Young's World Money Forecast

  UPDATE 10.14.24: In September, the Federal Reserve did cut rates by 50bps and signaled another 50bps in cuts by the end of 2024. I've updated my Payday Indicator chart below so you can see the diminishing yield investors can expect on their money.  Originally posted August 2, 2024. The market believes the Federal Reserve is poised to cut rates in September and that the Fed could cut them by 75 basis points by the end of the year. Of course, this analysis comes after the market completely misjudged the Fed's intentions about cuts in December 2023. So, take all predictions with more than a grain of salt. But comments from Jerome Powell and other Fed officials indicate they may be … [Read More...]

At the Ron Paul Institute for Peace and Prosperity, former congressman and presidential candidate Dr. Ron Paul explains that the "desire to monetize the federal debt is one reason, if not the main reason, why the central bank keeps interest rates low." He writes: Politicians favor an “easy money” policy because it creates an (illusionary) economic boom. The Fed-created boom helps the politicians remain in office. A reason politicians favor low interest rates is they facilitate government spending and debt, thus enabling politicians to aid powerful special interests via government spending. The desire to monetize the federal debt is one reason, if not the main reason, why the central bank … [Read More...]

Long-time readers are familiar with Young Research's Moving the Goods Index, a market-cap-weighted stock index made up of nonairline transportation companies. If I had to choose only one economic indicator to use, this would be it. Transportation companies lead the business cycle. The theory is that you have to move the goods before you sell them. If the index is reaching new highs, economic growth is likely improving. And if the index is dropping to new lows, economic growth is likely slowing. For the last couple of years, since the end of the major Covid shutdowns, the index has been consolidating, with slightly higher highs and slightly higher lows. Keep your eye on my Moving the Goods … [Read More...]

In 1985, America was just coming off one of the worst bouts of inflation in its history. Much as today, with inflation trailing off but still a worry in everyone’s mind, an argument naturally broke out between extremists in the financial media over whether America was poised for reignited hyperinflation or a deflationary death spiral. I had recently pioneered the Financial Armadillo Strategy and was asked to add my voice to the discussion with an op-ed in the June/July 1985 issue of Reason magazine. Instead of piling on with more extremism, I wrote: In the last decade, the world economy has become increasingly complex and unpredictable. Today, depending on the evidence being considered at … [Read More...]

In June of 1993, Bloomberg’s Pam Black asked me how to stay ahead of the inflation curve. I told her to “dip a toe” in gold. I continued: “Buy it with the idea that you won’t make any money. Hopefully, your other assets will do well, but if they don’t, you’ll be damn happy you were in gold.” Take a look at the chart below, and you’ll see how gold and the dollar have performed since that article was published. … [Read More...]

You want a history lesson? In 1987, I was interviewed by The Kiplinger Magazine - Changing Times (which is known today as Kiplinger’s Personal Finance). This wasn’t long after I had written Financial Armadillo Strategy with the late David Franke. At the time, America was coming off some of its heaviest inflation ever, and investors wanted a solution to the problem. Despite those high rates of inflation in the 80s, I warned that even somewhat more moderate rates of inflation—like those Americans have seen over the last two years—do real harm to investors. “I don’t mean 10% or 15% inflation; 4% or 5% is absolutely debilitating,” I said. Even then—like today—I was focused on dividends and … [Read More...]

Since the “temporary” stimulus package of 2009 was enacted by Barack Obama and greased through the system by Ben Bernanke’s Federal Reserve, Americans have faced ever more burdensome budget deficits. After Joe Biden moved into the White House, the dangerous spending reached a new level. Uncontrolled money printing has set America up for some hard lessons as the interest on the federal debt rapidly closes in on $1 trillion a year. This time around, the Federal Reserve isn’t running a bond-buying program while pegging interest rates at zero. Instead, the Obama/Biden-style spending will be forced to face the music on interest. Now, after years of profligate spending, Joe Biden has put … [Read More...]