Thursday, June 21, 2012

Blame for the rotten economy lies with the policies of the Federal Reserve

The policies of the Federal Reserve that include artificially low interest rates continue to cause the reported huge decline in most of our net worth.  Further, the artificially low interest rates are the major reason few can obtain financing from the too big to fail banks.  Moreover, by keeping interest rates artificially low benefits the federal government's own self-serving payments on the federal debt.

Since banks do not want to loan money to businesses and consumers, in turn there is not going to be a sustained economic recovery because of it.  When there is no capital in the form of loans for investment, there will be high rates of unemployment.  So, banks just hoard cash reluctant to loan any money until there is an increase in interest rates making loans more profitable for the banks.  And the economy including jobs continues to take huge hits because of it.

So federal reserve banking policies continue to be the drag on the economy due to their policies related to these artificially low interest rates.  Now if the Federal Reserve did, or when they do start to raise interest rates, then that will trigger more foreclosures in the housing market due to many sitting on adjustable rate mortgages.  It would appear had federal reserve policies raised interest rates too early, there would have been an even bigger housing disaster.

So we can anticipate the rationale of Federal Reserve policies announced yesterday. The Fed is going to continue to swap debt to ensure the federal government's interest payments are as low as possible on the federal debt for the next decade.  Then, there will be yet again more quantitative easing, part III soon enough. And then we have Congress playing their games with what is called the fiscal cliff.  This political posturing will force Congress to make some major changes to keep from going over this cliff towards the end of 2012. 

Congress will make some austerity cuts in entitlements as most of us expect; as well as make some small changes in federal tax policy before the end of 2012.  But do not expect Congress to really do that much, other than continue to do minimal change.  In other words, business in DC will merely continue as usual.

All this posturing still shows there is a day of reckoning ahead that will require sooner or later in the next few years of rising interest rates, more foreclosures, and due to the policies of the Federal Reserve, anticipated and prolonged periods of slow economic growth coupled with future high inflation rates.  In sum, let me welcome you to the 2nd Great Depression.

We the people are still having to pay the price for our federal government whether we like it or do not.  Basically, most of us have been and will continue to be raped and screwed by our own federal government including the Federal Reserve so too big to fail banks and other corporations will continue to control and dominate federal legislation, thanks to the United States Supreme Court decision in Citizens United making corporates kind of like a citizen.

In summation, not only are things looking bad in Europe, but also here in the United States for years. Welcome to a return of the dark ages of being in a major depression and do one's best to getting prepared for hyperinflation here domestically with further declines in many individuals net worth. Clearly, governments and corporations are, and will remain in charge of America until there is little left for them to take, from we the people.

Our federal government is now merely tools of the rich and the corporations. Until most begin to understand and realize the real enemy of the individual includes now, the federal government. And even when most understand that, it will be too late to do anything about it.

If we protest too loudly, out comes the police-state.  The federal, state and local governments will be ready to deal with all the civil protests and the anticipated, but not so civil riots.  Will you be ready?  They are.

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