The following editorial was published in Price Perceptions issue #1233 on January 11, 2003
Inflate or Die...
In early 2001, it became apparent that the stock market crash was damaging the economy. The Administration and Federal Reserve decided to re-liquefy the economy by reducing taxes and interest rates. Congress passed a large tax cut that was to be stretched out over several years. The Federal Reserve pushed interest rates to a 41 year low in a bold move to encourage home-owners to cash out and spend their home equity.
The stimulative effects of the tax cut and lower interest rates ended the recession, but growth remains sluggish and stagnate. In 2002, economists began to openly talk about deflation. Japan has experienced sluggish economic growth and deflation for the past decade. The idea that the US economy could follow a similar path gained acceptance among financial editors and economists.
In December 2002, Alan Greenspan spoke to the Economic Club of New York. For the first time, the Fed Chairman openly admitted that the Federal Reserve was promoting inflationary policies. Greenspan's statements included...
The US has never been more resolute in its determination to promote inflation... The Federal Reserve forced interest rates to 41 year lows... The Administration is pushing for the largest tax cut in history... And, budget deficits are projected to become the largest in history. In addition, we are spending historic sums on homeland security and war threats are building in the Middle East and Korea. It is patently obvious the US has taken on the war cry... inflate or die!
We expect the unprecedented inflation efforts to provide exceptional bull market opportunities in commodities over the next few years. Price Perceptions will be devoted to searching out markets that hold the greatest opportunity of responding to these new developments.
TRADING IN COMMODITY FUTURES OR OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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