Posted on 11/08/2010 9:05:58 AM PST by balls
NEW YORK (TheStreet) -- The question being asked all across the world of business news is: Will QE2 be successful? Because this policy is literally economic suicide, the question becomes: Will the Federal Reserve be successful in the assisted economic suicide of the U.S. government? I find this an utterly appalling question -- which highlights the intellectual bankruptcy of government policymakers and the bankers who goad them onward.
Quantitative easing is nothing more than a euphemism for printing money out of thin air. Its one-and-only purpose is to destroy the currency being printed. It is pure dilution and absolutely no different than a corporation vowing to improve its fiscal performance simply by printing a lot of new shares.We can illustrate the inherently evil nature of this monetary abomination by working through the "mechanics" of this policy. First, the explicit goal of QE2 is to increase inflation. By now, all readers should be familiar enough about "inflation" to know that it is literally nothing more than the speed with which our currencies are being destroyed.
I went on a one week vacation to Hawaii and checked junk silver prices for the first time since I left. In on week the price of Junk silver went up $3 an ounce.
That’s a gain of over 12% in one week.
QE1 failed, so what do liberals demand? More of the same “medicine” that made the patient sicker.
This can cause inflation, which inflates the numbers by which economic statistics are reported, leading media types and other intellectually deficient individuals to say that the economy is improving.
>>Quantitative easing is nothing more than a euphemism for printing money out of thin air. <<
I put it in this perspective: All money is loaned into existence. This means that when someone pays off a loan or defaults on a loan, it shrinks the money supply and is basically deflationary. But when QE happens, it is inflationary.
Right now, for every trillion being created, three trillion is being vaporized via the credit meltdown. IOW, they are trying to stave off deflation right now. However, it is a balancing act, and a bit like trying to bring in a damaged airliner in that it takes a while for control input to affect the plane’s flight patterns.
IOW, they could over react and put us not only in inflation, down the road, but hyperinflation not long after that.
I think the price of silver going up right now is that people are forgetting that we are actually in a deflationary period right now (regarding the quantity of money) and they are reacting to perception, rather than reality.
But then, isn’t it all based on faith, or lack thereof?
BTW, all this falls under the umbrella of “IMO”, and I am NOT an expert.
The reality is that every American taxpayer is on the hook for about 1/4 million dollars. The debt is that vast.
There is no way to pay the debt without either selling assets, growing the economy or devaluing the currency. Guess which method your Government will choose.
The dollar in your pocket will sharply devalue (by about 75%) sometime in the next 18 months. However, your silver and gold will not devalue - it will retain the same buying power it has now.
This fact explains everything you need to know about the so-called ‘bubble’ in precious metal prices.
And Sarah Palin is starting a fight with Bernanke related to this issue!
FIGHT SARAH FIGHT!
>>However, your silver and gold will not devalue...<<
It’s looking like stocks won’t either. :\
Some have argued they cannot print it fast enough to stop a deflation spiral.
When the devaluation happens, commodity stocks will go to the moon.
I wouldn’t hang onto airline stocks, or any business that needs to buy fuel. Or (=shudder=) real estate. Or manufacturing.
Big banking stocks - these will go up, simply because their debts and liabilities would have disappeared. Sensible banks will crash in price as their assets drop in value.
“However, your silver and gold will not devalue - it will retain the same buying power it has now.”
If only it were that simple, I would move everything into gold. In reality, gold is held by huge investors, such as India and China, and they can move the price in either direction a hearbeat. When gold drops in price, which it will at some point, it will do so violently (and make the 2008 market crash look like a picnic).
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.