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Sarah Speaks!

I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air.

The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate.

And if it doesn’t work, what do we do then? Print even more money? What’s the end game here? Where will all this money printing on an unprecedented scale take us? Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually – inevitably – no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?

All this pump priming will come at a serious price. And I mean that literally: everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher. And it’s not just groceries.

Oil recently hit a six month high, at more than $87 a barrel. The weak dollar – a direct result of the Fed’s decision to dump more dollars onto the market – is pushing oil prices upwards. That’s like an extra tax on earnings. And the worst part of it: because the Obama White House refuses to open up our offshore and onshore oil reserves for exploration, most of that money will go directly to foreign regimes who don’t have America’s best interests at heart.

We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.

 


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  1. Does anyone here read the members area with RSS on an Android phone? If so, which RSS reader are you using and how do you setup the password access?
    Thanks!


  2. Today’s 30 year bond auction is going to be interesting!


  3. Kink,
     
    I agree.  What’s your prediction?


  4. exec:  Your guess is as good as mine.  But judging from the action on TBT and TLT, I think last week might have been the best time to refinance your mortgage…


  5. Presuming Bernanke has the interests of the 350,000,000 legal citizens and another 60 or so million illegals as his primary interest, is to believe in the tooth fairy, the easter bunny, and santa claus.
    As long as those who hired him do extremely well, that is all he can or will do anything about.  He can’t influence employment, demand, or even one of the everyday decisions that 400,000,000 people make. He knows this. He is not clueless as so many assume. He is not inept or a dunderhead. He knows precisely what he is doing, and further he isn’t actually in charge of figuring out what to do. He is told what to do just like theBamster, Paulson, Geithner, Gensler at CFTC and like Cox was at the SEC, and all the rest of the alphabet soup henchpersons.  They all know that a city like Lost Angeles cannot be governed effectively, let alone a state like New Jersey, Californica or Illinois and that it is hopeless to attempt to govern but ineptly a country, the size, mishmash,  cultural and linguistic diversity of the United States
    All these so-called government agencies are merely franchise outlets owned by the likes of Blankfein, Dimon, Soros, and a few very well connected folk with coincidental interests, people you will never see, hear or smell.
    The best we can do is play it as it lays.  Your concern about what QE will do or not do is shared by millions but they as we are helpless to one damned thing about it.


  6. Exec – prediction….PAIN…


  7. Hey guys! 

    This is NOT the morning post, you know…

    This is a guest post from our future President!  

    8-)


  8. Looks like they are getting started early. 30 year treasuries taking a beating pre-market.


  9. Phil – When Sara can make an arguement without a teleprompter, I’ll be impressed……


  10. I cannot be around as much today
    NET $ (.53)% here, dx/y =+.40%
    high (.06)%, low (1.11)% that I have seen today.
    C = 1209.23, F =1206.75
    Oil +.14


  11. NET $ *.98)% big drop here last few min
    oil +.17, gold +1.80