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On June 8, in a financial world otherwise frothing with happy talk, money manager Michael Gayed posted a piece on financial analysis blog, Seeking Alpha, headlined, “The Summer Crash of 2011, Or the Great Re-Adjustment.” Read the whole thing here. Gayed wondered: If a bull market was truly on, why were defensive sectors — consumer staples, health care and utilities — -outperforming the broader market? Typically, these stocks are where investors run to hide in a recession. Oh, and why were bonds beginning to outperform stocks — -even as the Federal Reserve ended its QE2 bond buying program?
Now, the government collects less tax revenue than in did in 2008, yet its debt is trillions higher. “They know this,” Dempsey said. “That’s why they are desperately trying to create inflation… to pay that debt back with cheaper money.”