The more I try to get a grasp on what is happening in these markets the more I get confused. The Fed printing trillions of dollars can not be good news. This is about propping up the banks. It dose not address the core issue and it could also be viewed as the beginning of a full-scale Federal Reserve-sponsored bailout. This trend of using the printing press to “fix” the problems means Americans could be in for some serious cost-of-living increases down the road. Even the Financial Times says “Bernanke’s latest bailout attempt takes the nation one “step closer” to what it calls a “nuclear option,” which is the last-ditch effort of printing money to buy assets, pay debts, prop up banks, stimulate the economy, and so on.” The Times calls it the “nuclear option” for good reason. Once fiat currencies start down this road, it’s a one-way street to inflationary collapse. “A couple billion here, a few hundred billion there, and pretty soon you have a real liquidity crisis; the kind where you are drowning in money—none of which is worth much of anything.”
The feds move really caught the markets by surprise.The USD will fall and commodities will rise as we can see from the price of oil surging to above $50. This is not good for consumers and companies. Natural resources will make a move also.The feds reaction also told me that they are in panic mode. That the economy is in a very precarious state. The Chinese will curtail buying treasuries, not a good thing, as interest rates will rise in a down economy. The fed failed to mention it’s previous statement about the recession being over by the end of the year. (60 minutes) They are in full blown panic mode making stupid irrational decisions.
When the FED commits to buying 300 Billion of treasuries a couple things strike me:
1.300 Billion is not that big of a number in this area
2. Aren’t they admitting there’s a problem with treasury sales when America starts buying America’s debt?
