NIA Releases U.S. Economic Update

FORT LEE, N.J., March 5 /PRNewswire/ -- The National Inflation Association today released an economic update to its http://inflation.us members:

The Bureau of Labor Statistics (BLS) released unemployment numbers today for the month of February 2010. We saw a payroll decline in February of 36,000 jobs. If you discount the hiring of 15,000 temporary census workers, 51,000 jobs were lost. The official unemployment rate stayed the same at 9.7%, but including "discouraged workers" the U-6 unemployment rate increased by 0.3% to 16.8%. Interestingly, the BLS revised payroll data for April through July 2009, which included the addition of 54,000 payrolls in April of 2009 for people that had been hired in preparation of the census. If the BLS can't accurately count the number of people hired to work for the census, NIA wonders how on earth these census workers will be able to accurately count the hundreds of millions of people living in this nation?

If you have recently watched any financial show on television, 90% of the guests talk about the "economic recovery beginning to take hold." NIA believes it is impossible for there to be an economic recovery when the imbalances that need to be corrected are growing larger than ever. Although U.S. consumer spending was up 0.5% in January, the U.S. savings rate fell to a 15-month low of 3.3%. In order for our economy to be on a road to recovery, we need to see a sharp contraction in consumer spending along with a savings rate north of 10%. The truth is, any positive U.S. economic data only serves as an indicator that inflation is beginning to take hold.

We receive countless emails from NIA members on a weekly basis asking about what countries would be best to move to in the event of economic chaos in the U.S. Reports coming out of Greece that tram, rail, subway and bus services have shut down as employees protest cuts in bonuses and other holiday payments, are only a small preview of what could potentially happen in the U.S. as our government approaches default. Our hope is, we can educate America about the upcoming hyperinflationary crisis before it takes place, so that we can replace most of the politicians in Washington today with new representatives who will cut government spending and allow the economy to enter a much needed recession.

This past Tuesday, a couple of NIA's co-founders attended the Republican Debate for the U.S. Senate in the State of Connecticut. Although the format for the discussion did not allow for much debate between the three candidates, it is our belief that Peter Schiff was the only candidate who demonstrated the knowledge of what needs to be done to prevent hyperinflation. Linda McMahon is someone who we greatly respect for building World Wrestling Entertainment (WWE), a business that employs 500 people and entertains millions of Americans; but based on her support of the government's destructive TARP program, we believe she would likely be another Republican that acts like a Democrat after elected. Rob Simmons is someone who we greatly respect for his service to the country as a former member of the U.S. Army who earned two Bronze Star Medals, but Rob Simmons has absolutely no business or economic experience. We stood up and cheered after Peter's closing line of the debate, "if you send me to Washington, I promise you one thing, that town will never be the same again."

Canada is now taking steps to implement a new five-year plan to cut government spending and reduce its budget deficit from C$53.8 billion last year to only C$1.8 billion in 2014 and achieve a balanced budget by 2016. Australia's central bank has now raised its benchmark interest rate in 4 of its past 5 meetings to a level of 4%. Australia has been increasing exports of iron ore and other raw materials and is now on track to see a small trade surplus by the end of 2010. If the U.S. doesn't take steps soon to follow in the footsteps of Canada and Australia, instead of Zimbabwe, we could see massive emigration out of this country.

We previously reported how China reduced their U.S. Treasury holdings in December by $34.2 billion. It appears as though China is now beginning to spend their U.S. dollar holdings to acquire assets in the U.S. at depressed levels. China's overseas investments rose 6.5% in 2009 to $43.3 billion and could reach $60 billion this year. Although China's non-Treasury U.S. asset purchases last year were only $6.4 billion, this number could explode in 2010. China has been acquiring shares in U.S. companies like Coca-Cola and Johnson & Johnson. This does not show that China believes in a U.S. economic recovery. It only shows that China is becoming increasingly concerned about U.S. inflation and believes that U.S. stocks are a better investment than U.S. dollars.

NIA believes China is continuing to quietly acquire gold reserves and plans to acquire the gold sold by the IMF in the open market. It was last reported that China's gold reserves are now 1,054 tons, equaling just over 1% of its total foreign currency reserves. In order to ensure the stability of their foreign currency reserves with a declining U.S. dollar, China needs to rapidly increase its gold holdings. The Chinese newspaper China Youth Daily recently quoted Ji Xiaonan, chairman of the supervisory committee overseeing large state-owned enterprises under the State Council, who said, "We recommend China increase its gold reserves to 6,000 metric tons within three-to-five years and possibly to 10,000 tons in eight to 10 years."

In our opinion, a breakout in the price of gold along with a reversal in the recent U.S. dollar rally is likely to occur in the months ahead as we see more clarity in the Greece situation and proposed IMF gold sales. With the St. Louis Fed's Adjusted Monetary Base surging by $90 billion in the recent weeks to a record $2.184 trillion, we see little downside risk for precious metals at this time. It is only a matter of time before the world wakes up and realizes the U.S. economic recovery is phony and the only way our debts will be paid back is through monetization.

To receive NIA's latest updates about inflation and the economy, sign-up for the free NIA newsletter at: http://inflation.us

About us:

The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. The NIA offers free membership at http://www.inflation.us and provides its members with articles about the economy and inflation, news stories, important charts not shown by the mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul, Peter Schiff, and others; and profiles of gold, silver, and agriculture companies that we believe could prosper in an inflationary environment.

Contact: Gerard Adams, 1-888-99-NIA US (1888-996-4287), [email protected]

SOURCE National Inflation Association