“On December 12, 2012, the Federal Reserve expanded QE3 (Quantitative Easing) to begin monetizing U.S. Treasuries, once again. This renewed monetization of Treasury debt likely will become perpetually expansive, providing unlimited liquidity to a system that already is dependent on, and addicted to the Fed’s stimulants. With no economic recovery in place or pending, and with the financial system and markets unable to survive withdrawal symptoms, ever-expanding QE3 likely will continue until such time as the U.S. dollar collapses in a hyperinflation.” -John Williams 12/13/12
Rather than accepting the fact that the Federal Reserve Bank experiment could not work forever, the U.S. is destined to suffer the consequences of the collapse of this experiment. In an attempt to break the natural economic cycle of expansion and contraction, the Fed has only served to expose us to a much greater risk of severe contraction. The populace has been “drug induced” with the addiction of TV entertainment mixed with 24/7 news. Instead, we all need to be on our faces before Our Heavenly Father.
By committing to keep the rates low for another three years, the Fed has telegraphed the seriousness of the problem. The U.S. has structural unemployment and, students have been misled into getting degrees in subjects that don’t matter to the future of the country while racking up astronomical student loans. The Federal Government then gives them a break on their interest rate agreements so as to send the message that justifies their original decision. There are so many guilty parties to all the shenanigans that we do not have enough room in the system to put them all in jail. What a mess!
There is a chance of the U.S. to pursue to “two currency” system- one for domestic use and the other for international trade payments. This would be devastating to our seniors who live on Social Security. Their payments would quickly move lower in purchasing power thus evoking “attrition” to their ranks. Think about it. The true inflation rate is running much higher than the stated rate. We are reminded of that when we go to the market or restaurant. The economic impact to the overall family structure will be devastating. Just how many people can one wage earner support?
The Fed waited until after the election to announce additional stimulus. They attempted to “paint” a better picture just before the election so as not to put the current economic conditions in a more negative light. Three more years of zero percent interest rates will push investors to riskier alternatives thus exposing them to loss of their retirement principal. So much for the guaranteed 5% passbook savings rate that we all became accustomed to over a couple of decades.
The Fiscal Cliff issue is not solvable with a tax hike:
All of the drama surrounding the tax hike is designed to take our focus off of the real problem…. as though it will go away. The risk to the current system is epic. Japan will be the next player to enter into the money printing game. Will they be the tipping point to global economic chaos? If we didn’t have a severe problem, the Federal Reserve would not be taking these drastic steps. Think about it.