the whole solution to the problem is let the system cleanse itself,failures prune the dead wood,goverment intervention into mitigating recessions have gotten us to this point-no one wants to say what everyone knows the system is broke beyong repair this time–only wholesale debt moratorium is left-once this is done our system then will become entirely socialistic,communistic,–say good bye to america as you knew it
Seems like the banks could solve our problem if they would simply drop credit card rates to realistic corresponding levels vis-a-vis the super low 0% rate they are now paying. Why isn’t Congress jumping banks’ butts about this instead of fussing about executive pay which is a spit in the bucket????
Interest rates are, simply put, the “price” of money. And it is subject to the same formula for exchange that other goods and services are: MV =PY. M is the supply of money, V is the velocity of that money, P is the price level and Y is the quantity of goods and services produced in the economy.
As long as V remains low, no matter what government does to change the existing amount of money (M), the PY side remains UNAFFECTED. But this is the side that has to change in order to get the economy moving. Thus, government is IMPOTENT to do what it says it wants to do as long as it does not create any REAL GOODS AND SERVICES for the economy of the USA!!!! And a zero interest rate is a clear sign of impotence if I’ve ever seen one!
as a physics major in college I am interested in why V is called velocity in the above equation as M is money and P is money and Y is units. So you have money * velocity = money * units which means velocity = units. But there is no time element to the equation.
Now if Y was units per time period then you are talking then the equation makes sense. For x amount of money at some velocity y units per day you can generate what the price of goods are if you know the production of goods and services z per day.
But this seems to assume that money only moves as the goods and services do in the economy. But as the crash has shown us more money was lost than goods or services have been lost yet. We are at 7.2 percent unemployment yet the money supply at banks has gone from a high of 50 to 1 leverage to 10 to 1 leverage which means a drop of 80 percent in the money supply. Thus we should expect the unemployment rate to be closer to 80 percent and not 7.2 percent.
This math seems too fuzzy to be of any use.
Interest rates are, simply put, the “price” of money. And it is subject to the same formula for exchange that other goods and services are: MV =PY. M is the supply of money, V is the velocity of that money, P is the price level and Y is the quantity of goods and services produced in the economy.
As long as V remains low, no matter what government does to change the existing amount of money (M), the PY side remains UNAFFECTED. But this is the side that has to change in order to get the economy moving. Thus, government is IMPOTENT to do what it says it wants to do as long as it does not create any REAL GOODS AND SERVICES for the economy of the USA!!!! And a zero interest rate is a clear sign of impotence if I’ve ever seen one!
As a saver with no debt, I’m not real happy about low interest rates. However, I do accept that they are a tool to be used. The key is flexibility and the willingness to use different tools to try to soften the recession.
That said, the amount of money being pumped into the economy must lead to either much higher taxation or to inflation. Higher taxation is probably politically unacceptable so the chance are that we will get inflation.
At that point, the Fed has to decide which is the worse of two evils. High inflation or a longer recession and adapt their policy accordingly.
In the meantime …… buy some gold.
I see many people saying that deflation is very bad, but look at Computer Industry and Consumer Electronics. They always were operating in deflationary environment. Their products continue to become better and cheaper and still they were doing OK. The only who afraid of deflation are irresponsible borrowers who need to return money which they wasted. Unfortunately our Government is one of them.
Did Japan go to super inflation after 10 years of zero interest rate??? Ask yourself the basic question!! Start think out of the box your teacher put you in when your were in college!
This severe economic slump is not caused by a NORMAL RECESSION, it is caused by the SUBPRIME crisis with unprecedented 6 million homes in foreclousure and rising unemployment soon to double digit, the worse since the Great Depression of 1920’s. If we let the recession to work itself out as in the past and rely on the housing market to revive the economy it may take 6 years but chances are more business will fail and unemployment will continue to rise in this never-ending downward spiral. Without any government stimulus rescues plans, we are definitely heading for another Great Depression and in the process, dragging the world down with it.
Those are object any stimulus plans must be vicious foreigners or rich Americans who couldn’t care less about the economic survival of the nation. But as the ship of the American Empire sinks, so will all crews of Americans on it.
Government must exercise any means and any stimulus plans available and time may be running out. There is no better plan then letting rich investors in WallStreet to jumpstart the economy by initiating euphoric ecstasy of investment activities. The economic problem was caused by the financial sector, the solution must come from the financial sector.
To everyone here who says that the fed MUST keep rates lower because if the economy doesn’t start moving “now” we will be in a depression soon –
This is only a valid point if lower rates from the fed will stop a depression. They wont. They will, in fact, make it deeper and longer.
If we had been willing to go into a recession after the dot-bomb, we wouldn’t be going into a depression now.
Take your medicine kids.
All the negative comments and anti-rescue plans are from foreigners who are here to destroy America. American are patriotic, positive and faithful citizens and the U.S. government is brilliant and its will and policies are lifeward, not self-destructive, else it would never has been a world super-power. As economy recovers there will be strict regulations imposed to clean up and prevent corporate fraud. Coporate profits and banks’ profit will return to tax payers’ investment many folds. The world forever needs a leader and a Financial Standard. U.S.’s debt will be eradicated by world nations in due time as it did to its debtors. Gold price will go down to $400 after 2013 and will be oscillating beween 400 and $1,000 into the distant future, it will not be as doomsday sayers’ forcast of $5,000 or more per ounce. U.S. will always maintain its status as the world supper power, both financially and militarily, for as U.S. ceases to be the world’s Standard, the current civilization, as we know it will follow one of Nature’s Bell Curves one dust to dust.
May God bless America.
Keeping it low increases the risk of inflation, which is believed to be easily combated by raising rates… or is it? How many countries lost that battle since the 80’s? Israel, Russia… to name a few. What makes us better than them?
When Greenspan lowered the interest rate to 1% and held it there for so long it caused the inflated housing mess we have now. It is rediculous to start the same process all over again by holding interest rates at zero percent. Also, many retirees depend on interest from their CD’s to survive on and they are being killed.
Instead of referring to the U.S. Depression of the 40’s, I am confused that no one has mentioned the hyper -inflation of Germany in the 20’s. The U.S. lowered interest rates here. In the U.S. in the 80’s they didn’t lower the interest rates. I think we are headed for hyper- inflation. I have read many articles on the internet that point to that scenario. BUY, BUY BUY. Or risk loosing your money in the bank. Also, stock pile rice.
The Fed really has no control over the money supply. The Fed can only control the Monetary Base, therefore; if banks are not lending or lending very little, the money supply is not increasing that rapidly especially since money demand has increased. In addition, the Fed can always withdraw liquidity from circulation as needed. Our current financial situation calls for aggressive monetary, and now, fiscal policies.
There are worse places in the world to live. Imagine living in Argentina during their last financial crisis. Lenders (bank depositors) were not allowed to withdraw their funds from banks over 1 year. And, when they finally could have their funds, the funds were devalued by 1/2.
Low interbank rates will not, by themselves increase the money supply or add to inflation. That will only happen if the reduced Fed rate is reflected in the rates charged on real loans made so that business can grow and people can buy houses and cars.
You never can tell when changes in the Fed rate will have an impact on other lending rates. If this were not true in the past it is certainly true now. The Fed rate is essentially at zero and some other rates have followed such as CDs, Treasuries and US Agency note rates. Other rates have not, in fact muni bonds are going for almost absurdly high rates. In recent weeks you could buy muni bonds with a 30 year maturity for as much as 8%. That rate will not create inflation. And remember that interest is tax free so If you invest in munis at 8% it is like getting a taxable return in the neighborhood of 10%, plus munis with a B rating are ten times less likely to default that corproate bonds with a A rating.
If I was one of you retirees out there I wouldn’t be complaining about low CD rates, I would be buying as many muni bonds as I could.
Mortgage rates certainly have not reflected the drop in the Fed rate, nor have car loans or credit card rates.
Let’s not forget that, according to the laws of supply and demand, inflation is caused when you have too much money chasing too few goods. In a shrinking economy (i.e. a recession) the opposite happens. We will not have inflation until (and unless) demand for goods out-strips the production capacity.
By the way, blaming te housing and oil bubbles on low fed rates in the 90s is naive and comes from those who blame the government for everything bad that happens and unquestionably extoll the virtues of the free market.
Given all of that, I am nervous about the low Fed rates. When you get beyond the basis of the science of economics it is not very good at predicting the long term effects of any action made by any player, government, individual or corporation that has the ability to unilaterally take actions on such a scale that it can impact the entire economy. We should remeber that before we become profits of doom based on current conditions and the action that are being taken to improve them.
Given the extent of the economic crisis inflation concerns should be at the bottom of everyone’s list. Alan Greenspan spent a lot of time, energy, and interest increases on inflationary concerns that were no where to be found.
Inflation isn’t as simple as we like to think.
Companies raise prices only when they either must or think they can get away with it — which amounts to when their competitors will follow the price increase instead of trying to seize market share by keeping prices down.
When the physical plant to increase output already exists but significant portions are idle, companies usually try to seize additional market share instead of following a price increase. It is only when variable costs [such as labor] go up or companies are operating near capacity that they follow price increases and thus create inflation.
In the present environment, plants and factories are not operating near capacity and labor costs are quiet. Thus, companies have little pricing power or may try to expand markets by lower prices, instead of raising them.
While inflation isn’t dead, it is dormant. For a while, we can probably get away with almost zero interest rates and lots of available money.
Of course, if Congress decides to “help” the worker by mandating significantly higher wages, or higher health benefits, or a tax in lieu of such benefits, then variable costs will go up and you’ll see inflation in the face of low interest rates and loose money.
lets see:
1- banks borrow money with no interest from fed.
2- High Federal deficit spending
3- reduced imbalance of trade (from consumer spending slowdown) means less cash sent overseas
4- lower oil cost means $1.5B a day more left in pockets
could inflation pop up??? Du ya think??? Duh???
If the government wants to really jump start the housing marking, put the conventional 30 year mortgage at 4.5% like they’ve been talking about but also lower the jumbo 30 year to 4.5% as well. Raise the jumbo threshold for all states where it’s currently under $500,000 to $500,000. And to top it off, allow any current homeowner who wishes to refinance, to use the last appraisal on record. This will allow the millions of current homeowners who are looking to sell their homes be able to stomach a lesser selling price because they can still buy the bigger house they want. They’re the real buyers. The low rates will allow first time buyers more flexibility and stability when buying and allow current homeowners to move their properties easier and buy up the large spec home glut. This will really jump start the market and start to reduce the pent up inventory. It’s a win/win. Of course this program should only be available for a limited time but you would see a large portion of households with expendable income start buying and spending money again.
The root of the recovery is people feeling confident they can afford their homes.
Bernanke is doing an excellent job – couldn’t been better timing to have a fed governor who is expert on great depression. He will OF COURSE raise rates if inflation becomes a concern – as it appears from current indicators DEFLATION is more of the 2009 concern.
When the wine truck driver asks the Washington elite to pay in gold, then they will understand better the magnitude of the problem we are facing.
- Raise the Fed rate to 6% immediately
- Cancel all TARP funds
- Cancel all other bailouts
- Dissolve the large banks that were non prudent with our money
- Remove the Federal Reserve from power and give the ability to make money back to the United States Treasury.
This, or get ready for inflation that makes 1982 look fun. Inflation is NOT contained, it’s readjusting for an incredible run of the likes Bernanke can’t even imagine, even with his pocket calculator.
In all, I bet the US Dollar will be doomed in 3-years time.
What a shame for a country to be run by a bunch of total idiots.. Fire all the big guys who are given the TARP money..
Freeze all the assets of this guys stil dont how to spend and invest the TARP money..
Make them live in a some housing project on unemployment for a year and let them learn the struggle of a common citizen.
Create more jobs– results in keeping your home– results in paying mortgage—results in going out and spending money– results in money revovling in retail and small business..
Bottom line in US, today your life is tied to a job….
Adios…Rocky , Miami, FL
Bailing out the banks only helps the banks because they aren’t lending the money they were given. We are ‘A’ credit people and cannot get a decent loan. If you raise the rates, no one will be able to get a loan. So go ahead, you’ll be watching the economy sink even lower. People can barely afford to buy necessities as it is, myself included. I thought prices of grocery items would drop when gas prices dropped, but suppliers are trying to get every penny they can. And by the way, not everyone wants to be in debt. Why try to lure people into going further into debt by offering more loans? Give us some relief through lower prices on everyday necessities.
An educated public is an essential ingredient of a free society. Ambitious governments would have far greater difficulty implementing schemes that undermine liberty and prosperity were they faced with an informed and vigilant population.
Our government and monetary system do not work for we the people, we the people work for it, as slaves.
You’d think by now, with all the information & technology, with all the abundant resources and all the previous history, that we as a people would be able to be free in the sense of, absence of debt.
We pay and labor our entire lives realistically to support an quasi-empirical empire who’s only objective, being monetarily based, is PROFIT & expansion of Big Government.
Our society is being held back by the amount a time required to sustain any kind of decent quality of life. and for what? to be SAFE? to be Happy? No, to continue to fund a corrupt government that serves corporate interests, not the peoples, it serves profit interests.
How many support the bailouts?
How many agree with the government’s forced social security ponzi scheme?
How many agree that our government isn’t serving it’s peoples interests but only corporate big business interests?
How many agree that we want a privately owned central bank controlling our monetary policy?
How many agree that our economy will improve with more government spending of future debt that my generation and all 3 of my children’s generation will be immorally obligated with?
Enough is enough.
We must reject being held hostage by a monopolistic monetary policy!
Our economy has become one giant Ponzi scheme. Instead of taking money from new investors we borrow money from the future to shore up the present. Ponzi schemes don’t tend to be viable long term economic models, but very few in Washington and on Wall Street have figured that out yet. OK, maybe they did figure it out but, they don’t care as long as they can make off with their loot.
rEVOLution!!!!
Why should we the people of the United States accept and support a system that only serves for the interests of profit & Big Government expansion & not for the perpetual benefit to humanity?
Duh, give me 10% credit card rates and 6% bank saving rates and I’ll loan the banks my money. Current rate of .25%-.50%, no wonder they cannot get anyone to save.
All Americans can kiss their ass good by as we head for 3rd and possibly 4th world economic status in the next few years. Remember how we got here and anyone who believes more debt is good does not know their world history very well. American is about to be face planned as we fall from superpower status to Zimbabwe status as we experience shortage for everything once the world stops taking our fiat money and that’s only a few years away at best. We all got greedy to some extent and wanted our immediate gratification but now the bill is do and we can’t pay for it. Learn to grow you own food and do what our grandparents did during the last depression or be prepared to perish since the USA has no friend it can count on.
What the Fed giveth, the Fed can take away just as quick.
I’m not worried except we CAN NOT have deflation. All indicator show deflation. Deflation is a disaster to a free economy.
Yes, the government is punishing saving and rewarding spending….thus why you can not have an economy based on 70% consumer spending.
Gee, what if the so-called “Stimulus Package” included a much larger than $600.00 tax-refund (advance of our own money), say in the neighborhood of $6000.00 per tax filer…… wouldn’t that stimulate the economy, duh ??!! Most would SPEND it and some would DEPOSIT it in a bank. Isn’t that what we are missing now… money being spent and money in the banking institutions. Well, I guess that’s tooo much common sense.
VISION FOR THE FUTURE:
As happiness is initiated by a spark of emotional stimualtion and a wide spread forest fire starts with a spark of light, a global economic boom can be triggered by the rising prices and rising demands of Natural Resources. The continuous decline in the U.S. dollar will soon cause commodity prices to rise. Trade balance will also improve as exports will rise. Increasing demand of raw materials from government stimulus construction plans and and from China in its continuous modernization will further stimulate prices. The Resources Sector will be stimulated by trillions of dollars of investment funds sitting on the sideline. Increasing demands and investment activities in the Resources Sector will stimulate transactions between banks and the investment community and will break the dead lock of credit crunch resulting in the resumption of lending and borrowing. Increasing activities in the Resources Sector will result in job creation directly and indirectly in machinery manufacturing industry, transportation industry, financial industry etc… Increasing employment will lead to increasing consumer spending which in turn will lead to more job creation with a snow-ball effect. As economy recovers and inflation rises by 2013, surging interest rate and a mild recession will keep inflation under control. Subsequent economic recovery will return the global economy to its natural bio-rhythm. As affordable Green Vehicles that do not use one drop of gasoline roll out of production lines prior to 2020, DJIA will be propelled to 20,000 area by 2029 by the new innovation.
The long term DJIA (1999-2029) may be forming a 20-year Head&Shoulder formation with a double peak at 14,000 and a Neckline at 7,500.
http://www.futuresbuzz.com/dow30lt.html
Good luck and May God bless America
There is no threat of inflation, more dangerous is de-flation. We have been far to the left of the Phillips’ curve since the dot-com thing collpased. Oil is low now, and aggregate demand has collapsed. Between excessive imports and the flood of illegal alien workers, there is not demand-pull, or cost-push threat of inflation.
These idiots that control the Fed and the US banking system don’t have a clue
what the average guy has to put up with.
To hell with savers and the older folks on fixed incomes that depend on CD’s and fixed equities for their day to day income to live. Morons…
Our government has led us to believe that we cannot ever have another recession. The Federal Reserve is no longer an independent organization but a polical puppet of Washington. This intervention into the free markets will only make the patient suffer more. We cannot lower interest rates any lower. Now in order to prevent any decline in employment or GDP we must do something quickly (similar to the 700 billion bailout that they botched) or we will have God forbid………..A RECESSSION!! So now since the interest rate gig did not work we will need to spend (again, as quickly as possible) huge sums of money that we don’t have and financed by simply printing more of it. In my economics classes in college I learned a very nifty graph that was called supply and demand. When you had too much supply of something it always became worth less. Kind of what our currency will be a year or so from now. Very easy principle to understand unless your a worth less member of Congress. (Get it) So we will get a huge spending bill that will save us all by giving boatloads of money to projects to States, unions, teachers and every other special interest group and lobbyist that put you in power that will have very little to do with actually creating anything except a huge bloated bureucratic nightmare and leave us holding the bag. Believe me, wait until you see the feeding frenzy that develops around this bill if you thought what happened to the 700 billion , I mean 850 billion TARP program. (150 billion went to other non essential dire economy saving “projects”)was bad. So now that we have spent the first 350 billion of the TARP money and still don’t have an oversight board, or have a clue where, or for what it went to, we want our hands on the other 350 billion. If I am a politician I am in Pigs heaven right now and the trough is overflowing. But first, as a contigency to implementing this money, Congress wants to get banks to help out the poor souls that overextended themselves with those mortgages that they could not afford. Keep in mind that it was Congress who gave Fannie Mae the green light to guarantee those mortgages in the first place so that those poor souls could own their own home (briefly as it may be)and those mortgage companies and banks could write them without worry that they could sell the stinky mortgages to the government. Since it is imperitive that we need to get the banks to restructure the loans for these people (which 60% have defaulted again after loan workouts)we are going to pass a bill to now allow bankruptcy judges to rewrite the contract between the banks and the home owners to more favorable terms so they can default for a third time so we can further prolong the housing problem. This is already ion a bill (sponsored by embarassingly, a Congressman from Mchigan) as the stipulation for getting access to the second 350 billion of our money. So here is what happens if this passes. As a banker, if I have someone come into my office to get a mortgage, you better have an 800 credit score and be willing to pay 10% interest to cover my risk. That way if a judge needs to rewrite my contract at some time in the future to 6%, I will at least be at prevailing rates. If not, since you have the best credit score, you will end up covering my risk by paying 10%. Lucky you. If you have even close to marginal credit, you can go pound sand. This is what Congress is going to do to solve the housing crisis. Brilliant!!! Now if I am a buiness person and getting ready to default on my loan you bet your butt that I am going to sue to have that judge rewrite my loan to more favorbale conditions. It is called cramming the mortgage sown the lenders throat. Barney Fudd-Frank(He talks like Elmer Fudd, doesn’t he?)shouldn’t be held responsible for his lack of how markets work, he has worked in public office his entire life. We are overmedicating the patient, recessions are ways that the economy corrects itself and how we wring out excesses. We have been through them before and will go through them again. These people need to stop being part of the problem and start being part of the solution.
I suggest they take the interest rate up to 20% like in 1980- all done to keep people from overspending and this should curb the credit problem immediately.
First and foremost. Before we do anything else, let’s “clean up toxic waste.” The government (whomever that may be) mandated that those responsible for toxic oil spills expend the money to clean it up. Good. Now, let’s play by the same rules for those who created (or sold) the “toxic loans, bad paper and so on and so on.” That would be the Wall Street Execs who benefitted from their ill gotten gains and left us (remember the taxpayer) to clean up. Take away those bonuses before they bailed and it probably would be astounding how much money could be circulated in the economy. First things first.
The Federal Reserve has been flooding the financial system with dollars but still I don’t hear about how the U.S. economy is rebounding. Why is that? Answer – because the U.S. economy is still an expensive place to produce goods. Solution – flood more dollars into the financial system so that the dollar loses value thus making the U.S. a cheaper place to produce goods. Of course, the U.S. workers will be poorer but, as we know so well, the rich will still be rich.
Rates should be increased drastically as soon as possible.
People should immediately lower their standard of living (those who can) by 50%.
Then maybe we can produce something of value ourselves again at a sustainable rate.
Then maybe we will survive as a nation.
I think it’s time to start giving the TAXPAYERS the bailout to pay down some of the debt, which in turn will go to the banks anyhow. Rates shouldn’t have been dropped all the way to 0%…we should be at 1% until we’re out of the woods.
Hyper inflation is all but certain. Reduction in oil production and many other commodities will have the supply side crippling growth and fueling inflation.
Consumption is what brought us to this point. How about some good old fashion frugality and saving??
in response to “Posted By Shirley, Chesapeake, VA: January 13, 2009 4:00 pm ” NO bank should be lending to anyone that can not come up with 20% Down Payment and a Very good fica score thats what screwed things up in the first place. Kids right out of college should not be buying million dollar homes with no money down. Mortgage Brokers and Greedy banks were the culprits. Now we pay for their greed in the form of high foreclosure and an economy thats spiraling downward. Banks have to have guidelines, its not entirely their fault that loans are stagnating. People don’t have the score or the downpayments..Thats life, things will pick up when home prices drop alot more.
A lot of money seems to have vanished from the system, as valuations across most asset classes have diminished with the bursting of the credit bubble. This is compounded manifold by the drying up of leverage against all of these assets.
Because there is less money available, competition for that money increases and people are willing to give up more goods and services for less money. This is deflation.
The government can take stimulus inflationary measures until either the price levels realign with the real value in the economy, they run out of credit, or they manage to once again shift the bubble somewhere else.
“Point: The jobs to created by the Obama administration are for the poor/uneducated folks. Those with College Education will get NOTHING!”
I’d be willing to bet that most people with a college education would be able to handle the intellectual requirements of a blue collar job with no problem. In fact, a lot of “educated” people turned to manual labor positions in the Great Depression to get by. Some people might want to consider doing this today. Drop the elitism and take whatever job you can find to survive this economic calamity.
As an “average” American, the Feds lowering of the interest rate to 0%, has done nothing for me, except lower my returns on non-stock market investments. Interesting enough, in the late summer of `07, I decided to be more bullish with my investments in my IRA, and moved 1/2 of my investments into stock. As the news began to surface, in earnest, about what was on the horizon re a likely/near term financial meltdown/calamity, I ended up, within several months, of round tripping all those stock investments when the market was at 14,000; fortunately, because I was paying attention, I made a bit of money, but most importantly, preserved that underlying capital. In several years, when and if the market is able to walk again, maybe I’ll consider venturing into the water up to my ankles. For now, I’ll stick with the returns on CD’s I locked into over a year ago, rejoice in the fact that I’m now stock free(both IRA & non-IRA investments), and continue to depend on/follow my nose vs. the experts who continue to squander investors’ savings and give non-productive advice about what to do with one’s money. With all the spending/infusion of money into the economy in the next several years, I’ll look forward to the Fed reversing course, enjoy the boost in interest rates, and for the tide to come in. Being retired I don’t have the luxury of waiting the years it will take for the market to recapture its losses and move back to, maybe, rarified air!
I agree with Michael of NY. It was cheap, easy credit that got us into this mess. A comment was made by the Credit Card industry that new rules will mean some people will not be able to afford credit. I don’t see a problem with that. Some people don’t have the financial resource to pay back the debt and haven’t been taught how credit really works.
The banks aren’t lending money now. Who is going to lend money at zero percent and not get any return on their loaning?
All the bailouts and low rates and absolutely pure stupidity. Folks, the government isn’t the source of prosperity in this country. Rewarding bad business practices is not going to restore prosperity. The meddling of the Fed and Congress in the economy created this mess. It is best if we take our medicine, and let the economy correct. If we keep throwing ridiculous amounts of money into the bailout pit, we will end up with a lousy economy AND hyperinflation.
Don’t worry everything is going according to plan.
Contract the money supply, CHECK
In the ensuing economic chaos concentrate real wealth in fewer and fewer hands, CHECK CHECK
Lay the ground work for the destruction of the dollar, its subsequent replacement with the AMERO and further moves toward a ONE WORLD GOVERNMENT, CHECK CHECK CHECK
The absolute ignorance regarding the inflation evidenced by people on this site should be a cause of rejoicing for precious metals investors. Until we reach the stage where EVERYONE recognizes that the FED has paved our way to a hyperinflationary collapse (and start panic buying gold) PM’s will remain severely undervalued. A housing bubble caused by hyperinflationary monetary policy is still unwinding and people still can’t see that these policies are ultimately devastating. Truly amazing…
Three names I trust:
Ron Paul
Peter Schiff
Jim Rogers
Interest rates are too low. Market forces will dominate eventually anyway.
All of the statistics coming out are only self-serving – whether corporate or governement issued. Look at stats and opinions of real estate groups saying things are always good even though the man on the street knows better. Things are really bad and will be for a long time. The financiers and their bought-off politician friends, only want quick fixes and nothing they do or spend will correct what must happen – prices must go down. Homes prices must drop to affordable levels of around 100,000 to 125,000 based on the average family income of $40,000 and normal lending criteria. Until that happens, anything is just smoke and mirrors. The economy must work itself out.
Also, a college education does not really help a person in the world – it is a myth perpetuated by the teachers and professors to guarantee their jobs. Fact is, everyone is not capable of higher learning and dropping education standards to allow more “non-college level” persons is ridiculous. Example is to look at all these MBAs on wall Street, the banks and governement and you can plainly see college education is truly wasted on those not college material. These guys don’t know what has happened or what should be done to correct our problems. The hard working man on the street knows – hunker down, save and wait for better times.
Ben Bernanke is a feckless academic that has not got a clue.
The press touts him as an expert on the Great Depression-yet he does not see that Great Depression take II is where we are headed.
There is no wiggle room left with almost zero interest rates.
What is this man thinking.
Most Banks are keeping the money they have been getting. Try getting an equity line/loan over 80% loan to value. They have been given the money to help homeowners and they are not lending it. Lenders do not give money to borrowers without accountability yet the government has no clue as to where the stimulus money has gone.
The government should not be giving lenders any more money.
The government/fed are short sighted stupid (SSS). Cash is a commodity, if it is scarce the cost of it should go up. We should be raising rates, or at least not lowering them. This problem was created by too much debt. The solution is not to further increase debt, public or private. The goverment also said financial insitutions got too big, that they then became too big to let fail. So what do they do, they bail them out in a way that allows them to consolidate. It makes less of them, but even bigger. The goverments solutions are diametrically opposed to the problems and feeding their (the problems) long term growth. Debt is money, like it or not, we should take some very painful medicine or else we will have an even bigger collapse next time. The greater the debt, the bigger the money supply must eventually become. In the not too far future we will have at least 3 years of nearly 20% inflation each year. That is the optimisitic view. People should not be enticed to spend. That only temporarily helps the economy. Only saving until you can afford the things you want will put the economy on a sustainable basis. It would take us at least 10 years of severe pain to get us there, but without that, it is a never ending worsening cycle. Borrowing must be kept to an absolute mininum in all cases. As a minimum fed funds should be at 6%. The truth often hurts. Have a nice day.
Raise the interest rates, stop and cut spending, and remove the Federal Reserve! The Fed will cause a stagflationary period. Banks that were due to fail, acquired others, and then get TARP to finance impulsive moves like that. For example, JP Morgan Chase buying WAMU, then receives TARP money because it needed it. If that’s the case why did it acquire another bank. The Fed injects mass amount of money to make the public sector grow and make certain industries in the private grow, like big banking. Americans must end central banking…
Banks need more money? Give us a reason to put our money in the banks and we will do that, until then what is the point. Buy what you want now (if you are lucky enough to have a job) because it surely doesn’t pay you to save money anymore.
Its rubbish to say inflation is a beast and is a threat to the economy, would we rather let the economic slump to continue causing continuous business failure and continuous rising unemployment? As an analogy: There is a limit how far a submarine can dive, beyond that limit it will be no return, the pressure to cause it to sink to the bottom of the ocean. Similarly, the continuous economic slump will result in another Great Depression which will last for years. Government will not function due to depletion of income tax and sales revenue. There will be escalating social unrest and financial suffering. Rising prices and rising demands can revive the economy from its slump but a Great Depression may need another world war to pull it out of the dump but there won’t be any survivors to rebuild the world. Wake up….
INSANITY! Stop the bailouts, stop the stimulus, let’s save some money, stop buying/importing useless STUFF, and start focusing on investment….the only way for us to survive!
I think that lower interest rates and cheap credit got us into this mess. Why does growth need to be fueled by credit, perhaps we should save up some money first and then invest it? More debt will just create a bigger problem later on; don’t we have plenty of it already?
I think Mr. Chairman (Bernanke)of the Federal reserve should be terminated immediately and somehow and sent packing to someplace far away from the financial world. He is totally lost and completely useless and making the situation worse by his interest rates. Just how long will the world accept effectively nothing for their money to prop up this mess.
This is the problem when you have an elite group of people running the show. No term for any one elected office should be longer than 2, 4 year terms. These career politicians are shielded from what is happening in the economy and can only react to the last problem on record after something goes wrong. If rates were set and left alone the market would have time to adjust and not be trying to factor in a possible change in rates.
I agree with the article and that it isn’t a threat now, but always needs to be considered. Bottom line is this: When the economy starts to grow again (whenever that is) it needs to be met with an ungreedy approach to growth by the Fed so that inflation isn’t inevitable. (raise rates, increase reserves, etc.)
With interest rates artificially set at 0%, what incentive does any American have to save? This country finished serving its role as the engine of the global economy a long time ago. We don’t produce anything except armaments, we export our paper IOU currency to the rest of the world in exchange for cheap crap we don’t need, and we are saddled with both private and public debt that has not chance of being repaid.
The true definition of inflation is this: EXPANSION OF THE MONEY SUPPLY.
Inflation will probably appear in early 2010 and it will get worse, and worse, and worse. Anyone who can’t clearly see the end result of these current events is a short-sighted fool. Our economy’s problems lie in people’s incapacity to produce and save, not their incapacity to spend and accumplate debt. The government doesn’t seem to understand this, and because of it, future generations will be shackeled with America’s debt.
Tax revolt anyone?
“The market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.” U.S. Treasury Secretary Hank Paulson, August 2007
LoL, What a clueless piece of crap!
“Overall, the economy appears likely to continue to expand at a moderate pace over the coming quarters. As the inventory of unsold new homes is worked off, the drag from residential investment should wane. Consumer spending appears solid, and business investment seems likely to post moderate gains. At this juncture, the impact on the broader economy and financial markets of the problems in the sub-prime market seems likely to be contained, with a return to normal groth in the second half of 2008.” -Federal Reserve Chairman Ben Bernanke, March 2007.
Bernanke should be tarred and feathered.
Abolish the Fed.
Peter Schiff for Treasury Secretary!
And lift Michael Milken’s SEC ban so he can clean up the ponzi schmeme fraud he began 25 years ago that has come to define the U.S. economy.
Nuf said.
“And the Fed should be applauded for using every weapon in its arsenal — and even creating a bunch of new ones — to tackle the crisis.”
They’re the ones that caused it!!!!!!!!!!!
God help us.
To Daniel Rosario
What you see the financial industry doing is to be expected. Our country has run up too much debt and now the debt is due. The lenders know they have huge losses coming up as more and more borrowers go into default. So the first thing they do is to buy off the politicians and dupe the taxpayers into giving them hundreds of billions of dollars to shore up their balance sheets. Then, as you’ve observed, they raise interest rates and fees so as to get as much profit as possible before the collapse. And the last thing they do, or don’t do actually, is they absolutely positively don’t lend any more money out that may not be repaid. Funny though how the government gave them that money for the stated purpose of having it lent out but the industry had the exact opposite intentions. Question is, did the politicians realize this and I say YES They Did – they know who butters their bread.
Government manipulation, that’s what it is. Manipulation of the rates, manipulation of the dollar, manipulation of the gold and silver prices. As what’s said in the article, until the awakening of the beast.
The danger of what FED are doing is huge. The problem is not only zero interest rate but just blatant printing of money (not borrowing) by the FED. We risk to repeat what Germany experienced during Weimar republic and the former Soviet Union before it collapsed. The huge amount of money not backed by real value and accumulated during some time suddenly released. The people savings will be completely wiped out. Our current problem was caused by the gross misallocation of the capital because of easy money policy. What going on now will lead to the same just on much bigger scale.
More socialism is not going to be fixed by more socialism, what kind of an idea is zero interest rates in the realm of capitalism?
We Americans are such control freaks that we just can leave it well enough alone, and let the pain pass quickly, our federal (Big Brother)Government will continue to mess with this correction until the pain is with us for the next generation.
If you want to have the federal government do something then have it cut spending, and cut spending in a radical way. Too much interference for the last 60-70 years, this depression is because we never allowed the great depression correct itself to begin with.
Printing money out of thin air and running a Ponzi scheme for the rest of the money is a great idea. The only thing I don’t understand is why every country doesn’t do it. Oh, that’s right, we’re special here in the USA. We’re allowed to steal from the rest of the world and print money. Now that Trillion is the new Billion… I don’t understand why the government doesn’t just print a million dollars for every US citizen. That would take care of all of our problems… Not sure a pack of gum would still cost 50 cents… but who cares, we’d all be millionaires!
The timing is going to have to be absolutely perfect. I’m not sure its humanly possible to time when exactly interest rates need to hedge up and by how much. What comes to mind is a scene from James Bond. The bad guy takes off in an airplane and Bond chases him on a motorcycle over a cliff. Bond catches up with the plane in mid-air, enters the plane, knocks the bad guy out of the plane and gets control over the plane just before it crashes into a hill. He pulls up on the throttle and lands the plane safely. Can Ben Bernake, et al do it? We really have no choice now but to hope the heck they can.
I was thinking the other day that many of the economic challenges we face in our country, and maybe the world, is that many aspects of our economy (really companies) are mass production oriented. I believe that our financial system follows a 19th Century Mass production methodology that is not as efficient nor as effective as 20-21st Century Lean production methods.
I believe that our financial system is kind of backwards, in that currently the Federal Reserve sets interest rates independent of market conditions and the economic environment. While the Fed doesn’t pull a interest rate number out of a hat, it does rely on a small group of individuals to make this important decision. Despite their ‘expert’ status, the Board at the Federal Reserve is imperfect, not all knowing, and heavily influenced by multiple political and business interests. This influence does not always reflect the actual conditions nor the actual economic will of the nation. Nor could it, as it is depedent upon a small group of ‘experts’ to make seemingly impossible choices on ecomic decsions based upon their limited understanding (first economic assumption: perfect information).
The Federal Reserve produces interest rates independent of demand, ‘pushing’ them on the banking and financial industry. Often times this serves in the best (short term) interests of the financial sector, however shortages of capital in the market place are not met by market driven solutions. The best analogy is GM vs. Toyota. GM exists in a mass production paradigm while Toyota in a ‘lean’ paradigm. GM produces cars based upon predictions and forecasts, not on actual demand. In essence, GM pushes vehicles through its system. Toyota, following its Lean methodology, produces cars based upon what has sold, simply replacing what has been consumed. Toyota, unlike GM, pulls vehicles through its system. The big difference tends to be most visible when demand changes, and forecasted predictions become inaccurate. Mass producers then find themselves with too much inventory, while Lean producers may be idle, but without the high inventory costs associated with mass producers.
If the financial system was ‘lean’, it would pull interest rates and capital from the Fed. The Fed would not dictate rates, it would respond to what interest rates are being provided by the many banks to nearly infinite customers. The interest rates would fluctuate based upon the market conditions; specifically the Fed would release loans to banks based upon most recent rates the banks have provided to customers.
Rather than banks getting capital from the Fed and providing it to customers at an interest rate slightly above the Fed’s rate, if the paradigm were switched around, and banks loaned all their available capital at rates consistent to the current economic situation (economy, risk associated with particulars of business and its plans for the funds, etc) to have those funds replaced by the Fed at a rate slightly less than what the previous loan was provided. In essence, if the Fed replaced money that was loaned at a financial retailer, it would generate fiscal ‘pull’ in the financial system. Rates would naturally rise and fall depending upon the market conditions and economic situation. Rates would not be ‘pushed’ onto the banks, without any respect to what they are willing to loan those funds to other retailers or financial endusers.
What would this mean in a changing environment? As an economic situation ‘improved’, the increasing velocity of money (measured in the number and size of loans) would attract capital from the marketplace and the Fed, pressuring interest rates to decrease. During a economic slow down, monetary velocity would slow, and interest rates provided to customers from banks would naturally increase (as they have now) due to increased risk in the marketplace and scarcity of capital (measured in volume and velocity). The market driven increase in interest rates (seen both from the banks that are accurately measuring risk and ROI, as well as the Fed that is providing capital at rates slightly below market/bank rate: IE Fed is not ’stimulating’ the economy, mearly dictating the banks’ profit margin) would simultaneously attract capital from the marketplace and drive risk from the marketplace, as failing business models die from lack of investment and capital is pulled from individual and business accounts toward the financial sector due to rising interest rates and what is probably the better investment in an economic downturn (Invest in stock or Savings account at 7+%?) .
Overall, I believe that our current financial system was developed for the industrial revolution and the mass production paradigm it created. Alexander Hamilton, understanding the need to move the American economy out of its agricultural roots toward a manufacturing and financial based economy, laid out our economic system to support the coming industrial revolution. To support his plans he laid the ground work for the first banks as well as the plans for industrial espionage to gather important manufacturing and trades secrets from England (specifically for clothing manufacture). Our current issues are not ‘cracks in the foundation’, but rather just limitations in the system due to the changing global situation. We have outgrown the old paradigm. Our financial system should become leaner and make use of the expanding financial business environment that did not exist during Hamilton’s life nor during the Great Depression, when the Fed was provided its current responsibilities. We should make use of the marketplace to speed economic recovery and provide the most economic opportunities for everyone. A ‘pull’ driven interest rate that was determined by the marketplace. Most importantly it would limit the influence of political and business interests on interest rates, that are often more concerned with ‘what the economy should be’ rather than dealing with the current situation of the economic reality or current economic situation.
There is ZERO risk of inflation right now, with significant risk of DEflation and economic stagnation. The Fed needs to keep their foot on the gas until things start to turn around – THEN they can tap the brakes.
Point: The jobs to created by the Obama administration are for the poor/uneducated folks. Those with College Education will get NOTHING!
Point: Loosening up money supply is not working the TARP Bailout funds are being used by Banks to bolster their finacial sheets and to buy other troubled banks-Decreasing their competition. Big Surprise here.
Point: The Givernment (not a typo) doesn’t want Joe-Saver to save. Zero interest. Americans should wise up and save… Regardless of the rates put your money into CD’s all other products are risky at best. The Givernment should be helping out those who have followed the rules not the people who are taking advantage of the system. How many more Speculators need to walk away from their investments before the Givernment realize wow we screwed up. Lowering their Mortgage rates isn’t the answer, take the homes. If you can’t pay you shouldn’t be able to stay.
Point: Inflation/Deflation -neither one of these are prevalent now. If in fact deflation occurs WONDERFUL, prices come down those that can buy will buy. Right now all Americans that are looking to buy anything should wait, Prices will drop further on EVERYTHING. Inflationary pressures will not totally dissipate Food prices haven’t slacked at all, and oil will go up the Arabs/Russians will see to that.
In the end we are all screwed,and this is before obama gets in. If he tries to implement any of his Campaign promises things will get worse. thankfully , he is a True politician say whatever to get elected then go by the old tried and true. Has anyone seen someone who preached change like he did change his tune so fast.. Sheesh his cabinet is looking like Clinton’s. Maybe he meant he’ll change his underwear??
We are about to print money like crazy, in addition to financing more enormous loans with China and other countries to keep afloat. We are going to look around two years from now and wonder why everything is so expensive when really the issue is that the dollar isn’t backed by much more than tremendous debt. Good luck with your retirement nest egg if it is based in USD. -thinmint
Our country is facing an economic crisis that was created due to a number of reasons, however the crisis has expanded beyond the housing market into all aspect of the global economy. The economic crisis has grown beyond its origin because of our government’s inability to move away from a loose monetary policy. Our country, our government, and our population of ‘consumers’ have become too accustomed to this loose monetary policy, specifically the low interest rates associated with it.
We need to wake up. The economic paradigm that you are defending is dead. Cheap money no longer exists. Quit protecting stupid individuals and organizations that wasted their limited assets. You are destroying the global economy and creating a terrible situation. Our unwillingness to move away from a loose monetary policy is creating numerous problems in the credit market and global economy. Government officials are calling for taxpayer bailouts as the only way to fix the problem. As President, you must fix this problem, and the solution doesn’t need to cost the taxpayers anything.
The answer is very simple: You need to have the Fed raise interest rates. Yes, raise interest rates. It is that simple. This terrible mess would all work its way out if you simply quit giving away money for free. It is no longer sustainable. Not that it didn’t make sense in the past, or that it won’t again sometime in the future, but for now it is simply madness. Our present economic situation is proof of this madness.
The low interest rates made perfect during the economic boom of the 90s and early millennium. Low interest rates allowed easy access to capital in an economic environment that a high rate of monetary velocity (exchange of money in the economy). However, the situation has changed dramatically. Monetary velocity has slowed to a crawl, and as rates of borrowing have been lowered further still, the market for available credit has shrunk. The artificially low interest rates are not attracting capital, capital that is vital for qualified borrowers to grow businesses and lives. Our global economy is suffering due to an unwillingness to raise the cost associated with borrowing, which would ultimately attract more capital from individuals and institutions alike.
Monetary velocity is like a stream. Think about a large volume of water in the stream and the stream moving very rapidly. Ponder how much a unit of water costs at this point. The water is inexpensive because the water is rapidly available and exchangeable (associated with the speed of the water), and the water is superabundant (associated with the volume of water). Now imagine that either the velocity or the volume decrease, and how this might impact the cost for a unit of water. If there is less water going by, each available unit is more scarce. Similarly, the decreased volume also increases scarcity. Scarcity is a decrease in supply, and a decrease in supply would typically drive up the price associated to a unit of water. If the price of water could be artificially lowered during a time when water was scarce, it creates further strain on the stream during the ‘drought condition’. Obviously, the artificially cheap water would cause undue strain on the stream as demand would far outstrip the stream’s supply. Additionally, and not so obvious, especially to Government economists, is that artificially low prices for a unit of water would create little incentive for institutions or individuals to sell water back to the stream during drought conditions. These two influences, high-demand and low-supply, probably have exponentially negative effect on both the stream’s speed and water volume. Replacing water with money, you can see that by constantly lowering interest rates during a period of monetary scarcity, that the Government and its decision makers are in turn hampering the economy’s ability to correct itself.
What? You don’t believe me? You don’t think higher interest rates will fix the problem? Here’s another simple analogy: The Federal government has a large tank that can hold gasoline. Retailers can buy gas from the Fed at any rate, and these rates can adjust from time to time. End users of the gasoline buy the gas from the retailers. As in all other markets, the laws of supply and demand prevail. As such, supply can influence price, and prices can influence supply. In our analogy, the large, Federal fuel tank is empty, because prices are so low, that the fuel has been consumed. Now, despite a Congressional mandate to pump 700 billion gallons of fuel into the large Federal gas tank, there is not any positive influence on the economic engine. The Fed is constantly out of ‘fuel’, and large fuel retailers are unable to have enough fuel for everyone who wants to purchase it. Now, the current price for this gasoline is 25 cents a gallon. That’s right, 25 cents a gallon. And the Fed is complaining that their tank is empty, and businesses and individuals can’t buy gasoline, regardless of their ability to pay for it or how they’d use it, because at that price, no one can keep it around very long. Now, by simply raising the cost of fuel (or interest rates), the Fed will have a greater supply of fuel, as will the retailers, as not all fuel consumers are going to be financially able to purchase the petrol. Supply will increase, and fuel will be available to those retailers and individual consumers able and willing to spend market rate on fuel.
Our current economic conundrum is an excellent example of what happens when prices are artificially low: everyone is financially able to buy the good, but no one can buy it because it’s not available. It really is quite simple.
Please, Mr. President, please! Raise interest rates. It will allow businesses with sound business models to borrow money. Also, individuals that are financially capable can purchase products with credit that are within their means.
Doing anything else, like keeping interest rates artificially low to allow everyone to buy all sorts of things they don’t need with money they don’t really have, isn’t the answer. It never was, and wasn’t sustainable, as we have found out. Now however, the artificially low rates allow folks to afford to keep buying stuff they can’t really afford, the only problem is, no one is willing to lend them the money at these current rates. The marketplace has changed, it is no longer as risk-free, and as such lenders are more skeptical. Higher interest rates would reflect a lender’s current aversion to risk associated with the current marketplace.
Mr. President, please understand that by keeping interest rates artificially low you ensure that NO ONE can buy ANYTHING, whereas higher interest rates would allow QUALIFIED borrowers to buy what they can AFFORD.
Again, Mr. President, please raise interest rates. Thank you for your time.
Feds should drop the rates as a one time drop and send a strong message that there would be no more drops.
Now the amount to drop should be carefully considered such that the economy specially the housing market gets a bump.
Low interest rates and massive debt is how we got into this mess so surely it is how we get out of it. Don’t you see. If we all get into even more debt the economy will thrive. We’ve spent ourselves into this mess and by golly we’ll spend ourselves out of it. What are they thinking??!
Banks and lenders have reduced money supply to the american public significantly. It’s very hard to get credit. Credit lines are reduced.Reduced credit lines and hard to get new loans have resulted in reduction of demand. Reduced demand makes prices go LOW. NOW please tell me where is the inflation going to come??
Steve of Des Moines hit the nail on the head when he said: “Those who dismiss the possibility of inflation because we need to attend to the problems now are not focused on the long-term viability of the market or the US dollar.”
That is exactly the problem here. Our leaders are focused on a quick fix for every situation so their approval ratings (and chances of re-election) remain or become favorable. As long as quick fixes remain the focus, it will be difficult to create sustainable prosperity in this country. Shortsightedness got us into this mess, and it certainly won’t get us out of it.
If it’s deflation, it’s only because prices are correcting from their artificial price point due to inflation. They don’t call it a correction for nothing…
Visit http://www.mises.org for more analysis
Also be sure to check out http://www.lewrockwell.com
We have had thieves,liars & just plain morons at the helm now for the last 30-40 yrs.Odd how an immigrant that cannot read or write English & with only a couple of years education can budget & these Harvard & Yalies are clueless, to add to this we have law but no justice & welfare for these godless reprobates,corporate & government both.
The collapse of the job market means even harder times for last year’s and this year’s crops of college graduates. The offshoring of professional jobs and the widespread use by US corporations of H-1b, L-1, and other work visa programs for foreigners have left many recent American university graduates without careers.
Recently, Bill Gates of Microsoft was pleading with Congress to allow even more foreigners in on work visas. According to Gates, there is a shortage of American workers despite a 17.5 percent unemployment rate. I personally know American computer engineers, both seasoned and recent graduates, who cannot find jobs.
What Gates and American corporations want is cheap labor, in effect indentured servants, unprotected people who don’t demand an American standard of living and who have no student loans to repay.
In any case, why can’t congress do something about the crazy line items on the closing cost for refinancing. After all that we have given the banks why dont they try to be part of the solution instead of putting up barriers to refinance, Chase charges a $750 application fee, how’s that helping!!!
Well, its becoming pretty obvious to everyone but the Fed & Bernake that they don’t have a clue what they are doing…after all, they want to give another ungodly sum of money to the banks… and can’t even account for the enormous amount of money Bernake and crew have already squandered to the same banks….. the Fed has ZERO accountability for anything they do!
An objective person would be hard pressed to find any statement made by the US government that is reliable.
The reported job losses are likely understated. Noted statistician John Williams (shadowstats.com) reports that biases in measurement have understated the job loss over the last 12 months by 1,150,000 jobs.
Williams also notes that the official unemployment rate is an enormous understatement, due in part to the Clinton administration’s decision not to count as unemployed those discouraged workers who have been without jobs for more than one year. Williams reports the unemployment rate as it was measured prior to “reforms” designed to minimize the measured rate of unemployment. According to the methodology used in 1980, the US unemployment rate in December 2008 reached 17.5 percent.
Yes, “our” government lies to us about economic statistics, just as it lies to us about “terrorists,” “weapons of mass destruction,” “building freedom and democracy in the Middle East,” and the Israeli-Palestinian conflict.
Why are we still listening to all of the buffoons on Wall Street, the Fed, the Treasurty and the politicians. The market and economy are in a depression, like it or not, say it or not. The economy must correct itself and that means losses and a bit of hardship. People are resilient and do not need to be mollycoddled. We are still listening to the very same people who brought us this mess. Their solution is to try to return to the past economic models which we are currently seeing/experiencing as blatantly a fraud. Wake up america and the world. We need new leadership everywhewre. The current crop is worthless and untrustworthy.
Besides that the money for the bail out plan was barrowed from china. What happens when they DEMAND the payment
First of all stop with the “suggestions” that they stop keeping rates low. The fed followed arm chair quarterback like you last year and look what happened. Do us all a favor and shut up about rates and things you dont undestand.
It’s all about psychology because afterall the US dollar is just a piece of paper so to speak. The reality is that given all the ‘quantative easing’(which refers to printing money without much underlying regard) that is going on we are fated to some pretty disastrous hyper-inflation in the future.
As an economics major we were taught that the amount of money and the amount of available goods and services should be roughly balanced otherwise prices will soar when that money is directed at purchasing those goods and services. Which brings me back to the first point here – it is all about psychology. Right now there is an enormous amount of money on the sidelines – $5 trillion plus – just sitting there because people are too afraid to spend and everyday more money is added into the system as per ‘Helicopter Ben.’ When folks wake up and realize that all that paper has nothing underlying it they will put it into anything, particularly hard assets, and prices will soar. Yes when the music stops and people realize they need to convert what money they have into hard assets prices for everything will soar to levels never imagined.
Of course that might be avoided if the rates are quickly raised and money is drained out of the system. But you tell me – do we really trust the current crop of geniuses at the fed – which in large part got us to this crisis point – to make the hard decisions at that point to avert a crisis. Based on past history that is more than doubtful.
Without some pain there will be no gain – or righting of the current situation. Right now it looks like the fed thinks they can print us out of this crisis. That ain’t likely and we (and more likely our children) will be paying the price – literally – for years to come.
Thanks Helicopter Ben and the man really at the root of all of this – the ‘Maestro’ aka Alan Greesnspan.
The Fed lowering its interest rate is not having its desired effect. I work in the financial industry (credit union) and all I see is interest rates going up for loans and credit cards, from banks to credit unions including where I work at have increased lending rates. The economic crisis is entrenched into the psychy of America and financial instituions are doing the complete opposite of what the Feds want. With that in mind I think the Fed rate has lost its swagger and another solution hopefully from Obama needs to be put in place to get our American dream back!
Why should we listen to Ben? We’ve given banks millions of dollars and they’ve sat on it instead of lending it. My wallet is empty and their vault is full. Gimme a break!
Okay this makes no sense if rates stay that low for that long we will not just have inflation. we will have hyper inflation. what will happen is what happened in Germany at its collapse. We will be using our money for wall paper
One more point – Ben Bernanke is a student of the Great Depression and knows that another depression is imminent. So he lowers interest rates to stimulate the economy. Only problem is, that is not the job of the Federal Reserve. its job is to stabilize the value of the currency. In other words, Bernanke is using his office and position for a purpose other than prescribed by law. He needs to go -like yesterday. Raise interest rates, make borrowing more difficult, especially on the part of the government, and prevent the risk of hyperinflation. Remember we had deflation in the 1930’s and got a depression – Germany had hyperinflation in the 1930’s and ended up with Hitler, Nazism, a lost war and foreign occupation for half a century. Which was worse?
The Fed is guessing. They do not have the solution because this is all new to them. The Congress doesn’t know who to believe. Simply put if things were so bad for the majority of Americans whay would the Congress give themselves a raise. That is arrogance based on ignorance. That is the intellectual mentality trying to deal with this problem.We have a problem that is so serious I believe that it will be decades before the economy actual stabilizes.
Michael LittleBig Cleveland Ohio
Pumping money into the system will always lead to inflation. When the economy finally starts to turn around, inflation will be out of control. There’s no way that the Fed can take all of that money out of the system as quickly as its been able to put it in.
I believe that our large current accounts deficit is unsustainable, and, combined with record deficit spending and low interest rates, the dollar will lose value and fall dramatically within two years. That will cause inflation, but because its based on a declining dollar rather than an overheated economy, it will coincide with the ongoing recession and create severe stagflation. The fact is we’ve been living beyond our means for almost three decades, our gluttony financed by large trade and budget deficits. A rebalancing is needed, inevitable, and will be painful.
mr. greenspan…mr. greenspan? has ayn rand shown up at the seance table yet?
what we cant seem to figure into our models ia the unlimited capacity americans have – to find the way to cheat the system. our fiscal & economic policies presume honesty, fair play and a desire to want the greater good.
john galt has left the building.
I’ll take infation over de-flation and the accompanying depression it would bring with it any day of the week! Especially since no one is talking about hyper-inflation.
well, first I am danish, growth is necessary, what happen in USA we can feel it very soon here in our little country. So a good clima in USA is also very good for us (Denmark), you se our economy is very small, hope you understand my english
OK, we screwed up, spent too much money and ended up with lots of debt. Lower interest rates and low gas prices are a much needed breather so debts (personal and business) can be paid off. Just need a year. The rates can be brought up as quickly as they came down.
Ah inflating the currency the favored tool of politicians and bureaucrats that lack the courage to either raise taxes or cut services. Couple this with the next administration’s “long term goals” and these idiots will have us a stone throw away from socialism and stagflation.
It is probably too late and the Fed is part of the problem, not the part of the solution. For insight, spend some time viewing the material at
To stabilize the value of the currency, the fed funds rate needs to be determined by the amount of borrowing going on in the country. When borrowing is on the rise, inflation is the risk, so the funds rate should go up. Considering how much money Obama and the government wants to borrow, the fed needs to raise the rate sky-high. Only problem is, the fed is acting in concert with the government, lowering the rate so that the government can do all its borrowing and not have to worry about paying too much interest. Which is not the way it’s supposed to be – the fed was to act independent of the politicians so as to act as a brake on their insane fiscal policies. Oh well.
The FED made a huge mistake (under Greenspan) by lowering the interbank lending rates too low, thus promoting the borrowing and spending binges that have brought us to the present conditions of the economy. Have they learned anything from their past mistakes?…Nope. The Federal government is DESPARATELY trying to re-inflate the economy, but what they keep failing to acknowledge is that a fundamental shift in attitude has occurred. The Sheople of the US have finally started coming to their senses and realizing that borrowed money has got to be re-paid eventually. The lender truly does wish to get their money back with interest. The unrealistic rise in home values clouded that basic tenet of finance and we are struggling with the after effects of the unwinding of the housing/easy credit bubble.
Secondly, we are also struggling with the effects of paying back all the credit card debts associated with and generated by the housing buying binge and the mistaken belief that stocks (like houses) can ONLY go up in value. WRONG, WRONG, WRONG.
As we have witnessed, stocks and house prices can and do go DOWN. A commonly asked question is “When will it stop”, or “How low can the stock market keep sinking”. Well, the most accurate answer is, when everything gets to ZERO. Will it happen? Not likely, but if you go back to the stock market trend line BEFORE the FED started “manipulating” the market with their financial engineering tweaks, the DOW JONES could and should revert back to its mean line average somewhere near 4000 to 5000.
The FED is fighting a losing battle by lowering the rates to almost zero. Since banks are not really paying any interest money to those of us who would like to SAVE, what they are effectively doing is trying to force us to spend, but people have wised up and I believe a lot of money is being taken out of the system in the form of cash. Since it isn’t worth saving in a bank, my guess is people are starting to hoard cash (just like the banks are doing by taking the bailout monies and NOT lending it out). Why would a bank lend money out if there is not a good to excellent chance that it will be re-paid? They won’t, so the credit freeze will remain firmly in effect until conditions demonstrate that the financial conditions in this country have improved appreciably. That could be a long time coming. The Obama bailout will take months, if not years to start having any visible effects on the national economy. Even another round of fiscal bailouts directed directly at the people will probably not have any discernable effect on the economy since, as I have already stated, people are hunkering down and hoarding money. The spending train has LEFT THE STATION. The sooner the FED and the government accept this fact, the sooner the right steps will be taken to get the economy moving again.
I would suggect that the FED start increasing the interest rates, 1% per month, not only to keep INFLATION from roaring back (although there is little sign of inflation being any real threat in the short term here since companies and businesses have virtually no pricing power and wage escalation is a dead deal, in fact it is moving in reverse).
The only sure cure for what ails us is to let bad companies fail, let the bad banks fail, let the auto companies fail, let all the bad things that are supposed to happen when stupid financial decisions go wrong, happen. We can’t keep propping up the bad things from happening. We need to pull the bandaid off, so the fresh air can get to the wound, the wound will eventually scab over, heal itself, the scab will fall off and we can start fresh…smaller, leaner and wiser. Then we can start the next leg up cycle until we crash and burn again in a few decades…it’s the American way. Let’s get on with it.
Once again, the savers – those who abied by the rules are punished. The feds worry about deflation? The savings rates are deflated. Why not help us out?
Hey Wake Up!!
The only ones who are making any money are the people who used their
houses and holdings like ATM”s.
I and many other Americans did not jump in and muddy this water! Now Helicopter Bob wants to use my money to save the behinds of all his “Wall Steet” Buddies
What ever happened to earning money the “old fashioned” way, like my grandparents and parents did? By earn, I mean saving money (with interest) until you have enough to buy whatever you are saving for. My grandfather was an immigrant and saved money for a car over several years before finally buying one (there were no credit cards back then, and he could not qualify for an auto loan).
Low interest rates helped to create the housing bubble and rise in subprime mortgages. It is as if Mr. Bernanke is just following what Mr. Greenspan did (great?!?). Only worse, since the rate is now hovering just over zero (0%). The definition of insanity is doing the same thing over, and expecting a better/different result. All the very low interest rates will do is cause more bubbles, and spur on inflation.
Maybe that is one reason why banks are not lending money. People know that the Fed Rate is very low, and people expect to have low interest rates. Why should banks bother to lend, when they are not going to make much off of low interest rates. Maybe that is why they are hanging onto (hoarding) the bailout money, instead of lending it out.
It seems that over the years, with the lower Fed rates and banks giving paltry returns on savings accounts, it funnelled many people towards investing more in 401Ks (gotcha; whoops, they sure got me too).
Here’s another way (old-fashioned, I know) to look at things. If you save your money in a CD and say only get 2-4%, you might feel foolish for not getting a better return (like I did for the last decade). But what happens when your house needs a new roof, or you need a new car (or better used car)? You can avoid a home improvement loan or a car loan (or at least only have smaller car loan). You can avoid 5-7% in interest payments (or minimize the principal).
https://www.msufcu.org/c_rates.html
So if you earn say 3% on savings and avoid 6% of future interest payments, it is “almost” like getting a 9% return. The only difference is that you don’t see the 6% gain, but rather you avoid losing 6%.
If the Federal Reserve would increase the rates, it would help out old-fashioned savers like myself.
I don’t trust Wall Street anymore and I don’t trust banks. I have done most of my biz at credit unions for years, and have been very pleased… and I am sticking with the credit unions.
The reason we’re in this mess is because of excess credit creation and monetary expansion, doing more of the same is not the solution. We got here by overspending and more of it won’t solve the problem.
Conventional thought represents inflation as rising prices when in reality inflation is the result of an increase in the supply of money / credit, which manifests itself in rising prices because the same amount of goods and services are being chased by a larger quantity of dollars. Hence the rising prices.
The appearance of the rising prices is not immediate, but will appear in the future. Increasing the supply of money will show up as rising prices in the future but because the appearance is later few liberal economists acknowledge the connection.
You can’t expand the supply of money without causing inflationary pressure in the future. Those who dismiss the possibility of inflation because we need to attend to the problems now are not focused on the long-term viability of the market or the US dollar. You can’t pump trillions of dollars into the system and expect the currency to hold up.
Ultimately…and soon I fear…we’ll witness a waning confidence in the dollar…and justifiably, the govt. is essentially bankrupt, other govts will not want to finance the massive debt to prop up more failed businesses and financial institutions.
Those who think we can avoid this recession / depression by trying to spend and inflate our way out of this are fools. The recession is the cure for the problem, which was the credit created boom. If you want to point the finger at the problem point it at the FRB and the artificially low interest rates that encouraged all this malinvestment.
The major problem, to me, is that everyone seems to think that a ression is bad. I mean, yes it is bad for us, but just like the planet – there are ups and downs. Like the seasons, the economy will change – killing off unhealthy businesses and practices and forcing the others to change to stay “alive”. This whole bailout theme is fawled b/c it allows these bad businesses with bad business practices alive without consequence to the management (i.e. their business stays open and they continue to make money).
We are Americans and we have made it thru worse times.Yes, things aren’t as good as they use to be, but they will not stay bad forever. I have a real problem with ALL of the bailouts. Yes the finacial secter needed a bailout, though it should have been much more strict on the regulations, but businesses – no. When do we draw the lines? When will we as the American people force good, sound business practices instead of the philosophy that the point is to make as much money as possible as quick as possible?
When, as a people, are WE going to take responsibility?
Interest rates are of concern. So is deflation & it’s ugly sister hyperflation. But the most pressing danger is Japan or China deciding we are a poor risk debtor. No more T bills……..
I get good info at http://www.osgoodwisdom.com
really think !!!!-what happens when someone finally has enough and goes to gold back monetary system–the US BECOMES A BANANA REPUBLIC–THE OTHER POWERS IN THE WORLD CAN SHUT THE DOOR ON AMERICA–WE ARE NOW ENBARKING ON OUR OWN DEMISE–ALQUEDA DOES NOT HAVE TO MEET US ON THE BATTLE FIELD TO WIN THEY NOW HAVE THE MEANS TO DESTROY US
Can we just fix one thing at a time? How can inflation be lurking when people are having less and less disposable income to purchase goods and services? A few months ago Bernarke was fighting inflation when the real problem was recession verging on depression. Please, lets look at the consumer’s pockets and not the bank’s vaults!
Rates should stay around zero to help promote businesses. If inflation happens, it is a natural occurrence, it may have to go through its course, but it still holds true that man tries to control and God laughs.
The patient is bleeding to death, so lets transfuse him without stopping the bleeding-dumb. The Federal reserve should require banks to lend, lower the rates or nationalize them, otherwise we will see a Great Depression- just hope it won’t be as bad as the other one. Its absolutely rediculous to worry about inflation-do you live on this planet?
In a perfect world your theory and those of the other (so called experts) may be correct. That very few saw what we are now experiencing speaks to those who are sopposed to know. The Fed’s are doing what they thinks is best….
To the current low interest rate environment in perspective, it helps to look at interest rates in the post-depression period of 1932 to about 1955. During this period, the 3 month T-bill returned less than 3%, and during the years from 1934 to 1947 returned close to 0%.
The problem is we have too much experience with inflation, and very little experience with deflation. Deflation may be here to stay for a decade – get used to it.
Renewed inflation is far and away the biggest threat to our economy. The Ferderal Reserve’s mission should be to preserve the value of the currency, just like European Central bankers do. The only thing that the Fed will do with its current strategy of increasing the money supply is create a very nasty case of stagflation.
No more rate lowering. Fed should start to raise rates each month to about 3% or 4%. Let the economy take it from there. Throwing more money at the problem will not work. Look what the banks are doing with the money (OUR MONEY)….NOTHING BUT KEEPING IT TO BALANCE THEIR BOOKS. COLOR CONGRESS STUPID.
Only government can take perfectly good paper and ink and combine them into something totally worthle$$.
It’s now clear the the US as well as global economies are now in a deflationary spiral that’s created a liquidity trap. This means that ZIRP policies will be ineffective in stimulating demand or economic growth. The only beneficiaries of zero interest rates are the banks who borrow large sums of (free) money, only to boost their reserves to cover the enormous amount of toxic debt which continues to increase every month as the “real” economy implodes. Obviously, this is a very bad situation.
It’s not the Fed’s job to stimulate the economy, leave that to businesses and consumers like it’s SUPPOSED to be in a free market economy. Jeez, I don’t know when the Fed turned into a bunch of Socialists. The Fed’s job is to protect American currency against inflation, and they’ve been doing a terrible job of that over the past five years — longer then that actually. When’s Bernanke going to be fired?
Well, duh. The Fed can raise rates any time it wants to. It would be ridiculous to say, at ANY point in time, “here’s what we’re going to do for the next year.” That would take away the ability to react to unfolding events, such as indications of rising inflation (the CPI is calculated monthly). So obviously, no, they should not commit to any specific course of action for the whole year.
Hey kids, inflation is already here if you haven’t noticed….Gold is at $820 per oz….2 years ago it was around $600. The next time you go to the grocery store, look how much smaller the packages of cookies, or other products have gotten, and how much more your paying for less product. Granted houses have gone down in price, oil products have gone down, but everyone is still broke. Even if the interest rate was at “0″, the banks wouldn’t lower their credit card rates…And they wouldn’t start loaning money, just like when they got their first taste of the bailout money….they kept it…and AIG partied on it! This whole thing is a mess, and needs to be cleaned up.
Inflation??? Really??? From where???
Wages? No. Commodity prices? No. Real Estate? No. You need the Hubble telescope working to see inflation in the pipeline…
THE.. LETS CUT THE INTEREST RATE TO SOLVE ALL PROBLEMS APPEARS TO HAVE RUN ITS COURSE. POST 911 MR. GREENSPAN DID THIS WITH SOME OF THE RESULT WE SEE TODAY. THE OBAMA TEAM IS PROPOSING TO FIX ALOT USING A C.C.C STYLE OF PUBLIC WORKS TO STIMULATE THE ECONOMY. HOW ABOUT WE ADOPT A SYSTEM OF MANAGED GLOBALIZATION WHERE BUSINESSES ARE ENCOURAGED TO REMAIN IN THE UNITED STATES. RATHER WE ALWAYS SEEM TO CHAMPION THE MANFACTURING CHASING CHEAP LABOR MODEL. REMEMBER CHEAPER TEE SHIRTS. IF WE “STAY THE COURSE” ON THIS ONE WE VERY WELL MAY BE HEADING FOR THIRD WORLD STATUS.
Inflation is nothing compared to deflation. Knock off the scare tactics…the Bernake is simply doing what it said it would do in 2002.
He will not allow us to follow the Japanese model.
WE SHOULD STAY THE COURSE. TOO MANY CHANGES IN RATES MAY BE DISASTROUS TO THE STOCK MARKET. LETS LET THE DUST SETTLE BEFORE WE MESS WITH RATES AGAIN.
IN ADDITION, OUR BANKS ARE SHOOTING THEMSELVES IN THE FOOT BY RESTRICTING
LOANS AND CREDIT CARDS GIVEN THE SUPPORT THE TAX PAYERS ARE GIVING THEM.
HOW ABOUT GOVERNMENT GUARANTEES ON MARGINAL/HIGH RISK ACCOUNTS AS OPPOSED TO CASH HANDOUTS FROM THIS POINT ON???
I do think keeping rate at zero is dangerous. It hurts the older folks who depended on interest for their livelihood and retirement. and if inflation eats the value away due to the large sums of stimulus $$$$ in the system in the very near future, it will be disastrous for many folks.
It’s not a defined time table (2009, but a function of other economic indicators e.g. job situation, PPI etc. Liquidity needs to be pulled out of the economy as soon as the end of the recession becomes visable.
Most likely it will be between Oct-2009 and May 2010.
Inflation must be protected against, especially for those of us who still have cash. the rate should be around 5%.
Why should we the people of the United States accept and support a system that only serves for the interests of profit & Big Government expansion & not for the perpetual benefit to humanity?
The main reason we have to have growth is because the Fed lends money at interest into existence and then can’t print the money to cover the interest. The Constitution says Congress should coin the money and it should be gold or silver. The Fed is the reason for all the current problems. Read Woodrow Wilson’s memoir where he regrets allowing it. In a couple years paper currency will be cheaper to use than toilet paper – or they can price fix and we get shortages of everything. Check out Max Keiser or Peter Schiff for epople in the know
Extinguish the fire with dollars! We will see the ash of pax dollarium. It’s the first test, maybe the last, of major economic downturn with fiat moneny system in USA.
To Jayson in NYC,
You would give up that dollar because a dollar isn’t worth squat unless you spend it. You can’t eat it, wear it, sleep in it, or anything else but paper your walls with it until you spend it.
We need to create an economy that does not RELY on growth. Because we honestly do live on a finite planet and “someday” we will be forced to live in a stable sustainable way. It would probably be wise to start creating that now while we have some room to grow.
This does not mean that it shouldn’t cost money to borrow. Lets stop pretending things that don’t make sense really do. Money should never, ever, ever be lent at less then the rate of inflation. Which is currently above zero. Money should only be borrowed where it is highly useful. If it isn’t worth paying for the right to use money you don’t have, then it isn’t good for the economy (in the long run) for anyone to borrow the money.
Cheap money got us into this mess. More cheap money wont get us out.
They’re doing the same thing they did before when rates were at 1% which caused the housing bubble. This time it’s going to be worse. Hyperinflation in 2010!
The oil bubble and the real estate bubble happened because Greenspan kept the interest rates too low for too long. We are doing this once again. Those who have capital will not allow the feds to inflate the economy using their money. Captial will invariably go in to things that will protect the value of their hard earned capital. We are setting ourselves up for a long period of low growth and high inflation. Lowering rates to near 0% is akin to providing another dose of the drug to a patient experiencing withdrawal symptoms. House prices need to fall to long term average rates so we can start growing once again. Delaying the inevitable will continue the pain and reward irresponsible consumer behavior that brought us to this state.
What does NOT make sense to me is the idea that 3m + jobs can be created via the rebuilding of Americas infrastructure ( which is sorely needed ) Rebuilding Highways, Bridges, Grid infrastructure , etc sounds good, creates mostly Blue Collar jobs, Does not do a thing for College educated people, especially new grads?. Also, who is kidding who here…..it would take Months to create and receive bids that meet Federal and State approval, and then Who does the hiring? Contractors? or the Gov’t. Unless outside firms are paid to Manage and deliver, it will take 2-4 yrs to get started. I also worry that companies like Haliburton, Marietta, Grumman etc , are salivating over their prospects to rip the US taxpayer off more. I for one, am very cautious that President elect Obama is getting in way over his potential to deliver.
Who cares about inflation of the money supply and the subsequent rise in prices? I mean, it’ll destroy the poor and middle class, but they don’t matter anyways… Well then we’ll just put on wage and price controls. I mean, they worked so well in the 70s… Oh they didn’t work well and they caused shortages??? If anybody thinks that inflation is okay, you won’t mind me taking 1% of your salary every year… It’s only 1%, so no big deal, don’t worry about it, go spend money!!!
How about passing on the rates to average consumer by lowering the APR rates on credit cards? Might be nice to pass some of this to the working middle and lower income class.
Absolutely the rates are too low and yes inflation is hiding around the corner. Whether rates are at 0% or 2% banks are not lending money.
Throwing cash at them will not help either as they will only hold on to it in fear of worse times ahead. All the bad debt lenders are holding that was originally supposed to be bought with the first half of the TARP money needs to be bought now with the second half of the funds. Until lenders shed this debt, they will not feel comfortable lending regardless of the rate.
They don’t care about value, just growth. If they cared about value, they would stay away from market intervention. The market can only fall so far before someone gets greedy and steps in for the value. They are postponing this from happening with all their intervention. I’ll keep my powder dry on the side until the market gets to a valuable level!
If you check the archives, you will see that back in October during the height of the credit freeze I suggested increasing the money supply to promote liquidity and raising rates to fight inflation and promote lending. My logic there was simple – if a bank doesn’t want to lend when the fed funds rate is at 2%, they definitely won’t want to lend if it’s at 0%. Yes, rates are far too low and it will come back to bite us in the ass at some point.
As far as making growth a priority, simply due to the time value of money there must be growth. If I don’t get compensated somehow for giving up $1.00 now (saving or investing) by getting $1.05 later, why would I ever give up my dollar?
If my kitchen is on fire, do I worry about the fire extinguisher might destroy my favorite china set?
Why must we always make growth the main goal of a country? Shouldnt we strive for some sort of balanced system that replaces jobs that are obsolete and adds new ones accordingly?
I dont see how this myth of perpetual growth can coincide with the realities of a finite world of resources. We promote our version of capitalism to the world without an thought of what kind of impact it has on the physical planet.
I’m not talking climate change, i’m talking about deforestation, pollution, etc.
All for what? The latest fad pumped by madison ave?
We need to seriously rethink our priorities.
The Fed should keep its rates at or above the core PCE rate of inflation almost all of the time, even now. It just doesn’t make any sense to be lending money for less than that, since it’s then ‘free money’. Given that core inflation is now zero, we’re probably right where we need to be.
The Fed should be at the ready to increase rates as the core PCE starts to rise. It could be quite a while. The Fed should also be on the lookout for speculation, too. Much of the inflation’ that we saw from 2000 through 2008 was just speculators (like Goldman) driving up the prices. There were never any shortages of commodities like oil, just skyrocketing prices. That’s why it deflated so quickly, with 7 years of price gains vanishing in 7 months: bubble.
Forget about inflation; let’s get this economy moving.
“All the negative comments and anti-rescue plans are from foreigners who are here to destroy America.”
I’m an American serving in the military and I’m definitely not here to do that.
“American are patriotic, positive and faithful citizens and the U.S. government is brilliant and its will and policies are lifeward, not self-destructive, else it would never has been a world super-power.”
If our policies were lifeward and our government brilliant, we wouldn’t be in the mess we are now would we?
“As economy recovers there will be strict regulations imposed to clean up and prevent corporate fraud. Coporate profits and banks’ profit will return to tax payers’ investment many folds. The world forever needs a leader and a Financial Standard.
Replace the first word with IF…and why do you think we should stay the financial leader? It was OUR irresponsibility that is bringing down the rest of the world.
“U.S.’s debt will be eradicated by world nations in due time as it did to its debtors.”
Do you have $53 trillion laying around to meet our budget obligations? I find it hard for the rest of the world to just roll over on that one. Don’t forget about the baby boomers qualifying for social security and medicare in the next few years…
“Gold price will go down to $400 after 2013 and will be oscillating beween 400 and $1,000 into the distant future, it will not be as doomsday sayers’ forcast of $5,000 or more per ounce.”
Perhaps, I think we’re in for an inflation problems next year but speculation abounds…
“U.S. will always maintain its status as the world supper power, both financially and militarily, for as U.S. ceases to be the world’s Standard, the current civilization, as we know it will follow one of Nature’s Bell Curves one dust to dust.”
I agree with you’re bell curve idea, I just wonder what makes you think that we are any different from any other empire of the past? History repeats itself, but I’m sure every great empire on the verge of decline told themselves that they would be the exception.