Dreadful Market Perceptions

As we explained in the last issue that when GDP figures are again revised we would find 2nd quarter GDP growth was really 1.3% to 1.5%, not 2.4% revised down from 3.7%. This experience points out the really bogus nature of government statistics. Several months ago we projected that without QE the economy in the 3rd quarter would result in 1% growth and minus 1% in the 4th quarter. Insiders on wall Street knew months ago that we’d get QE, which was announced on Wednesday by the FOMC and that is why they projected GDP growth for the 2nd half of 1-1/2%. We project zero to 1%. Even with a $5 trillion injection over the next two years by the Fed, we can only project 1-1/2% growth accompanied by 14% plus inflation. If you own gold and silver you will be happy. Such stimulus eventually fails and burns out, markets fall and interest rates rise.