BDR
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- Oct 10, 2008
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The Fed Declares War on America
By Drew Mason
Does this title sound extreme? If you've been one of those Americans who has saved more than you borrowed and think your wealth is safe in savings accounts and bonds, this may not be extreme at all. As bond owners, CD holders and passbook savers, consciously or unconsciously Americans have stored wealth believing that the US government has their back. This week the Fed made it clear that additional quantitative easing is on the way and that savers of dollar-denominated investments won't be protected to any degree by Washington.
The message, that the government has decided it's politically acceptable to torpedo the life savings of many Americans, is disconcerting. The fact that once again this is being done 80 days before elections to ease the burdens of even those who have borrowed in a reckless fashion is an unspoken but clear decision.
Skeptical? Think about the intrinsic value of the dollar and think about all of the Americans who measure their wealth in checking accounts, money markets, CDs, and bonds because “they’re safe." The revenue-generating ability of the government doesn't increase with “quantitative easing,” better known simply as “money printing," and the value of past US government promises to pay weakens while the supply of dollars increases. Ask any freshman econ student and he'll tell you that increasing supply without commensurate demand increase doesn't bode well for an asset.
Perhaps this is why, referring to the dollar, OPEC’s Mahmoud Ahmadinejad said: “They get our oil and give us a worthless piece of paper.” That's not a comforting comment to those American savers who are betting their financial future on “worthless piece of paper” in the form of savings accounts, money market accounts, and bond holdings.
Continued at http://www.minyanville.com/business...e-Black-Swan-Fed/8/16/2010/id/29610?page=full
By Drew Mason
Does this title sound extreme? If you've been one of those Americans who has saved more than you borrowed and think your wealth is safe in savings accounts and bonds, this may not be extreme at all. As bond owners, CD holders and passbook savers, consciously or unconsciously Americans have stored wealth believing that the US government has their back. This week the Fed made it clear that additional quantitative easing is on the way and that savers of dollar-denominated investments won't be protected to any degree by Washington.
The message, that the government has decided it's politically acceptable to torpedo the life savings of many Americans, is disconcerting. The fact that once again this is being done 80 days before elections to ease the burdens of even those who have borrowed in a reckless fashion is an unspoken but clear decision.
Skeptical? Think about the intrinsic value of the dollar and think about all of the Americans who measure their wealth in checking accounts, money markets, CDs, and bonds because “they’re safe." The revenue-generating ability of the government doesn't increase with “quantitative easing,” better known simply as “money printing," and the value of past US government promises to pay weakens while the supply of dollars increases. Ask any freshman econ student and he'll tell you that increasing supply without commensurate demand increase doesn't bode well for an asset.
Perhaps this is why, referring to the dollar, OPEC’s Mahmoud Ahmadinejad said: “They get our oil and give us a worthless piece of paper.” That's not a comforting comment to those American savers who are betting their financial future on “worthless piece
Continued at http://www.minyanville.com/business...e-Black-Swan-Fed/8/16/2010/id/29610?page=full
