As people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, wonders: Did the U.S. Treasury just issue a major warning to the Fed? Russell also covered one stock's surprising performance.
Richard Russell: "I ordered a book on Friday called Target Tokyo (click here or on image above to purchase). I ordered it through Amazon, and believe it or not, the book arrived on Saturday. This is a fabulous book about Jimmy Doolittle and the 16 B-25s that flew off the carrier Hornet for the first bombing of Japan during World War II. It’s a thick book and I thought I couldn’t get through it, but after I started, I couldn’t put it down. It’s a fabulous history, from Pearl Harbor through the first retaliatory air strike against Japan.
Staggering U.S. Debt Worrying The Fed And Hurting U.S. Economy
I think the US is trying to pull itself up by its bootstraps. The problem is the massive US debt of over $17 trillion. I think the Fed’s idea is to get the economy growing again, start paying off the debt, and all will be well. The key to the strategy is whether the Fed can get the US economy growing again. On this basis, I’ll be watching the stock market for the answer to whether the US economy can be revived.
The huge total of US debt — over $17 trillion – is a stone hanging over the US in the form of deflation. The greater the debt, the greater the odds that deflation will overcome the economy. Japan has for years attempted to grow its economy upon the base of its huge debt. After ten years of trying, Japan is still unable to get out from under this deflationary burden. I hope that the US can do better.
U.S. Treasury Probably Warned Fed That Raising Rates Would Be Suicidal
The first sign will be the Dow climbing above 18,000 and progressing from there. The idea of the Fed raising rates, in the face of the compounding US debt, is ridiculous. I assume the Treasury is calling the Fed, warning them that raising rates would increase the compounding effect of the national debt, and would be suicidal.
On another subject, I just subscribed to “Next Issue,” an app which includes dozens and dozens of magazines that you can read on your iPad. At first I was skeptical of this amazing product, but it’s not a gimmick. Dozens of magazines and back issues of magazines are available on your iPad. I’m surprised that the magazines went along with this service, but evidently they did. Try it. You’ll be reading, if you’re a magazine nut like I am, with an endless supply, for $10-15 per month.
Costco Is On A Roll
I just received Costco’s magazine. This is an incredible company and the magazine itself is an education. Costco sells everything from toothpaste to eyeglasses to insurance. The stock’s action has been sensational, and with good reason. Is Costco stock too expensive now?
Late Notes — As I write 45 minutes before the close, the Dow is up 62 above the critical 18,000 level. Transports are up 21 and holding above 8,000. Nasdaq is up above the 5000 level. Gold is up 13.1 to 1187.6. I describe the stock market as weakly bullish and holding its own in the face of mildly bullish economic news.
Gold And Silver Will Be The Last Men Standing
Silver and gold are tangible wealth. They can only be destroyed by industrial use. Silver is lost because it has many industrial uses. All the gold ever produced in history is still available in the form of jewelry, medical use (teeth) and hoarding. When the US debt becomes too great a burden, gold and silver will be the last men standing." You can subscribe to Richard Russell's 90 years of wisdom and remarkable writings at Dow Theory Letters by CLICKING HERE TO SUBSCRIBE.
***ALSO RELEASED: The Catalyst For The Next Global Crisis Is About To Be Triggered CLICK HERE.
The audio interviews with Rick Rule, Bill Fleckenstein, John Mauldin, Michael Pento, Gerald Celente, Egon von Greyerz, Dr. Paul Craig Roberts, Andrew Maguire, James Turk, Dr. Philippa Malmgren, Eric Sprott, Robert Arnott, David Stockman, Marc Faber, Felix Zulauf, John Embry and Rick Santelli are available now and you can listen to them by CLICKING HERE.