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-- Posted Monday, 24 November 2008 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Monday, November 24, 2008

“Phenomenally accurate forecasts 

The Dow’s 500-point rally on Friday was being attributed to President-elect Obama’s choice of New York Fed chief Timothy Geithner as Treasury secretary. Over the weekend, the Wall Street Journal effused over Geithner’s supposed “prescience” in having foreseen the risks -- if not, apparently, the unraveling -- of the credit cycle. However, in the gimlet-eyed newsletter world, the prospect of having a Fed policy wonk in charge of the U.S. Treasury is about as heartening as having Harvard’s history department run the Armed Forces. We’d much rather the market had rallied 500 points on word that Obama plans to abolish the Federal Reserve.

Fat chance, you say?  For sure. But could anything conceivably be more bullish for the stock market and the economy? Instead of having the wonks throw yet more trillions of dollars at problems they’ll probably never fully understand. The nation could start fresh with some old-fashioned, Adam Smith-style capitalism.  That would all but ensure that every precious dollar Americans are able to save from this point forward will be deployed to best effect, economically speaking.  Doing away with the Fed would lay the groundwork for an enduring recovery rather than a centrally managed one that, from the looks of the bailout so far, would probably come to resemble Stalin’s five-year plans, but without specific goals.

Ghost of Keynes

We’re not suggesting things would get better right away, since even under the most optimistic circumstances the economic crisis could take five years or longer to run its course.  But the way in which we choose to handle this very severe economic dislocation from the outset matters a great deal, since we know from the experience of the 1930s that Keynesian stimulus, public works programs and good intentions alone are not sufficient to overcome deflationary drag. Many economic historians, even liberal ones, now concede that it was nothing FDR did that finally lifted the economy from its depressionary depths, but rather the gearing up of U.S. production for World War II. Are we headed down the wrong path once again?

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Last Class in 2008

Because the November 5-6 Hidden Pivot Seminar was sold out, we will be offering the class again on December 3-4 for $1150. The fee includes entry to weekly tutorial sessions for an entire year. For more information, click here.

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Monday, 24 November 2008 | Digg This Article | Source: GoldSeek.com

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