in the United States, and filling the financial airwaves with references to the 1970's oil crisis, wage freezes, and wheelbarrows full of cash.

Deflation or Inflation? Yield Curve Holds the Answer
Typically, a steep yield curve points to inflation. Not so this time, says EWI's Bill Fox.

5 Markets Where the Wave Principle Forecasts Best -- and Why

Gold in particular follows the Wave Principle impeccably, at least in a world of fiat paper currencies. Gold is a wonderful reflector of the Wave Principle because unlike, say, pork bellies, it is traded by people around the globe, so the prime mover is the psychology of human beings at the most shared and basic level.

G20 Summit: Are Great Expectations Justified?
Government interventions only work when they are aligned with the mood of the crowd.

Long Wal-Mart, Short Liberty
When the government taxes one citizen on behalf of another, we are all diminished.

At some point, the burden of the U.S. national debt burden may result in a forced restructuring to avoid default. This restructuring will be on terms dictated to us by our creditors…one of whom is a communist regime. I wonder how agreeable those terms will be.

Deflation: How Can It Be Stopped?
As the saying goes, you can lead the horse to water, but you can't make him drink.

There is one question that we at Elliott Wave International get over and over again: "You were correct with your predictions of deflation. But now that it's here, why can't the government do [fill in the blank] to stop it?" There are lots of articles out there – well-written articles written by qualified authors – arguing how the government can do this or that to stop deflation. But in our opinion, they ALL miss one key point: social mood. Here's why...

A One-Word Answer
Can all the socioeconomic variables in all their complexities be accurately accounted for to engineer a viable macro-economic policy? No.

I would like suggest that due to its complexity and immeasurable quantitative data points, the science of economics has failed. (To be sure, the economic models that we have labored under have also failed us in the past. I am out of fingers and toes trying to enumerate the number of booms, panics, crashes and failed central banks since 1776.) 

A Picture Of Treasury Yields Is Worth One Word: DEFLATION

As the year 2007 rolled into 2008, the mainstream financial experts were certain of one thing (if you don't count death and taxes): Inflation would take the U.S. economy by storm and trigger an across-the-board flight out of the rate-sensitive bond market. The very opposite -- DEFLATION -- has occurred.

Deflation, Fiat Money, and Market Destruction
Yes, the Fed Chairman DID Say This in Public

Do Home Prices Look INFLATIONARY To You?
Core C.P.I. is at 2.3%, overall C.P.I. at 5.0%, and the Fed funds rate at 2% -- is THAT inflation?

EURUSD: U.S. Interest Rates Unchanged. Now What?
With the Fed's decision out of the way, what will determine the next move in the EURUSD?

Now that the Federal Reserve left U.S. interest rates unchanged and the U.S. dollar lost on the news, the question is: Was that all of the "pressure" the USD would see, or is there more to come? Here's a chart Elliott Wave International's Currency Specialty Service showed right before the Fed's announcement on June 25...

Is Gold REALLY a Safe Haven in Recessions?
With claims like these, we at EWI always do the same thing: We look at the data.

"Gold always goes up in recessions and depressions." Is it true? Should you own gold because you think the economy is tanking? Whenever we hear some claim like this, we always do the same thing: We look at the data. The results speak for themselves...

Walmart Capitulates -- The Rich Win
Attention Brutus, please observe aisle seven...

Stock markets closed lower today, Wednesday, October 3, 2007

Inflation to the Left of Me, Deflation to the Right -- And Stuck in the Middle Is YOU
Lend me your ear! Heh heh...

In 1974, Stealers Wheel recorded the memorable bubblegum song "Stuck in the Middle With You." In 1992, Quentin Tarentino used the song during the famous "ear scene" in his first feature film, "Reservoir Dogs." You might ask: "What's this got to do with monetary valuation?" Well, just lend me your ear for a moment…

Wild On The Edges
Where the action is

Edges are where the social and biological action is; they’re the first places shaped by change. On the edges of seacoasts, forests, riverbanks, and -- real-estate bubbles – gulls scream, chipmunks gambol, poison ivy grows, dreamers gamble, and predators wait. Edges are where most of the feeding happens. So what does this have to do with commodities?

Deflation is a Process, Not an Event
And doesn't move in a straight line...

People tend to associate predictions with events, not processes. Because our culture-at-large encourages brief attention spans, it's confusing to be carried along in a long, unfolding process. If it happens slowly, it is much easier to deny. That is, unless you have lost your job, or house, or both.