The US budget deficit will be addressed with more urgency as we near the “fiscal cliff” we discussed last week.  What will the consequences be if the deficit continues? We start this Mid Week discussion with an article on the subject from Bill Gross,  the Managing Director of PIMCO. We follow with a look into the recent drop in the unemployment rate to 7.8%.  Our third article warns of the risk of another global recession. We wrap this week up with an article about how central bank policy may affect gold prices.

Bill Gross Discusses The Consequences Of Not Reducing The U.S. Deficit – In his monthly commentary, Bill Gross of PIMCO states that unless we begin to close the deficit gap, the Federal Reserve will print more money to pay for the deficiency. Inflation will follow, and the dollar will inevitably decline.

Unemployment 7.8% To 22% – Is There A Better Method? – Last Friday, the Bureau of Labor Statistics announced that the unemployment rate had dropped from 8.1% to 7.8%.  Lance Roberts examines the calculation of the unemployment rate and alternative ways of measuring the rate.

Risk Of Another Global Recession Is “Alarmingly High,” IMF Says – The International Monetary Fund cuts its projection for global economic growth this year to 3.3%, the lowest since the recession of 2009.  The IMF says the chance of an even sharper decline with growth falling as low as 2% is “alarmingly high”.  The U.S. could slip back into recession if leaders fail to prevent a “fiscal cliff” of taxes and spending cuts from taking affect at year-end.

How Monetary Policy Affects The Value Of Gold – This article by Frank Holmes discusses the correlation between the central bank policy of quantitative easing and the impact on gold prices.

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 W. Ennis