WASHINGTON – With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy. To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.This could be it. The dollar's final death spiral may have just begun. Bernanke is being asked to fund Obama's and Congress's spending. Bernanke will take it out of your savings by taking it out of the dollar. He's going to buy the assets with newly printed money, which will eventually enter the banking system. Eventually, credit will "thaw." Fractional reserve banking will further increase the money supply. Inflation will start to bite. Interest rates will rise. The economy will not recover. The FED will be asked to buy more debt. It will be asked to suppress interest rates by printing more money. It won't be able to. Other nations will start to sell off their Treasuries. The FED will be asked to buy even more to finance the national debt. The money supply will spiral higher and higher. Wealth will not be created by the process. It will be destroyed. This is because it will not pay to generate wealth. It will pay to destroy wealth. The government will make sure of this. It's going to be ugly. I'm not sure how long it will take. Maybe years. Maybe not. Long-term treasuries were up, the Yen and Euro were up (the dollar down), and oil and gold were up on the news. Not a good sign. Okay, so it wouldn't exactly be the beginning of the end. That probably occurred in 1913. But anyway, it is a big deal. Pay attention! And be prepared...(emphasis mine)
Wednesday, March 18, 2009
The Beginning of the End?
As I have been saying, the FED has decided to buy more Treasury debt: