Posted on 11/03/2010 11:37:20 AM PDT by TSgt
WASHINGTON — The Federal Reserve launched a controversial new policy on Wednesday, committing to buy $600 billion more in government bonds by the middle of next year in an attempt to breathe new life into a struggling U.S. economy.
(Excerpt) Read more at msnbc.msn.com ...
There won’t be new life in this economy until Obama and his thugs are out of our house, the White House.
And we watch while, before our very eyes, Obama inherits additional deficits from George W. Bush. Astounding!!
Those people are insane. I’m coming around to Ron Paul’s position: End the FED!
bend over America
For those of us who are only semi-literate on the financial system, can you please give us a “For Dummies” explanation of why this will hurt us and what we might do on a personal level to protect ourselves?
Is it dangerous to hold government bonds right now? GNMAs?
It's not going to matter who's in the White House.
OMG!
Dropping a ping so I can hit this thread later.
I can only answer the first part. :)
They are essentially printing $600B U.S. Dollars, backed by nothing but air. This will drive down the value of the dollar and result in inflation.
I would invest in guns and butter.
Prices are going to be skyrocketing this coming year as the value of the dollar drops.
But the stock market will go up like Zimbabwe’s did when valued with inflated dollars.
what we might do on a personal level to protect ourselves?
Recommended investment vehicles: Bottled natural gas, consumable foodstuffs suitable for long-term storage, shotguns, and ammunition are good places to start.
If you listen to Glenn Beck (a backer of TARP), of course, you’d have that idea that Ron Paul did not exist that opposition to the Fed was all Beck’s idea.
Without Fed purchase of treasuries, USGOV would have trouble selling the amount of treasuries that must be sold, and the market would adjust by requiring a higher yield (i.e. rate of return) on the treasuries, which would result in higher treasury rates.
The Fed purchase of treasuries will help keep the longer term treasury rates down; however, the Fed’s ability to purchase year after year is limited, and once the rates do go up, the treasuries then held by the Fed will decrease in value, thus harming the Fed’s balance sheet, which would probably require a USGOV bailout.
In short, the QE plan is a means of putting off the inevitable pain of USGOV spending more than it has, but any plans to put off a financial burden only increase the severity of the burden once it comes due.
It would matter if the Congress wasn’t producing $3 trillion in debt in 2 years. Then this probably wouldn’t be happening.
I would add that inflation is a subtle form of taxation. This is a big pile of taxes that Obama is dropping on us, a day after we rejected his Big Government policies.
Wiki Case Study:
Zimbabwe Hyperinflation 2003-2009
Inflation rose from an annual rate of 32% in 1998, to an official estimated high of 11,200,000% in August 2008 according to the country’s Central Statistical Office.[94] This represented a state of hyperinflation, and the central bank introduced a new 100 billion dollar note.[95] As of November 2008, unofficial figures put Zimbabwe’s annual inflation rate at 516 quintillion per cent, with prices doubling every 1.3 days. Zimbabwe’s inflation crisis was in 2009 the second worst inflation spike in history, behind the hyperinflationary crisis of Hungary in 1946, in which prices doubled every 15.6 hours.[96] By 2005, the purchasing power of the average Zimbabwean had dropped to the same levels in real terms as 1953.[97] Local residents have largely resorted to buying essentials from neighbouring Botswana, South Africa and Zambia.
In 2005, the government, led by central bank governor Gideon Gono, started making overtures that white farmers could come back. There were 400 to 500 still left in the country, but much of the land that had been confiscated was no longer productive.[98] In January 2007, the government even let some white farmers sign long term leases.[99] But, the government reversed course again and started demanding that all remaining white farmers leave the country or face jail.[100][101]
In August 2006, a new revalued Zimbabwean dollar was introduced, equal to 1000 of the prior Zimbabwean. The exchange rate fell from 24 old Zimbabwean dollars per U.S. dollar (USD) in 1998 to 250,000 prior or 250 new Zimbabwean dollars per USD at the official rate,[102] and an estimated 120,000,000 old or 120,000 revalued Zimbabwean dollars per US dollar on the parallel market,[103] in June 2007.
In January, 2009, Zimbabwe introduced a new Z$100 trillion banknote.[104] On January 29, in an effort to counteract his country’s runaway inflation, acting Finance Minister Patrick Chinamasa announced that Zimbabweans will be permitted to use other, more stable currencies (e.g. Sterling, Euro, South African Rand and the United States Dollar) to do business, alongside the Zimbabwe dollar.[105]
On February 2, 2009, the RBZ announced that a further 12 zeros were to be taken off the currency, with 1,000,000,000,000 (third) Zimbabwe dollars being exchanged for 1 new (fourth) dollar. New banknotes are to be introduced with a face value of Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500.The banknotes of the fourth dollar were to circulate alongside the third dollar, which remained legal tender until 30 June 2009.[106]
I am investing in Ammo, Coffee and Jack Daniels....they will be very good items to barter when the SHTF.
JMO..
$600??? Holy carp- what happened to $300 and then a gradual ease to maybe $500?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.