Production gone crazy.

If Robry is correct, the level of natural gas production is insane. The recent completion of several pipelines has increased production by at least 1-2 bcf a day. This level of production will force the market for natgas to fall below $4. You just cannot have this level of production without a dramatic increase in demand. But the demand for natgas is somewhat inelastic because of the difficulty in quickly switching large segments of the US economy to natural gas. We are seeing more and more busses, garbage trucks and other fleet vehicles moving to natural gas. But it takes time for these transitions to happen. The level of natgas production has increased in several times the increase in demand. If Roby is right, shorting ung will be the only possible way to make money off of natgas in 2011.

QE2, Inflation and Gold

In QE2 the Federal Reserve is buying $600 million in US Treasury debt to keep interest rates down. These purchases are thought by many to cause inflation and thus make gold and other hard assets more valuable. But most analysts have missed the main impact of QE2. The main impact of QE2 is to drive China from a fixed exchange rate. The impact of QE2 on US inflation will be minor, but the impact of the Fed's QE2 on China's inflation will be HUGE. The point of the policy is to force a change in exchange rates by China.

On Sunday (Dec 5th) Ben Bernanke in an interview on 60 Minutes Overtime said the following comments on the impact of QE2 on the China:
"If they fix the currency to the dollar, then China must have the same monetary policy as the US....
They are risking inflation by importing US monetary policy...
It's not in their own interest [for China to keep the currency fixed to the US dollar]."

The point is that all of the impact of QW2 is going to first impact other countries, especially China. In a Telegraph Article Joseph Stiglitz presents the following:
All this liquidity that they’re creating is not going back to grow the American economy and is going to Asia and other emerging markets where it’s not wanted,” Mr Stiglitz said. “Most of the countries around the world have begun to react. They put in capital controls, exchange rate interventions, taxes on these capital flows - a variety of interventions.”

The Federal Reserve is set to buy an additional $600bn of Treasuries - dubbed QE2 - until June 2011 in an attempt to boost economic growth, according to the central bank's chairman Ben Bernanke.

However, Mr Stiglitz maintains that banks in America will invest money provided under the Fed’s program in Asian and other emerging markets, which have recovered faster from the recession.

Brazil's real has gained 1.5pc against the dollar so far this year, and Chile’s peso has appreciated 6.6pc against the greenback."

The point is QE2 will NOT cause US inflation, but will cause other nations to "do something". Each of the policy options for the countries will impact the commodities and gold.

So let's look at a simple example to see how this could happen. Let's imagine a simple economy. It has only US treasury debt, consumer product A and gold. China provides the consumer product A and can buy and sell gold. So the Fed buys $10 billion in Treasury bills and provides an additional $10 billion for people to buy consumer product A. So the Chinese manufacture and sell $10 million of Product A to the US. But then they have $10 million and must do something with the dollars. Because China has fixed the exchange rate, if they exchange the dollars to yuan to pay their workers, the Chinese Government must buy the dollars and print yuan. So the Chinese government prints 66 million yuan. But this is vary expansionary for China. The money supply in China is skyrocketing. Thus they have inflation and the Chinese react. What is an individual Chinese to do? Buy Dollars which may face sudden depreciation? Or buy Gold which will protect them from Chinese inflation? They buy gold. Thus, until China changes the exchange rate, individual Chinese will import gold and force the price up.

In real life the situation is much more complicated, but Ben Bernanke said in the interview with CBS that the US would not experience any inflation. He was very confident in this view. WHy? Because we are exporting the inflation to China.

Is this happening? Let's look at money supply:
"Broad money supply[in China], or M2, rose last month by 19.5 percent, the fastest gain in six months, the People’s Bank of China reported yesterday. M2 has surged 55 percent over the past two years and outstanding yuan-denominated loans have climbed to 47.4 trillion yuan, 60 percent more than in November 2008. "
Ahhhhh...... Chinese money supply increases by almost 20!
What about inflation?
"Consumer prices rose a more-than-forecast 5.1 percent from a year earlier, a statistics bureau report showed in Beijing today. Producer-price inflation was 6.1 percent, higher than any of 28 economists surveyed by Bloomberg News had estimated. "

So the US QE2 policy is impacting the money supply and inflation in China, not the US. The Chinese realize this and are reacting:
"BEIJING (AFP) - – A Chinese government think tank has warned inflationary pressures are building in the economy and consumer prices will remain "relatively high" in 2011, amid growing expectations of a rate hike.

The Chinese Academy of Social Sciences also cautioned that the world's second-largest economy was at risk of overheating next year "if the growth speed is not controlled properly", Xinhua news agency said Wednesday."

Full Article

Thus, the Fed Policy of QE2 will NOT cause inflation in the US. But it will overheat and cause inflation in China. The Chinese government is helpless to either have inflation or change the exchange rate.

Lastly, what about all the other countries like emerging markets Brazil?
"Brazil's real has gained 1.5pc against the dollar so far this year, and Chile’s peso has appreciated 6.6pc against the greenback. "
The dollar is deprecating against all the free floating currencies. But this pushes the price of all portable assets, like gold, silver and oil up. The price to Brazilians of these products is FALLING, without a price increase in dollars. So all portable assets have a upward price pressure in dollars.

What investments will work in this environment? Only hard assets that the Chinese [& people in other countries] can buy. Thus, US physical assets (like property, apartments and other assets in the US) will not benefit from QE2. But assets that the Chinese can buy (like Gold and Silver) will benefit. When the market begins to understand this basic relationship, then these scarce hard assets that are portable, will increase in value beyond normal inflation and be the best asset class for investors to own.

What about oil? Oil is an interesting problem because if the Chinese economy does slow, the oil demand will fall. But the retail price of gasoline and other fuels are not always market prices. The Chinese government especially in times of inflation often limits the price of oil products and uses the excess foreign exchange reserves to buy oil. But a slower growth in China will lower the demand for oil from the other wise crazy increases in demand that would have occurred. Oil demand in China will not FALL but increase at a slower pace. If the US economy slowly rebounds, this will add to the demand for oil and given the limited supply will put pressure on the oil price. Oil is a portable assets that the Chinese might buy to store. Thus, the oil price looks to be even to up because the increased Chinese demand.

Bottom line: Buy portable assets that Chinese, Brazilians and others can purchase. Other assets like apartment buildings and housing will not see the impact of this inflation. Oil should see the positive impact, as well as soft commodities that are exported from the US.

Well so much for the lower production.

EIA Oil

Nat gas Supply Continues to Fall

Production data from Canada has fallen quite a bit.

Chart updated

NatGas Production eases for the 1st time in weeks.

Gold Reserves by Russia

graph

New North American NG Production Chart

Another new high (sigh)... The only good news is that production actually fell off late in the week. But a new high of over 70 per day is very worrisome.

Two Graphs

Two graphs

NatGas Production increases to new highs.

The march upward in NatGas Production continues. A new record high, with no signs of any moderation.

NatGas Production increases to new highs.

Comments on Ben Bernanke's Speech

Below is the most important part of the speech for monetary policy and gold price. My summary is:

1) The Fed feels the inflation rate is too low and unemployment too high.
2) With interest rates zero, they cannot lower interest rates further. Thus, the only policy tool they have is to increase the balance sheet.
3) But that tool has some disadvantages: a) They don't know the impact and so getting the 'right' size of stimulus is a guess. b) The public does not believe they can reverse course and withdraw the stimulus at the 'right' time.
Ben in this speech says they have to try anyway and they have 'new tools' to withdraw stimulus in a reasonable speed.
4) Thus, the Fed needs to provide additional stimulus to achieve the long-run goals of the Fed.

Impact on gold? As many expected, the impact will be to debase the currency to decrease unemployment. One element that was totally missing from the speech was the impact of the stimulus on exchange rates. The dollar is likely to fall in relation to other currencies with this policy. Then what will other countries do? Stimulate their economy. Result? Got Gold?

Ben Bernanke is really trying to do the best he can. He wants to maximize employment and minimize inflation. Right now, he feels inflation is 'under control' and unemployment is not. Thus, additional stimulus is coming from the Fed and if you have 100% of your assets in dollars, you will feel the pain of higher inflation and low interest rates on bonds. He is saying inflation will go to 2% per year or more. If you are getting 2% on a five year treasury, you will loose money. Gold looks to be golden when Central banks want to devalue their currency and are in a race to the bottom.
================================Part of the speech is below===================


Monetary Policy Tools: Benefits and Costs
Given the Committee's objectives, there would appear--all else being equal--to be a case for further action. However, as I indicated earlier, one of the implications of a low-inflation environment is that policy is more likely to be constrained by the fact that nominal interest rates cannot be reduced below zero. Indeed, the Federal Reserve reduced its target for the federal funds rate to a range of 0 to 25 basis points almost two years ago, in December 2008. Further policy accommodation is certainly possible even with the overnight interest rate at zero, but nonconventional policies have costs and limitations that must be taken into account in judging whether and how aggressively they should be used.

For example, a means of providing additional monetary stimulus, if warranted, would be to expand the Federal Reserve's holdings of longer-term securities.5 Empirical evidence suggests that our previous program of securities purchases was successful in bringing down longer-term interest rates and thereby supporting the economic recovery.6 A similar program conducted by the Bank of England also appears to have had benefits.

However, possible costs must be weighed against the potential benefits of nonconventional policies. One disadvantage of asset purchases relative to conventional monetary policy is that we have much less experience in judging the economic effects of this policy instrument, which makes it challenging to determine the appropriate quantity and pace of purchases and to communicate this policy response to the public. These factors have dictated that the FOMC proceed with some caution in deciding whether to engage in further purchases of longer-term securities.

Another concern associated with additional securities purchases is that substantial further expansion of the balance sheet could reduce public confidence in the Fed's ability to execute a smooth exit from its accommodative policies at the appropriate time. Even if unjustified, such a reduction in confidence might lead to an undesired increase in inflation expectations, to a level above the Committee's inflation objective. To address such concerns and to ensure that it can withdraw monetary accommodation smoothly at the appropriate time, the Federal Reserve has developed an array of new tools.7 With these tools in hand, I am confident that the FOMC will be able to tighten monetary conditions when warranted, even if the balance sheet remains considerably larger than normal at that time.

Central bank communication provides additional means of increasing the degree of policy accommodation when short-term nominal interest rates are near zero. For example, FOMC postmeeting statements have included forward policy guidance since December 2008, and the most recent statements have reflected the FOMC's anticipation that exceptionally low levels of the federal funds rate are likely to be warranted "for an extended period," contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language of the statement in some way that indicates that the Committee expects to keep the target for the federal funds rate low for longer than markets expect. Such a change would presumably lower longer-term rates by an amount related to the revision in policy expectations. A potential drawback of using the FOMC's statement in this way is that, at least without a more comprehensive framework in place, it may be difficult to convey the Committee's policy intentions with sufficient precision and conditionality. The Committee will continue to actively review its communications strategy with the goal of providing as much clarity as possible about its outlook, policy objectives, and policy strategies.

Conclusion
In short, there are clearly many challenges in communicating and conducting monetary policy in a low-inflation environment, including the uncertainties associated with the use of nonconventional policy tools. Despite these challenges, the Federal Reserve remains committed to pursuing policies that promote our dual objectives of maximum employment and price stability. In particular, the FOMC is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate. Of course, in considering possible further actions, the FOMC will take account of the potential costs and risks of nonconventional policies, and, as always, the Committee's actions are contingent on incoming information about the economic outlook and financial conditions.

Increased Production of Natgas

The latest production numbers still show an increased production of Natgas. As many producers have not yet pulled back drilling, this increase could continue for several months.

Very Interesting Production Data.

The following chart shows the EIA production data overlaid with Robry's estimated production data. Robry's monthly data is taken and multiplied by the number of days and 1,000 to get a comparable monthly number. (Note mistakes are possible in entering the data or messing up the number of days in a month!). The overall impact is to see results in general are similar. Recently, Robry has shown higher rates of change (eg production rising higher and falling more) than the EIA. Thus, this summer with production rising, Robry shows even higher production than the EIA. Overall, a rather interesting chart that shows what happens with real time data vs several month old data reporting.

Banking Measures show no sign of an uptick.

Supply levels out; Demand is high

While everyone is going crazy about the high level of supply of natgas, the demand has increased in almost every area. One very interesting and strong demand is the Res & Comm demand. During the early Sept period, it has fallen to minimal levels every year (3-4 bcf). But this year the demand is over 10 bcf/day. While this may sound small, it is actually really important. Is this demand coming from unusual sources (transportation)? Or is this demand changing from other sources (eg burning natgas instead of electricity for hot water heaters)? What is the source of the doubling of base demand from the Res & Comm. sector?

Overall with demand much higher, the huge increase in supply has been offset. The key question is how much of the increased demand is the result of weather and how much the result of new natgas demand. The results this week show a much higher level of base demand, but not quite enough to balance the new supply. But the base demand should increase over time, while if the drilling rigs ever slow down, supply would ease. The point is all is not lost. Consumers are responding to the low natgas prices by increasing demand, even in this recession. If we had a strong economic recovery, the demand for natgas would be higher than even these elevated levels of supply.

Is Helicopter Ben out of fuel?

In his most recent speech Ben B. highlights three policy tools the fed has:
"Policy Options for Further Easing
Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus. I will focus here on three that have been part of recent staff analyses and discussion at FOMC meetings: (1) conducting additional purchases of longer-term securities, (2) modifying the Committee's communication, and (3) reducing the interest paid on excess reserves. I will also comment on a fourth strategy, proposed by several economists--namely, that the FOMC increase its inflation goals."

So let's look at the impact of each of these:
1) Buy more longer-term securities. While this might have the impact of lowering the long term rates, what good will that do? So what if rates go from 4.50 to 4.25 for a 30-year fixed rate mortgage? Does anyone think a small change in long-term rates is going to turn housing around?
The simple fact is this policy tool has limited value for increasing economic activity.

2) Communication.
Translate they can promise rates won't rise for like forever. Talk. Talk. Talk. A change in the committee can change that real fast. In addition, people are not buying houses because they expect interest rates to rise. While the Fed can change economic activity with talk at times (for example if they took out the extended rate provision the economy would tank further), at this point changes in the language are unlikely to INCREASE economic activity.

3) Reduce interest rates on balances at the Fed. Big deal. They only pay 25bps right now. Unless they move that to negative amounts (which he says will not happen in the speech), this change will have minor if any impact on the economy.

Summary: Helicopter Ben is out of fuel. The Fed has no more policy options that seem to make any sense. They don't have much ability to jump-start the economy. This is really bad news for the economy.

Production increases

The following chart by itself is very scary for natgas prices. But demand has been elevated during the past two months. The key question is this just because of warm weather or a more basic demand change?

Looking at Robry's data, clearly generation demand is higher, but both industrial demand (up by over 4 bcf day) and Residential and commercial demand (up by 4 bcf/day) have equaled the increase in production. What has caused this increase in demand?

Bears say the weather and once Sept hits, the huge increases in production will hit the storage causing the price to crash. Bulls can argue that the economy is starting to notice the huge disparity between oil and natgas and transfer demand from oil to natgas. Some evidence that refineries and other industrial users are consuming more natgas, instead of oil products. Robry's data clearly indicate a large increase in industrial demand.

But what about the 4 bcf/day increase in R&C demand? Is that a temporary weather demand or a real increase in demand?
Sept. should provide the answer.
.

Updated Demand and Supply Charts

NatGas Production increases, but demand also increases.

At first glance the following graph looks very bad for natgas. Production is skyrocketing and the future looks grim.
While the production increases appear to be able to overwhelm everything, there is hope.
The demand has really increased.
Specifically, the industrial demand has skyrocketed.

This is a dramatic and important increase in demand. First, the demand is constant year-around industrial demand. This is not the seasonal demand, but demand during ALL times of the year. Second, the numbers are the average of 6 months of data. This is not a one time event, but an increase in the 6-month average demand for natgas from industrial users. Third, the increase is crazy, considering the economy is still in deep trouble. Realize demand is now 3 bcf a day HIGHER than the highest point EVER reached. Industrial demand has skyrocketed EVEN in one of the worst economic slumps the economy has experienced. What will happen if we ever get a boom? What will the industrial demand look like when the unemployment rate falls to 5%??!?!

Thus, while the supply of natgas looks to be overwhelming, the market is picking up the fact that natgas is cheap. Companies are switching sources of energy to natgas. This will not be fast, but industrial demand is more constant year-around demand than heating demand.

Summary of Haiti Trip

The High School youth of NPC went to Haiti from July 28 to Aug 3rd. Our group was almost 30 people, with 6 Adult leaders, 5 Foundation for Peace staff and 19 youth. But you also have to add our head cook and 2 bus drivers to our group.

Our main task was to help finish a school on the 2nd story of a church in Anse-a-Pete, Haiti and start a water tower. We also had a very important medical clinic which saw about 700 people. To reach the smaller children, we did two Bible school events. Of course, we also had fun with a soccer game in Haiti and one in Pedemales, DR. Lastly, we were apart of three worship services (two in Pedernales and one in Haiti) and spent the afternoon at a fantastic beach.

Anse-a-Pitre Haiti is a small town of about 30,000 people in the southwest part of Haiti. It is isolated from most of the world, because of really bad roads and transportation system. Even though the city is on the Caribbean Sea, the roads are so bad, it takes over 8 hours of travel on the ground to get to a major airport. The roads in Haiti are difficult and dangerous. The roads in the DR take you along the coast and eventually to Santo Domingo, but only after 8 hours of grueling travel.

Our two partners were the Foundation for Peace, which provided the logistical support, planning and resources in Haiti and the DR. Our local church partner in Anse-a-Pitre was headed by Pastor Andre. Both partners were key in our trip.



Our major task was construction. Because we were doing the foundation of the building, we had to dig the holes for the supports. We then spent about 5 days mixing cement, moving sand and gravel and helping clean up the construction site. All of the work was manual labor and very little construction equipment was available. We had shovels, picks and buckets. To mix the cement, we mixed by shovel several wheelbarrows of sand, gravel (sometimes) and cement bags. After adding several buckets of water and much work, we had cement mix! The mix was put into buckets and set to the correct location to be thrown in the holes. We had cement for the foundation of the water towers, cement for the concrete blocks and some Haitian workers had cement for finishing the inside of the school.



Bucket lines were required often to move the material to the correct location. We moved a large amount of sand and other material to the correct location. We also made and put into place 8 rebar pillars that were cemented in place. All of this activity was really hard in 90 heat and the strong summer Haitian sun. If you were in the shade and could catch a breeze, it was quite pleasant. But if you had to do hard manual labor in the sun, you quickly sweat out huge amounts of liquid.

Our medical clinic was one of the few free medical services offered in Anse-a-Pete. Anse-a-Pete has only one doctor and he cannot treat all the people. Many of the people cannot afford the medicine and do not see a doctor. The conditions included malaria, TB, dengue fever, crazy high blood pressure (200/100) and a host of other problems. For example, one 13 year old girl had NEVER been to a doctor before in her life. Clearly the medical clinic saved some lives and made others more bearable with medicine.


The soccer games were fun and helped bring a spirit of sport to both Haiti and the DR players. We did one game in the AM in Haiti and one in the late afternoon in the DR. From the pictures, you can see the economic differences between the two countries.


Both VBS events were helpful to the children. They got a short skit, a bible reading and some craft work. Both VBS events took about an hour.

The worship services were significantly different than the more traditional service at National. The youth got also to see worship services in two different cultures. It is always interesting to see the similarities in ideas and the differences in style. The Haiti style is different than the DR, even though the churches are very close in their theology.


Finally, when you visit a great tropical beach, it is a good time. We got to swim and just relax for an afternoon. What a treat!



Overall, the trip was very powerful. We had the honor to help the people of Anse-a-Pitre have a better school, better water, better health care and some fun. We also had the opportunity to learn from them many important lessons about life, faith and surviving in difficult circumstances.

Slight upward changes in charts.

Sharp increase in Production.

The Impact of Bank Lending

In this recession the nature of lending has changed. In most recessions, bank lending starts falling at the start of the recession. Banks seeing a problem start to tighten standards and stop lending. But in this recession, the banks INCREASED lending as the recession started and did not stop till July 09. But after July 09, the banks repaid TARP shares and lending has fallen like a rock. The rate of change of lending (2nd Derivative) has increased significantly. As a result, lending volatility has been increasing. In other words, in strong economic times the banks increase lending at a faster pace and pull back lending at a faster pace. Look at the following chart to see the increased volatility of lending.

Looking at the weekly data for large commercial banks shows the same pattern.




The data clearly show that in this recession the banks continuing lending until well into the recession. In July of 09, they reversed course in a dramatic way and starting decreasing lending at a furious pace. In fact, adjusting for accounting changes, the banks have decreased total loans outstanding by 10% since the start of the recession! This HUGE decrease in lending has to impact Main Street and the economy. Why did the banks reverse course and stop lending? TARP. In the first part of the recession, the banks received large amounts of capital. Below is the quote from the Sec. of the Treasury:

Although this program's primary purpose is stabilizing our financial system, banks must also continue lending. During times like these with a slowing economy and some deterioration in credit conditions, even the healthiest banks tend to become more risk-averse and restrain lending, and regulators' actions have reinforced this lending restraint in the past. With a stronger capital base, our banks will be more confident and better positioned to play their necessary role to support economic activity. Today banking regulators issued a statement emphasizing that the extraordinary government actions taken by the Fed, Treasury and FDIC to stabilize and strengthen the banking system are not merely one-sided; all banks – not just those participating in the Capital Purchase Program – have benefited, so they all also have responsibilities in the areas of lending, dividend and compensation policies, and foreclosure mitigation. I commend this action and I am particularly focused on the importance of prudent bank lending to restore our economic growth.

As a result of this new capital, total loans increased, when in all prior recessions, the total loans decreased BEFORE the start of the recession. While some of the increase in loans was liquidity related, part was clearly related to the TARP and increased capital in the banks. When the TARP funds were allowed to be repaid, the lending starting to decrease at an dangerous rate. Look at the SHARP and dangerous decline in lending in any of the charts. The fall in lending since July 09 has been faster than any previous recession. Thus, the TARP actually did the job and slowed the economic impact of the financial crisis. Unfortunately, the Obama Administration, allowed the banks to repay the money and lending has fallen of the map. This decrease in lending will cause a 2nd recession and will cause tremendous economic problems for the economy.

Without immediate action to slow the decrease in lending, a further weakening in the economy is near certain. You cannot have a TEN percent decline in bank lending without dramatic and real impacts on the economy. Allowing the banks to repay TARP and no longer lend was a major mistake of the Administration and they will feel the impacts on unemployment and at the ballot box in November.

Given the large decrease in lending, inflation cannot be a problem. In fact, deflation is clearly a danger in a world where total lending is falling at 10% per year. The Fed must increase the money supply at a crazy high pace or face a very deep 2nd recession. Look at the money multiplier for additional problems:


Note the significant fall in the velocity of money during the MIDDLE of the recession. This is unprecedented and clearly a result of a significant change in actions by individuals.

With lending falling in the past year and velocity of money also falling, the economy must fall into a second recession. It is a simple fact that gross domestic output must equal the amount of money times the velocity of money. If both the money supply and the velocity are falling, then the output must also fall. With a significant portion of the US dollars used overseas, the simple equation is slightly more complex, but the point is still valid. A steep decrease in lending and velocity of money is going to force output to fall.

Because of the dramatic change in banking conditions, the Federal Reserve has an impossible task. They have to significantly increase the money supply to prevent a depression and at the same time be ready to decrease the money supply if the economy takes off. The ability of the Fed to change from a "stop depression" to a sharp increase in economic activity is near impossible. Right now, because of bank lending falling of the table, they need to pump money into the system. FAST. But once the economy starts to rebound and bank lending starts to increase, they are going to have to drain money at a very fast pace or inflation will skyrocket.

A sharp V shaped recovery off of a 2nd deep recession would be a very bad outcome for the country. Why expect such a sharp V? One reason is the emotional attitude of the consumer and producer. Many company executives are very uncertain about how the regulations will impact their business. Small business especially are very uncertain of the exact impacts of all the new rules and regulations on their operations. They simply do not know what to expect. This uncertainty will eventually be resolved.
Congress cannot without creating a depression, continue making new regulations for the economy. Once small business has a feel for the new regulations impact on their particular business and enough time has expired for them to find solutions, then they will be ready to explode their output. After several years, there will be opportunities that have gone unexploited. In essence a pent up demand for taking risk. Thus, after a 2nd recession, a sharp V recovery has to be a strong possibility.

But a strong recovery with an extremely expansive monetary policy will produce serious inflation. So the problem for the FED is that in the short run to prevent a depression they have to run an outrageously expansive monetary policy. But the moment the policy and economic forces turn, they have to turn off the spigot and drain money at just as a fast rate. A VERY difficult task for the Fed or any central bank.

Updated Charts

Production Increases

Production Bounces Back