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“Fed never truly implemented tight monetary policies”
Code for stop printing more money.
The only people who profit from cheap money are the ones getting the money at the beginning.
Interest rates got so low that ‘cash’ investors sought other venues.
Thus, there was much less cash going into the interest bank/savings accounts.
Thus, there was less money available to banks to loan.
==
Retirees who rely on fixed income interest vehicles are being hurt severely. A few years ago, they were using interest to help pay their living expenses. Now, many of those accounts are paying such low interest that retirees are hurting, financially.
Yet, hidden in the statistics, living costs (food, utilities, etc) are increasing substantially.
Exactly my take on this article as well. And, I think the author is spot on. I recall many, many editorials from the editors of the WSJ warning Greenspan of major economic problems unless he closed the spigot - and fast. Those problems are upon us. Combined with federal pressure on Fannie and Freddie by Democrats to lend to those who could not repay, it was, to use a well-worn phrase, the perfect storm.
"The best policy response would be to do nothing and let the free market correct the excesses brought about by unforgivable policy errors. Further interventions through ill-conceived bailouts and bulging fiscal deficits are bound to prolong the agony and lead to another slump -- possibly an inflationary depression with dire social consequences."
And remember that we were led to our current predicament while Bush was supposed to be watching the hen house. He ran a very good war but his domestic policies will sink him as a great president. Spending as a function of GDP rose dramatically during his two terms and the Fed/Treasury policies during those eight years led us to the mess that we are in that the Socialists are "capitalizing" on to promote their collectivist policies.
We are in trouble. Obama is, as we all at least suspected, a Socialist with a capital S.
Worst Is Yet to Come:” Americans’ Standard of Living Permanently Changed
Posted Feb 17, 2009 12:53pm EST by Aaron Task in Investing, Recession
There’s no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.
But “the worst is yet to come,” according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American’s standard of living is undergoing a “permanent change” - and not for the better as a result of:
An $8 trillion negative wealth effect from declining home values.
A $10 trillion negative wealth effect from weakened capital markets.
A $14 trillion consumer debt load amid “exploding unemployment”, leading to “exploding bankruptcies.”
“The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car,” Davidowitz says. “A lot of that is gone.”
Going forward, the veteran retail industry consultant foresees higher savings rate and people trading down in both the goods and services they buy - as well as their aspirations.
The end of rampant consumerism is ultimately a good thing, he says, but the unraveling of an economy built on debt-fueled spending will be painful for years to come
marking