This morning, the Federal Reserve Open Market Committee announced that it will NOT continue stimulus packages after QEII ends in June, 2011. Additionally, they stated that they will hold interest rates near zero, “. . .for an extended period of time.” Further, they said that the earliest that they will raise interest rates is November, 2011 and probably not until 2012. Lastly, they plan on continuing to hold the two trillion dollars in treasury debt securities and mortgage backed securities. For some very well educated people, the FED and Current Administration sure do some very stupid and idiotic things!!!
The stimulus packages, which stretches back three years, never helped anyone much except asset prices; including the stock and commodities markets. Housing continues to slide and 25 million Americans can not find work. Hiring notched down again in May, 2011. Over 40 million are on food stamps. Unemployment remains stubbornly high.
Keeping interest rates near zero does NOT help anyone except the bankers (of course that’s the whole idea – the power elite who really run this country). If I’m a bank, why should I lend money to you, when I can borrow from the FED for near zero and buy super safe 10 Year T-Notes or the 30 year long bond and make 3 or 4% on my money, with no risk?
The trillions of dollars of Mortgage Back Securities the FED holds, on it’s balance sheet, only benefit the banks as the FED bought these “toxic assets” to bail out the banks (the power and control elite). Further, the FED owns it’s own debt; which was part of the long-term stimulus package. I wish I could do that, loan myself money!
Try as they might, the FED and the U.S. Government can NOT hold off the inevitable boom and bust business cycle. On the contrary, they are only making it worse. Great Depression II is going on all around us and will get much worse. The real unemployment rate is closer to 30% than 10% as shown on several blogs and web-sites, e.g., the “Billion Man Project” and “shadowstats.com.” Inflation is running rampant in almost all areas except housing.
All that is about to change because without further stimulus packages, all asset prices are going to plunge; except gold, silver and some hard assets. Look what happened in the “Stagflation” years in the 1970’s – – the economy stagnated and inflation rose. When inflation is perceived to be on the horizon, many investors invest in gold and other hard assets to protect themselves. Holding dollars is financial suicide because they will be worth less and less and buy less and less. Technically, its not that the price of things are going up, its the dollar going down.