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Stephen Leeb continues:


“Everybody knows the Fed is not targeting headline inflation because it includes two extraneous factors called food and energy.  Food and energy have been in uptrends for about the last twelve years.  It’s hard to call those extraneous.


In the past, in the 80s, 90s, etc., they were cyclical.  Food prices would go up and then go down.  The same thing for energy, up and down.  But a twelve year uptrend for commodities, it’s very hard to call these extraneous.  We are, right now, looking at inflation of 3.9% in the US.  That inflation number is higher than the average inflation between 1950 and now.


My suspicion is that the protests around the world have had an impact on the Fed members.  It goes back to this food and energy dynamic.  If you look at food and energy, and this is a statistic that is hard to believe, it accounts for 60% of the income of the bottom 20% of this country.  They are extraordinarily pressed just to feed and heat themselves....


Continue reading the Stephen Leeb interview below...




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“60% of the country has to borrow right now in order to satisfy their food and energy needs.  We recently had a central banker discussing inequality in America.  When you see these people making comments like that, they are worried about the fabric of our society.  In other words, the Federal Reserve is ready to ease and almost certainly will ease again.


This easing is ready to take place with inflation already running above 60 year averages, that’s extraordinary.  If you go back to the 70s, inflation wasn’t much higher than it is now when Nixon instituted price controls.  He perceived inflation of 4.5% or 4.7% as such a problem, that we needed price and wage controls.


Today, 4% inflation is no impediment to further Federal Reserve easing.  How can you not love gold under these circumstances?  I want to hate gold.  I want to say everything is ok, but everything is so far from ok under these circumstances that you have to love gold at $1,780.  You probably have to love silver even more.”     


Dr. Stephen Leeb: Chairman & Chief Investment Officer of Leeb Capital Management and the

author of “Red Alert: How China's Growing Prosperity Threatens the American Way of Life”

Just released, to order from Amazon CLICK HERE.



© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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