This month the Dow surged almost 9% making it the best July in 20 years for the index. Furthermore, the GDP is declining at a slower pace than expected, which is good. See graph:

Was it the stimulus? Unknown, but doubtful. What is known is that as of the end of May, only 6% of the money designated to directly boost the economy was actually spent, with only 5% more planned for the rest of the year. The administration admits that much of the money will be spent next year… how convenient. As I wrote before, the cyclical nature of the market means that we will eventually recover and in fact, this recovery is being seen in different parts of the economy but not much as a direct measurable result of the stimulus. Even the administration’s fictitious claims of creating or saving 150,000 jobs does not come close to the millions of jobs lost the year.

The problem is simple: the economy is showing some signs of recovery already and if we get a huge infusion of cash into the market in the middle of an upswing, we risk inflation. Already, the dollar has weakened and may weaken further, even though just a few months ago we were talking about deflation. By running the US dollar printing press on max to solve our problems all that the administration has done is kick the problem down the road. The collapse of the dollar is worse than a global recession because while the latter affects everyone, the former shifts the balance of power in the world. There are many reasons to oppose or criticize the Obama administration but the most serious one is the unsustainable fiscal irresponsibility because, coupled with foreign policy weakness, it will lead to the end of American superpower status.

-AG