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We stopped "debating" the inflationists a while back simply because their arguments had become too bloody stupid to endure. Obviously, they have not been playing with a full deck, since they continue to obsess over the absolutely useless textbook definition of deflation -- "a decrease in the money supply."  Rather than have you become confused by all the drivel and ignorant blather concerning the money supply, which virtually no one understands, we would rather that you see deflation for what it is: an increase in the real burden of debt. One of my ablest comrades-in-arms has been Mish Shedlock, a deflationist with more patience than I when it comes to dealing with the factually challenged.  In his latest commentary, Mish mostly agrees with some points concerning deflation made by David Rosenberg, an economist who has earned our respect. Click here  to access the article.

Frank Shostak  is one of our favorite economists because he talks plain-sense.  In a recent essay he wrote for Mises Institute, he explained why the government's huge stimulus efforts have failed to stimulate much of anything.  To make matters worse, says Shostak, if the feds continue down this path, seeding the banks with yet more money from nowhere, it will effectively destroy the real-savings base that is absolutely crucial to any recovery. Click here  to read his essay.

In the chat room, I've posted a note concerning an over-the-counter mining stock of interest. You can find the note at 16.22 hours.

Here's another sharp rebuke to all the yo-yos who think inflation is just around the corner.  The essay amplifies Hummel's thoughts -- published here recently -- on seigniorage, explaining why hyperinflations can occur only in currency-driven systems (such as Zimbabwe's), and not in nations like the U.S., where money has effectively been replaced by credit. Click here to read the full essay.  Here's an excerpt: "I agree with Pento on every point, except for one – a devastating bout of inflation is unlikely.  In the United States, two camps of thought dominate the marketplace.  The bullish camp believes that government interventions can be fine-tuned to hold inflation in-check, while allowing the economy to expand.  The bearish camp believes that government interventions will eventually unleash uncontrollable inflation that will send the price of gold, oil, and other commodities soaring to sky-high levels – while sending the economy into a prolonged tailspin due to reduced purchasing power. "But more than likely, both camps are wrong.  And the hyperinflation expected by the bearish comp is even more unlikely than the bullish viewpoint.  Why?  Throughout the world’s financial history, there has never been a case of hyperinflation in a country using a monetary-system based on credit.  Hyperinflations only occur in countries that use currency for money.  That’s an important distinction that cannot be overlooked. "A credit-based monetary system prevents severe inflation in two ways.  (1) During times of rising inflation, investors avoid bonds in favor of hard assets.  As a result, bond prices deflate, causing great losses for existing debt holders.  (2) During times of financial stress, bonds backed by questionable assets deflate in value."

Click here for a fine rant from Roger Mason on the true state of the economy.

Writing at Politico.com, here's Jeremy Lott on the increasingly likely collapse of the Obama presidency: When he ran for president, George W. Bush promised to be a modest reformer at home and a humble representative of the United States on the world stage. The Al Qaeda-organized-and-funded terrorist attacks of eight years ago changed all that. During his presidency, Bush created massive new government bureaucracies, sent troops into two wars and threatened more as part of America’s war on terror. Barack Obama’s initial approach to the office of the presidency has been as grandiose as Bush’s was restrained. It’s not hard to recall that he ran as a transformative candidate, promising sweeping, though somewhat fuzzy, “change” during the campaign. For the first several months of his presidency, Obama has labored to deliver on that pledge. He pushed a controversial stimulus bill through Congress to help rev up the economy, turned Bush’s reluctant bailout of Chrysler and General Motors into a giant government auto buyout and appointed a record number of “czars” to help regulate bureaucracies in both public and formerly private sectors. Then, Step 2. Obama is trying to fundamentally alter the American economy by backing sweeping environmental, labor and health care legislation. He wants to change the way Americans consume energy, unionize and see their doctors. So far, he’s failing miserably. Consider the following: • Cap-and-trade legislation had to limp over the finish line in the House of Representatives with the help of a few moderate Republicans, who then caught holy unshirted hell from their constituents. Environmental legislation generally has taken a drubbing in public opinion polls when people consider how costly it is. • The Employee Free Choice Act may be stripped of its “card check” provision in the Senate, which would effectively do away with secret ballots for unionization

From one Brian Heyliger, editor of Market Trigger Alert, I received a promotional letter -- "The One Myth About Trading You Should Know" -- that deserves to be widely shared. It offers some very useful tips on how to get your mind right for trading regardless of what system you use : I want to tell you something about trading you won't hear often... Trading has nothing to do with indicators and everything to do with you. Let me explain... The easiest things to learn are indicators and setups, but they have nothing to do with trading. You can memorize them, you can buy them, you can even program your computer to alert you when they occur. But the Achilles Heel of trading is this: YOU! There are numerous sites and gurus touting their products as the "Holy Grail" of making money in the markets. "Just buy my trading system and you'll make a million." Well, that's not actually true, because winning, stand-alone trading system won't work if you are broken... To trade a system successfully - whether it's something you've purchased or developed yourself - you need to have the correct mindset. The Paradox of 
'Holy Grail' Systems This may surprise you, but you can learn a perfectly good trading system, trade it, and lose money, while someone else trading the very same system makes a fortune. The only difference is between the winner the loser is the person trading - that's it! The traders who lose simply aren't following the rules of the trading system they designed (or purchased), unlike the winners. The key to making a system work is developing the discipline to follow the instructions. This is the hardest part about trading. Let's illustrate this with an example ... You just lost $1,000 on the last trade and

Were you aware that the Bureau of Labor calculates unemployment in various and sundry ways that are not shared with the press?  Neither were we -- until we heard about 'U-6," which reckoned U.S. joblessness at 14.8 percent back in February.  We would assume it's much higher now, but unfortunately February was the last month given.  Incidentally, if 1933's rate of 24.7 percent had been calculated using today's dubious metrics, it supposedly would have been lower by at least five to ten percentage points. Click here  for the link.

The following questions about my option strategies came up in the forum, but I am republishing them here because they may be of interest to a wider audience: What is the advantage of going long one call, and then locking in a given spread via shorting another call, versus “locking-in” the spread by going long on puts instead? My answer below is more generalized, but to address your specific point, we should prefer to "lock in" a profit by shorting a wasting asset rather than buying one ourselves.  For most option traders most of the time, shorting calls is MUCH more profitable than buying puts.  Indeed, in the several decades I have been trading options,  I cannot recall a instance when put buyers were happy for more than three consecutive days.  Even those who owned puts ahead of the 1987 crash had just two days of sheer bliss to get rid of them. Is it that in the latter scenario, one is long twice, and can thus get screwed twice by the pros? I always thought the latter scenario would be a good one in cases of low implied volatility, where the loss on one is mitigated, and the gain in the other is increased when implied volatility rises during larger underlying moves. (That may just be retail-customer theory, which the pros have long beaten. But what do I know? I’m still waiting for someone to start offering straight options on the VIX. Thanks! &&&&& The spreads I prefer are intended to provide a highly leveraged shot at big profits, but without the usual, horrendous time decay. This tactic is especially useful if we expect a stock to rise (or fall) over a period of several months. We also seek to take advantage of fleeting spikes that goose option volatilities to the moon.