The U.S. Labor Department just released the August non-farm payroll report. The major stock market futures continue to decline after the report signaled that there were zero jobs created in the month of August. The Labor Department actually used some creative transformation vocabulary calling the job report unchanged which actually means zero jobs created. Oh what a world we live in. The European Union is also facing major problems this morning, the second Greek bailout deal seems to be falling apart by the minute. We can now only wonder when Greece will go back to the Greek Drachma. Many traders and investors are now wondering if the Federal Reserve is going to have to put QE-3 back on the table. We can all see how well the last QE-2 worked. In any case, the S&P 500 Index e-mini futures (ES U1) are trading lower by 18.75 to 1182.50 per contract.
What a grim jobs report. I think Obama’s plan to reduce it to 8.2% in the next 12 months is looking quite bleak.
The bottom line is that we are still facing deflation. People who are calling hyperinflation and the crash of the U.S. treasury are not taking into consideration that United States is not like an Argentina and a Weimar Republic. Its economy is so interwined with the rest of the world that its currency and treasury simply cannot go bust. They might depreciate but that’s about it.
When people compare Rome to the current United States, they are not comparing apples to apples. The world has never been so inter-dependent like it is today. It is inconceivable that China would dump U.S. treasuries or U.S dollars because that would cause its own demise. The same applies to the rest of the world.
It is really the interdependency that prevents United States from going bust nothing else.