Economic parameters: Aug 29 update.

The state of the US Economy and the Stock Market.

Not much change to report here. Both, the Economy and the Stock Market are now driven by and distorted by the enormous influence of the government. The deflationary policies (i.e. mark to market accounting) put in place on Sep 15, 2008, are still in place. This provides the pretext for the government and the FED intervening in the Markets far beyond their designated and legal authority. There are several goals that the government is pursuing: 1. obtain ownership of critical industries (financial and automotive); 2. slow economic growth; 3. make the govt the source of income for millions and redistribute income; 4. set the stage for the govt controlling (and distributing) 50% of the national income. The deflationary pressure created is balanced by creating new bubbles in various investments: treasuries, student loan bonds, etc. Most of the economic moves take a long time to make themselves felt, but we are on the road to inflation, economic stagnation and a gold buying panic. Stocks are continuing to advance as shown by the chart of the S&P 500. The advances are slowing.

The next subject to tackle is the price of gold. The early reverse head and shoulder formation in weekly gold prices has been aborted. In its place we find a wedge formation of lower highs and higher lows. The author of the graph has left his picture in the corner (Larry Edelson). This is shown clearly in the weekly price gold chart, but also on the daily price chart. What the wedge formation is telling us is that gold prices will break out of this range and probably on the upside.

The US dollar continues to lose value. The goal of the government is to do this slowly rather than all of a sudden. For the Socialists in control of our country, this has several advantages. First, it allows them to make a pretence that the country will repay its debt in cheaper dollars. Second, as assets (stocks, bonds, etc) adjust for inflation, the inflationary increase in apparent value, will be taxed. That way the government will take away more wealth and distribute it. The Obamabots need to stretch out the length of their legal plunder so they can continue to distribute their loot for years. There is a discrepancy between the way the daily value of the dollar shows up and its weekly value. This discrepancy is due to the sampling of data covered.

Finally, we will consider the price changes in oil. What is clear is that oil prices have risen while oil supplies have increased. So, the rise in price is not due to a shortage but a loss of the value of the dollar. In case you are interested, the storage glut is in jet fuel and diesel.

The final graphic shows the source of oil imports into the United States. For those who say that we are involved in Middle East politics because of our oil imports, the answer is this: most of our oil imports do not come from Saudi Arabia. We try to be an honest broker in the Middle East, because Israel is an ally and because the Jihadists are our enemies.