What will be the effect of our present Federal Reserve policies on future inflation? We begin this week with an article by Bill Gross, who uses simple examples to explain Federal Reserve policy with a look to its long-term impact. We follow this with a reminder that the U.S. government has reached its debt ceiling of $16.4 million and may run out of money to pay its bills by February 15th. Kenneth Rapoza writes about how the Treasury is managing an additional period of fully-funded government operations. It it now up to Congress to raise the debt ceiling. Finally, we have a piece by Lance Roberts, who discusses three bullish points and three bearish points for 2013.  While no one can predict where the markets will end in 2013, it is important to have a measured approach to optimism where the relevant risks are given due weight.

Federal Reserve Policy Explained – In his January Investment Outlook, Bill Gross describes the Quantitative Easing Programs of the Federal Reserve with simple examples to help us understand the economics behind them.  Gross warns about the ultimate impact Fed policy may have on inflation in future years. http://www.pimco.com/EN/Insights/Pages/Money-for-Nothin-Writing-Checks-for-Free.aspx

U.S. Could Default On Debt As Soon As February 15th, Analysis Shows – The U.S. government will run out of money to pay its bills sometime between February 15th and March 1st, according to the Bypartisan Policy Center. On December 31, the U.S. reached the debt limit established by law, but the Treasury Department says it is implementing “extraordinary measures” that could delay default for about two months. http://www.forbes.com/sites/kenrapoza/2013/01/07/u-s-treasury-to-run-out-of-money-by-feb-15-study-says/

Bullish Points and Bearish Points For 2013 – In this article by Lance Roberts, he discusses three bullish points and three bearish points for 2013.  Of course, no one can predict where the markets will end this year.  Roberts advises a measured approach to optimism, where the relevant risks are given due weight. http://advisorperspectives.com/dshort/guest/Lance-Roberts-130107-Coin-Toss.php

We hope you enjoy reading these articles along with us and that you find them informative.  Please forward this to your friends and family.

John R. Day and Bill Ennis

 

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