More Investors Position for Possibility of U.S. Default

The net notional amount of derivatives used to hedge or speculate against a default on U.S. government debt rose 12% in late January, according to Depository Trust & Clearing Corp. figures.

The increase suggests investors are becoming more nervous about the quality of U.S. debt. It also threatens to cast a pall over the notion that Treasurys are risk-free assets investors should run to for haven from other instruments.

The net notional of credit default swaps bought and sold on U.S. debt rose from $2.67 billion to just over $3 billion between Jan. 14 and Jan. 21, ...

http://online.wsj.com/article/SB10001424052748704775604576119960455333704.html

Fed chief Ben Bernanke denies US policy behind record global food prices

Ben Bernanke, the chairman of the US Federal Reserve, has dismissed the idea that the central bank’s policies are to blame for the rise in global food prices to a record high that helped trigger political unrest in Egypt.

Mr Bernanke said that the rapid growth of developing economies was behind the increase in food prices, rather than the Fed’s decision to embark on a second, $600bn (£371bn) round of printing money. “Clearly what’s happening is not a dollar effect, it’s a growth effect,” Mr Bernanke said in a rare question and answer session with journalists at the National Press Club in Washington on Thursday.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8302111/Fed-chief-Ben-Bernanke-denies-US-policy-behind-record-global-food-prices.html#

Fed denies policy is causing food rises

Asset purchases by the US Federal Reserve do not cause rising food prices in countries such as Egypt, the central bank’s chairman Ben Bernanke said on Thursday.

“I think it’s entirely unfair to attribute excess demand pressures in emerging markets to US monetary policy, because emerging markets have all the tools they need to address excess demand in those countries,” he said.

Mr Bernanke’s comments are a firm retort to critics who argue that by driving down US interest rates with quantitative easing the Fed is pushing capital flows into commodities and emerging markets.

http://www.ft.com/cms/s/0/5c4aeaea-2fbd-11e0-91f8-00144feabdc0.html#axzz1CztEsxVR

Companies Stock Up as Commodities Prices Rise

Companies contending with rising commodity prices are stockpiling rubber tires, cotton clothing and other goods, a maneuver that is aimed at insulating them from inflation but also could contribute to it.

John Anton, founder of Anton Sports, with his surplus supply of cotton T-shirts in Tempe, Ariz., last month.
Spice-maker McCormick & Co. stocked up on some ingredients and Monro Muffler Brake Inc. bought extra tires and motor oil, assuming prices of those goods will keep rising. Anton Sport, a small athletic-wear wholesaler in Tempe, Ariz., amped up its fabric purchases to avoid higher prices.

These pre-emptive purchases are a fraction of overall business activity, but the trend is being watched by economists and business executives. The stockpiling comes at a pivotal moment for the global economy, as central bankers scramble to judge the impact of raw-materials price increases and figure out whether or when to raise interest rates.

http://online.wsj.com/article/SB10001424052748704775604576120533736097682.html?mod=WSJ_hp_LEFTTopStories

U.S. economy, inflation, China, euro, gold

U.S. Inflation Could Rise Twentyfold

Are We Seeing a Whiff of Inflation?

Economists are pointing out that January's super strong ISM manufacturing report could be signaling early signs of inflationary pressure.

The prices paid index jumped to 81.5 from 72.5, the highest level since 2008, when oil was spiking in the mid-$140s per barrel. In November, prices paid was at 69.5.

http://www.cnbc.com/id/41370200

Four Reasons Why The Government Is Destroying The Dollar

1. Creating money out of thin air on a massive basis is all that stands between the current state of hidden depression, and overt depression with unemployment levels in excess of those seen in the US Great Depression of the 1930s.

2. It is the weapon of choice being used to wage currency war and reboot US economic growth.

3. It is the most effective way to meet not just current crushing debt levels, but to deal with the rapidly approaching massive generational crisis of paying for Boomer retirement promises.

4. Political survival and enhanced power for incumbent politicians.

http://www.financialsense.com/contributors/daniel-amerman/four-reasons-why-the-government-is-destroying-the-dollar

Authoritarian governments start stockpiling food to fight public anger

Commodities traders have warned they are seeing the first signs of panic buying from states concerned about the political implications of rising prices for staple crops.

However, the tactic risks simply further pushing up prices, analysts have warned, pushing a spiral of food inflation.

Governments in Asia, the Middle East and North Africa have recently made large food purchases on the open market in the wake of unrest in Tunisia which deposed president Zine al-Abidine Ben Ali.

http://www.telegraph.co.uk/news/worldnews/middleeast/8288555/Authoritarian-governments-start-stockpiling-food-to-fight-public-anger.html

The downsizing of America-manufactures learn creative methods of repackaging inflation.

There is a slow burn going on and it is happening in your wallet and also in the gas tank of your car. The US Treasury and Federal Reserve have made it their mission to slowly cut the value of each one of those green dollars you have. Since many Americans are struggling to make the monthly bills, many producers realize that they cannot up the price on regularly bought consumption products.

http://www.mybudget360.com/downsizing-of-america-oil-production-off-1980s-peak-repackaging-inflation-decline-us-dollar-purchasing-power/

Why the Smart Money is Trading Dollar Bills for Hard Assets

“With each passing day,” we observed last week, “inflation seems less and less a theoretical fiction, and more and more a genuine threat… No self-respecting economist or self-aggrandizing central banker is acknowledging any inflationary risk whatsoever,” we continued. “But the indifferent data points of real-world prices testify to the contrary.”

http://dailyreckoning.com/why-the-smart-money-is-trading-dollar-bills-for-hard-assets/