More Stimulus Only Weakens The Economy Further

The misguided goal of the "stimulus" is to get consumers to spend more. But excess past consumption is why the economy is so weak now. We must reduce consumption to free up resources to increase capital investment and production. More spending only weakens the economy further.

Very appropriate that Larry Kudlow was wearing a mask when he claimed the V-shaped recover was going strong, but that the economy needed an additional $1.8 trillion in government "stimulus." The economy can't be simultaneously strong and also in need of massive government support.

Much darker days for the U.S. dollar lie ahead. It's going way down and taking the entire American economy down with it.

Powell Doesn't Understand Economics

Powell doesn't understand economics. Low interest rates are only good for the economy if they naturally result from high savings and low debt. If they result from Federal Reserve manipulation, they are extremely harmful. Like any government price control, it results in adverse imbalances.

The Fed's misguided monetary policy will create the condition where any cure for an inflation rate that greatly exceeds its 2% target will be fatal to the economy. If the inflation disease doesn't kill the economy, the cure will. The question is, which poison will the Fed pick?

The Wrong Road To Economic Recovery

The economy doesn't need more consumption, it needs more production. Productive employment will stimulate the economy. Printing money and distributing it to non-productive people will not. It will only result in larger trade deficits, a weaker dollar, and higher consumer prices.

The Reasons Behind The Gold Sell-Off

Gold is selling off because traders now believe the Federal Reserve will not be as easy as once expected. While Fed policy is more likely to be much easier than expected, if traders are correct this development would be far more bearish for the stock market than it is for the gold market.

The lack of conviction gold stock investors have in the trade really is amazing. Despite the most positive fundamentals ever for gold, fear is far more pervasive than greed. Imagine what the market will look like when larger gold stock investors actually turn bullish on gold. 

Related trading instruments: SPDR Gold Trust ETF (GLD),Market Vectors Gold Miners ETF (GDX)

Buying The Gold Dips

Today's stock market rout was likely triggered by disappointment that the Federal Reserve was not dovish enough. The Federal Reserve may not be dovish enough to support a stock market bubble, but it's more than dovish enough to support a much higher gold price. Buy the dip!