"It has been a privilege to serve the nation during these challenging times."
-PAUL O'NEILL, U.S. Treasury Secretary, Resignation Letter, 12/6/02
Dr. Irwin Kellner, CBS MarketWatch chief economist says that O'Neill's successor is likely to come from banking or Wall Street, in contrast to his background, which is from manufacturing." Les Alperstine, president of Washington Analysis, said the shakeup gives Bush a "clean slate," as O'Neill made the mistake of "speaking his heart." (Wow, speaking your heart can be dangerous these days)
Roger Arnold reminds us that one of O'Neill's major platforms was the maintenance of the previous administration's "strong dollar" policy. This may be the signal that the administration is going to back away from this policy. The Yen began strengthening as soon as the announcement was made and gold spiked up 2 dollars at the same time; leaving me to conclude that the currency traders are drawing the same conclusion. This would signal a shift fiscal policy and an indication that the Federal government is now going to move to get fiscal policy ahead of the economy and to stimulate the economy.
A depreciation of the dollar would:
1) Drive up gold prices. Gold and the dollar have a cyclical inverse relationship.
2) Drive up the Yen and Euro as it relates to the dollar. Japan and Germany will not like this and it could be the beginning of trade wars and protectionist measures being taken by these countries.
3) Slow the rate of growth of the trade deficit. The trade deficit has been growing dramatically this year as US consumers have been buying a lot of foreign goods but they haven't been buying ours.
Craig Smith believes that the O'Neill's departure more than likely will be inflationary in nature, given the recent "Fedspeak" that we have heard from Fed Gov. Bernanke and the remarks of Chairman Greenspan that "we've got control of the money printing presses". Low inflation/deflation is not politically expedient, therefore, I believe the flood gates of money will open to stimulate and reassure a second term for the Bush Administration.
Dennis Peacocke, President of Strategic Christian Services, told Derry Brownfield's audience today that he expects the ongoing disintegration of American culture and economy until we wake up to "reality." Dennis further said that pressure reveals what is real in the economic, family, church and governmental realms. (See Isa. 26:9)
Derry also discussed with Dennis the new Homeland Security Bill, which, according to Dennis is (along with the 9-11 attack) further evidence that God's hand of protection upon America has been in a slow motion decline for over 200 years and that we can expect a further erosion of our freedoms as the price of God's providential judgement...until enough Americans stand up and finally say "enough is enough!"
Dennis also called for a national debate over two key issues; 1) What is a real leader? ... and How can we facilitate an economic revival in America? Dennis feels strongly that we need a new leadership model that is based on "Do and I do" and not "Do as I say." The deterioration of America's confidence in leadership is the result of moral failures in government, business, church and family.
Regarding how to create an environment that will produce an economic revival, Dennis' advice is that Christians spur a debate over the modern banking system and Federal Reserve that is presently in shambles. He feels (and we agree) that we must understand that "interest" is not a gift, but rather, a judgment and the key to overhauling the U.S. banking system is to restore the historic "merchant banker" paradigm that provides bankers with an incentive to help borrowers succeed in business, rather than benefiting regardless of how their borrowers fare.
On the topic of gold, Derry and Dennis were in agreement that because gold represents economic reality it will continue to serve as a historic hedge against the building pressure in the economic realm and will likely move higher in relation to "dollars" in response to emerging crises both in the U.S. and worldwide.
Yes, these are changing times indeed. Times that require clarity and discernment. Times that require
servant-hearted leaders who are brave enough to tackle the big issues with the same kind of tenacity that
Moses had, as he boldly told the Egyptian Pharaoh, "Let my people go!"
May we all learn to boldly "speak our heart" and may our hearts embrace the truth as together we face "these
changing times" -- no matter what the cost is.
Dennis Peacocke - audio resource "MEGATRENDS" - $34.95 - 5 audio tapes/syllabus
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