Rumours continue to circulate that former Fed Chairman Paul Volcker will be Obama’s Treasury or Fed chief. Volcker’s hardline anti-inflation stance makes him an exciting prospect for Greenspan/Bernanke critics. But Andrew Carpenter says we should also remember the painful recessions that Volckers’ interest rate hikes induced…

Chasing market moves is the worst way to invest, says Steve McDonald. And piling everything into one asset class will not work either. Over time, you will always make more money with a balanced portfolio. That means a suitable combination of stocks and bonds. Steve comes up with a simple formula to find a portfolio split that works specifically for you.

With the economy eroding at an alarming pace, it is no wonder investors are turning away from their former retail haunts filled with trendy, over-priced items.

Stores like Whole Foods (NASDAQ:WFMI) and Trader Joes are watching their customers head to low-cost competitors like Wal-Mart (NYSE:WMT) and Safeway (NYSE:SWY).

It is no surprise to see an ultra-cheap retailer like 99 Cents Only Stores (NYSE:NDN) climb its way to the sole spot on the list of companies reaching 52-week highs today. The global economic crisis has actually been the best thing to happen to the company’s share price in a long time.

The rationale behind the positive run is obvious. When the economy is in the gutter, consumers have less money to spend on the things…

No-one likes an economic correction, says Bill Bonner. But they are both “essential and helpful.” If left to its own devices, the market will sort out its own mess. But the Fed will never let this happen. And just like Japan in the 90’s, this will only draw out the suffering.

It was only a few months ago that some economists were screaming for a Fed rate hike to keep consumer price inflation under control.

Things have changed dramatically since then. The biggest economic fear for the foreseeable future is now deflation.

This from VOA News:

Economist Nouriel Roubini of New York University said that rapid decline in oil prices indicate that deflation is more of a problem than inflation.

“I think deflation is going to be the story, or what I refer to as ’stag-deflation,’ a period of economic recession and deflation,” said Nouriel Roubini. “And why do I say that?  We’re now seeing the beginning of a slacking goods market with aggregate demand falling relative to supply.”

Roubini says the commodity prices that were at…

History tells us that gold is the “ultimate antidote to fiat money” says John Pugsley. He says gold’s dollar price relative to other goods is now higher than the long-term trend. But no one really knows how much the buck has been inflated in recent years. And as price inflation returns “with a vengeance”, the gold bull run should resume.

Bill Bonner says the Fed will make this slump longer and harder than it should be. Bernanke & Co are using every weapon in their arsenal to prevent deflation. But they tried this during the Great Depression. And Japan tried it in the 90s. And both times they only managed to deepen the pain.

As expected, the Fed announced a 50 basis point rate cut today. The move brings the benchmark rate down to 1%, the lowest level since 2004.

The Fed said that inflation was no longer a threat and that the central bank will cut rates as needed to boost the economy, according to Marketwatch.

Importantly, the Fed statement drew no line in the sand at the 1% funds rate target, raising the possibility that rates may move lower.

The move raises lots of technical questions about having rates so low, but analysts said these matters are of less concern than ending the credit crunch.

The last time the Fed funds rate was below 1% was in July 1958.

With interest rates so low already, economist at…

There is no longer any doubt that we are heading for a deep, deflationary recession. But James Howard Kunstler is more worried about the “tidal wave” of monetary inflation that will follow. With the financial landscape washed clean, the economy will need to be rebuilt on productive enterprise.

The stock markets opened sharply lower again today. Steve McDonald says bonds are a much safer and more profitable alternative right now. Investors should stick to short-term bonds to maintain a flexible portfolio and limit market risk.