{"id":10477,"date":"2015-07-28T18:11:53","date_gmt":"2015-07-28T23:11:53","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10477"},"modified":"2015-07-28T18:11:53","modified_gmt":"2015-07-28T23:11:53","slug":"blame-the-fed-for-the-commodities-slump","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10477","title":{"rendered":"Blame the Fed for the Commodities Slump"},"content":{"rendered":"

Blame the Fed for the Commodities Slump<\/a><\/h3>\n

When we left you at the end of last week the world was falling apart.<\/p>\n

As you know, the economy functions on electronic credit\u2026 not cold, hard cash. Without the banks pumping more credit into the system \u2013 by way of loans \u2013 it sags.<\/p>\n

The Dow fell 163 points \u2013 or about 1% \u2013\u00a0on Friday<\/span><\/span>.<\/p>\n

More significant is the action in the gold market. At this morning\u2019s price of $1,103 an ounce, gold is now trading $100 below what we thought was the \u201cfloor\u201d under the price.<\/p>\n

Why?<\/p>\n

It could be that gold is signaling a global recession\/depression. People tend to buy gold when they fear inflation. All they see today is a global deflationary slump.<\/p>\n

The\u00a0People\u2019s Daily<\/em>\u00a0newspaper \u2013 the official organ of the Communist Party \u2013 tells us that Chinese electricity consumption is accelerating at the slowest rate in 30 years.<\/p>\n

 <\/p>\n

We all know China\u2019s GDP figures are untrustworthy, but electrons don\u2019t lie. They flow with the economy. And they\u2019re now only increasing at a sluggish 1.3% a year \u2013 suggesting a big slowdown in the Chinese economy.<\/p>\n

According to economists\u2019 estimates compiled by Bloomberg \u2013 as opposed to the official spin from Beijing \u2013 China\u2019s economy is growing at the slowest pace in 25 years.<\/p>\n

 <\/p>\n

A Pileup in Commodities<\/h2>\n

Meanwhile, on the commodities highway, there\u2019s a huge pileup.<\/p>\n

The crash in the oil market \u2013 which has taken the price per barrel of U.S. crude down 53% over the last 12 months \u2013 has left a massive slick.<\/p>\n

A barrel of U.S. crude oil sold for just $48.14 at\u00a0Friday\u2019s<\/span><\/span>\u00a0close \u2013 just 42 cents above its 52-week low. Overall, commodities are at a 13-year low.<\/p>\n

And the coal miners have slid on the cheap oil and gas.<\/p>\n

In the March issue of our monthly publication,\u00a0The Bill Bonner Letter<\/a><\/em>, we explained why energy was so cheap. The Fed dropped the price of capital so low that it cost almost nothing to borrow.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Blame the Fed for the Commodities Slump When we left you at the end of last week the world was falling apart. As you know, the economy functions on electronic credit\u2026 not cold, hard cash. Without the banks pumping more credit into the system \u2013 by way of loans \u2013 it sags. The Dow fell […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2045,1035,130,7608,151,175,216,7607,3522,303,374,1775],"class_list":["post-10477","post","type-post","status-publish","format-standard","hentry","category-economics","tag-beijing","tag-cash","tag-china","tag-chinese-gdp","tag-commodities","tag-credit","tag-dow","tag-easy-credit","tag-easy-monetary-policy","tag-fed","tag-gold","tag-oil-price-collapse"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10477"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10477\/revisions"}],"predecessor-version":[{"id":10478,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10477\/revisions\/10478"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}