Yesterday the Federal Reserve led by Bazooka Ben set the course through 2015:
1) The creation of $40 billion a month out of thin air to purchase agency mortgage-backed securities at artificially low interest rates;
2) The continuation of Twist 2, and the shifting of Federal Reserve holdings of US Treasury Bonds into longer-term bonds;
3) Combined purchases of long-term securities between QE3 & Twist 2 of approximately $85 billion per month through the end of the year;
4) Quantitative easing without any pre-defined limit, meaning an open-ended commitment to keep purchasing securities at whatever level is judged necessary until the labor market improves "substantially";
5) The potential purchase of additional assets and the deployment of other policy tools as needed;
6) An extension of the 0.0% to 0.25% target range for the Fed Funds rate until at least mid 2015.
What does this tell us? There is ugliness ahead. Bazooka Ben and his squad had determined that the so called recovery has not truly materialized as “expected”. We are now in the 2nd dip of that double-dip recession I wrote about during the 1st phase a couple of years ago. Europe and China are stimulating their economies as well. We are in a major global slowdown with no turnaround in sight.
The retirees and baby boomers are now funding this attempt to recover the economy… without their agreement. Ben has affectively said that your savings rate will stay at near 0% through 2015. Retirees are toast. Baby boomers in their desperation will begin to place their savings in higher risk assets such as stocks and bonds. Those who keep their money in savings will see their purchasing value decline. As the long-running Christian TV cartoon show “David and Goliath” dog says: We’ve been hosed Davey!
Now the risk of hyperinflation is even higher than before. John Williams at Shadowstats.com is convinced that the event is close at hand. The following details his view:
Only Our Heavenly Father knows the details of the ugliness ahead. As we listen to HIM, we will know the Truth and the Truth shall set us free.
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