So by now you have heard the fed is buying debt, something they swore they would never do under oath. I doubt the fed will be hauled to jail for lying under oath like congress threatened to do to baseball players. The Fed claimed they wanted to improve asset values, ok, that hasn’t work nor has it ever worked. So what’s the deal?
Everyone with a clue knows what the Fed is doing is wrong. They are really out to destroy the dollar. The dollar only has value as long as people have faith in it, and what the Fed is doing is destroying faith in the dollar so the dollar is going down. With it, will go the savings of every American. If you are close to retirement, you might want to think again about how close you really are. It just got a lot further away, curtsey of the Fed.
The Fed says they want to raise asset values so people feel rich because rich people spend money and since we don’t make anything, we need to drive our economy by spending. The second aspect that doesn’t get so much play is that the administration wants to compete globally with the likes of China, by weakening our currency. Both are rather stupid moves as Obama is finding out in his talks to the G20. The dollar is the world currency, you don’t destroy the standard currency. But Obama is a friend of Soros who does want to destroy the dollar so you can make your own conclusions as to why he is doing this. Either way, if you bought his slogan of hope and change, I’m sure you will be doing a lot of hoping and wishing for changed rather quickly. We should be cutting federal spending, not raising the debt to even higher levels. But that’s not something he’s serious about because the area where we have a massive unfunded liability is in the federal workers pension system. If you really wanted to control the debt, you will have to cut the benefits to federal workers upon their retirement and that’s not something he is going to do.
What we need is a strong dollar, not a weak dollar to stimulate the economy. Our economy is mainly run on consumption and out of a nation of 300 million only 12 million actually make something in a factory. The rest of the population is trying to sell services and lattes. So until we have a strong manufacturing base again, a strong dollar is key to a strong economy. Here’s why… of the things we manufacture, we import the vast majority of the raw goods that go into producing those manufactured goods. Cheap raw goods allows us to create inexpensive finished goods to sell around the world. But if we weaken our dollar, the raw goods will cost more and so will the finished goods. Then our economy is shot because Americans won’t be able to buy the foreign or domestically produced goods because both will be too expensive.
The second reason for a strong dollar goes back to the fact we are consumers for the world. The world still needs us to buy cheap junk from China, expensive wines from France, chocolate from Switzerland and coffee from Latin America. When these goods are cheap, we buy more and this helps us at home by providing more services jobs as well has helps the rest of the world have money to buy what little we do make.
The Fed needs stop what it is doing now and Obama needs to tackle the hard issue of controlling spending. We don’t have a tax shortage, we have an excess of expending. If he went after the unfunded liability and got them under control, he could actually be the greatest president in a generation because even though his union friends would hate him, he would have saved the economy for the next 20 plus years. But don’t count on him coming to this conclusion anytime soon.
