More on QE2, at American Thinker;
The Keynesians finally got their wish. The Federal Reserve plans to inject $600 billion of the most caustic debt imaginable into the economy. […] In the hope of generating inflation, the central bank is going to enable deficit spending by buying treasury bonds. You read that correctly: the primary goal is to erode the value of the dollar, and we get to watch our currency and wealth literally dissolve before our eyes.
International fallout…
h/t Maz2
Anybody want to buy a hemp wheel barrow?
Why pay back debt when you can inflate your way out of it?
Does that mean we will enjoy a drop in the price of those delicious California Almonds?
If this takes place,there will be another revolution.
This sounds like the very thing that the Americans are accusing the Chineese of doing, which they want stopped. Where does control of the currency by a government end and what about free markets???
America is really alienating itself from the global market with these sorts of low ball tactics…not too mention creating more ‘class’ conflict between your average American’s and it’s elites. Funny how whenever the gov’t and Fed talk about what’s best for the ‘economy’, their intended actions only benefit the banks and the wealthy.
Why does American politics even have two parties? All I see is one broad policy being represented by all…except for the few rational, largely ignored, voices…like Ron Paul and Dennis Kucinich
Article in the Financial Post says a significant part of the QE #1 trillion U$ ended up in “mutual funds investing in developing countries”.
The same article points out the worry of these countries are their currency and economies are inflating and there is concern this will be fiscal bubble redux for the Asian (formerly described as Asian Tigers).
Not understanding how QE2 will not also be invested in developing countries. The appearance is a plan to generate U.S. employment through a race to bottom in lower purchasing power in the USA.
This will be followed by a developing country economy bubble burst. Which IMHO means labour costs will be lower everywhere and the ability for consumer based growth will be limited.
Appreciate someone who truly understands what is happening to comment on this. Thanx. Cheers;
Posted by: spike 1 at November 7, 2010 11:24 PM
The first installment already happened.
Since I was positioned to take advantage of the predictable commodities boom, I’m $26,000 richer this week.
Silver, not gold, is the big winner.
Load up. The ride is about to begin.
syf, did you convert to $$’s or keep it in the metal?
I heard a radio commentator on CKNW Vancouver say that there was an expectation that gold was set to rise another $1000 / oz. Any rumblings in your neck of the woods?
glacier:
Gold will be OK, but silver will be the big winner, since it’s affordable compared to gold right now.
60 bucks an ounce is possible. Now at $25.
My big runner is a relatively unknown silver mine stock in Mexico which started production about five months ago. That’s about all I can let you know. I’m sure any stock broker could get you into a good stock that’s going to start running the more money the US prints.
Were those comments you heard on the Michael Campbell show this Saturday? That’s where I’m getting much of my optimism.
Like Campbell says, learn not to worry about the world’s events. Learn how to profit from them.
This is about as great an opportunity as there will be for a while.
OK, I’ll give you one clue, glacier.
Stock is trading somewhere around $10 a share right now.
With expected target and over-reaction, this one could go to $30 a share.
Or, pick up some silver ETF’s. Likely not as much of a kick, but it will get you a good return as long as those idiots are running the Fed.
Ask the Germans how well that worked for them in the 20’s. Ogabe and his nutty crew are going off the deep end.
The debt has already been incurred so your chance to stop the consequences is gone. Now your choice is whether you get taxed straight up or whether there is an inflation tax.
Of course spending has to be cut, but America picked a path and is living with the consequences.
So the downside is deflation, not just one or two % but worse. All that does is increase the tax burden of the debt already incurred.
As SYF has figured out. One can avoid an inflation tax by investing. The cold dead eye of the sleepless internal revenue collection service generally doesnt have an easy avoidance option to it.
If you didnt want the tax, in whatever form, then you avoid the debt. If you wanted to avoid the debt, then you avoid the circumstances that led to it….including the election of politicians who dont care about debt, generally found on the left.
Do NOT buy precious metals mining stock! BUY THE METAL. If the economy starts to collapse, the promoters and insiders will be the first ones to unload their paper holdings and the little guy will be left with a**wipe. Good luck trying to dump your 500 shares when the Brokers are drowning in 100K share sell orders.
https://online.kitco.com/
This is why I didn’t sell my underwater property at fire sale prices (what a metaphor mix, btw) If the govt is going to inflate away its debt, I may as well go along for the ride. I just rent it to lessen the pain, then wait for the inevitable.
AGWGore said to “Share this article with your friends”.
It’s been “strangely unreported by the mainstream media.”
“Collapse is Personal Setback for U.S. President
Barack Obama was a board member of the Joyce Foundation that funded the fledgling CCX.”
…-
“Carbon Trade Ends on Quiet Death of Chicago Climate Exchange”
“Republican mid-term election joy deals financial uncertainty among green investors as the Chicago Climate Exchange announces the end of U.S. carbon trading.”
“The Chicago Climate Exchange (CCX) announced on October 21, 2010 that it will cease carbon trading this year. However, Steve Milloy reporting on Pajamasmedia.com (November 6, 2010) finds this huge story strangely unreported by the mainstream media.”
http://www.suite101.com/content/carbon-trade-ends-on-quiet-death-of-chicago-climate-exchange-a305704#ixzz14cMLxCNs
…-
Mo’ on Mao Stlong:
“Who is Maurice Strong – The Classic Liberal Blog *****
Maurice Strong is someone you should know. After all, he’s a major player in the … The charity was the Joyce Foundation on whose board of directors Obama served and which …”
http://the-classic-liberal.com/maurice-strong/
Belmont Club:
Socialism a dead horse, Tonto?
Ughly, Kemo Sabay.
…-
“But more importantly both demography and economic dysfunction compound.
Things don’t get worse in a linear fashion, it gallops away.
Simply servicing the skyrocketing debt of the last ten years will take a rapidly increasing share of national income equal in just a few years to the entire budget of the DOD.
A few years after that, not even the entire Federal Budget can pay off the interests. Anyone who has gotten into credit card debt knows how quickly the quicksand rise.”
“A Clockwork”
“Janet Daley surveys the collapse of the welfare state idea on both sides of the Atlantic. Europe is finding it can’t afford it at precisely the time that the American is trying to imitate it, while its voters reject it. The question is: where is this political discourse leading?”
http://pajamasmedia.com/richardfernandez/2010/11/07/a-clockwork/#comments
Did I hear someone say that Ron Paul and Dennis Kucinich were “Rational” voices…..???
Good to start the day with a laugh.
Now … as for deliberate devaluation of the US $ …. I thought we had all figured out that this was the plan going back 5 or more years.
Not that it is a good plan …. but it certainly is the plan.
The problems the US has are really generational. They decoupled the dollar from gold in the seventies. In the eighties, they deregulated everything (this is okay if you have nothing but honest ethical people in charge – unfortunately everyone is not honest and ethical – fact of life). They offshored all their jobs to Asia and China to make a quick buck for someone in the eighties and nineties. Under Greenspan, they further deregulated and took a hands off policy to financial institutions (including things like Sally Mae and Freddy Mac). He also maintained an extremely low interest rate policy.
Bush ditched Greenspan because he was a dummy and tried to bring some sort of regulation to the financial industry and brought in Bernanke. He couldn’t because the Congress and Senate were really in the hands of these guys.
Bush also made a miscalculation in the Iraq and Afghanistan wars. He did not expect them to last as long or be as expensive. So his tax cuts for wealthier individuals caused a monster debt which would have actually paid the 2 trillion cost of the wars. (I don’t think it is ever prudent to have tax cuts during a war because there are so many unknowns.)
The financial crisis, the housing collapse, the massive unemployment is a direct result of all this.
The unemployment numbers in the US are supposed to be around 9.5 percent but in reality they are closer to 17 percent. This is unsustainable. The gov’ts (at whatever level) is not obtaining revenue. These people are not buying anything. Big problem.
Obama has been trying for the last year to get China to elevate it’s currency to a realistic value. China has not complied (even though they said they would do something).
China just got a wake up call. It is no accident that Bernanke announced this the day after the election and it is no accident that republicans and democrats in office have basically said nothing.
Obama is in India right now. India is also a problem. The US has lost a lot of jobs to India as well through outsourcing and via the fact that India also controls access to their markets. This has to change. India has to open up their markets to the US. India is the future (and not China).
Germany also took a direct hit from Obama. They have to open up their markets. Germany was very smart in that they did not offshore anything big and so they are the number 2 exporting country in the world (China just surpassed them for number 1). They don’t export insurance or financial services or punditry. They make real stuff of value (the other stuff is just support).
When you are not playing on a global level field, you have to level it. That is what Bernanke is doing. The bottom line is that the US needs jobs and they need to be able to build and export real products. They need a gov’t that supports that. No more massive trade imbalances, forget the foreign oil (except from Canada), no more not being able to design, build, sell, their own stuff. They have to take care of themselves, even at the expense of the rest of the world, which they have grown since WWII.
USD erosion is bad news for Canada.
Only a theory born in a vacuum of reason would believe injecting more debt into the populace at a time when debt has crushed their trading power, would hold hope for the future – knowing that in time cumulative public debt will outstrip all productivity. To further sit back and see that this theory has,in practice, NEVER worked and to keep faith it will, maybe some day work, is the epitome of insanity.
Socialist-Communist-collectivist economic theories were born in a vacuum of practical reason and continue to evangelize the insanity of debt-financed debt relief. As you stare at that shrinking dollar in your piggy bank today and ponder why a 1913 freehold 20 dollar gold coin is worth $1300.00 today and a 1913 state issued dollar bill is worth $0.00. you may want to kick a debt-issue fiat money printing socialist in the arse and try to dislodge their brain.
Posted by set you free @ November 8, 2010 12:13 AM
“Gold will be OK, but silver will be the big winner,”
Absolutely. Silver has been kept undervalued by traders and , like gold, they aren’t making any more of it – what little we have, a good percentage is consumed by industry, taken off the market for good thus enhancing value.
Silver is the long term hedge the big players are picking for themselves. The price is artificially low so get in soon.
The world bank may have a debate on returning to some form of gold standard:
http://www.ft.com/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html#axzz14hOSwGue
If that were to happen the US – I the short to mid term at least – would have some real problems. Its largest export for at least a couple of decades has been treasuries. If the GS is adopted there would be a switch to security in different forms – gold and related metals for example. Loss of a liquid market for treasuries closes down the debt option to fund payment of entitlements. Thus immediate, wrenching change would be forced on the US govt.
While this has its benefits, it would also have a huge destabilizing effect on global security (Fred Thompson spoke of this when he was in Calgary last week BTW).
The fed, and the white house that pressured it to pump in money last week setting off a currency war, could have put the lives of millions of people at stake if the US were to lose the war.
The next few weeks could be very historic for tragic reasons…
Somebody better go and check to see if there is anything left in Fort Knox.
Sounds like most of us here have figured it out.
Fiat currency useless, commodities is the place to be.
This is the time, with wise investing, we can all profit from this crisis created by Keynesian idiots.
One of the funniest ambush video questions i saw taken in the Colbert/Stewart rally to restore naivete was: Is Barack Obama a Keynesian?
Some of the reactions were hilarious, stemming from those caught in the word trap and thinking the reference was to his Kenyan father.
I’m going to enjoy buying properties in Arizona at rock-bottom prices and then paying them off with massively inflated US dollars, while still earning relatively stable oil/uranium/potash/gold backed Canadian dollars.
Now is the time when future millionaires will be made. Just not here in Canada, is all.
Obama by the way is not an idiot. He is a saboteur.
Phantom:
You’ve touched on another part of my investment strategy.
Once the inevitable happens, it would be advisable to hold some land on which you can grow your own food.
Fertilizer stocks are poised for a huge gain. If anybody listened to the chatter about the BHP takeover bid, the offer was way undervalued.
Here’s another tip.
The Brazilian government is behind development of a new potash deposit. Even though Brazil recently bought some potash from Sask, that Brazilian deposit should be in full production by next spring.
At $300 at tonne shipping cost, the resource will be valuable since it is closer for the South American farmer, who will not have to pay as much shipping costs as they do for Saskatchewan potash.
Just something to watch for.
Just one thing..
“So his tax cuts for wealthier individuals caused a monster debt which would have actually paid the 2 trillion cost of the wars.”
Uhhh…well. Forget all that talk.
Let’s just take 2007. The federal govt. took in $2,674,007,818,000. That’s it.
Then there is this little nugget:
“CBO has estimated that “war-related defense activities” in 2007 were “roughly $115 billion.”
http://en.wikipedia.org/wiki/2007_United_States_federal_budget
Where did that “money” come from? THIN AIR. They take in 2 trillion “real” cash, then “print” 115 billion for “war”. GOOD JOB!
Taxes are not needed at all. The US Govt reps and military buddies just get whatever they need from Bernanke. They want war, he presses buttons on a keyboard and poof they got the cash to do it.
So why not just end the farce of taxes? Just borrow straight up from whoever owns the Federal Reserve. Stop bugging the people of America.
The people running the show will do whatever they want regardless of tax “income”.
Instead of putting the fake money towards killing weaponry, why not put 115 billion into the US healthcare system in one year? Or into roads/bridges/whatever.
The military can take a year off. They earned it after all.
The Obama administration is attempting to rip-off the savers and lenders and reward the ‘what-could-go-wrong’ hippies. It remains to be seen which way this will flop – and I do mean ‘flop!!’.
The old saying – ‘this time it is different’ may very well be true, but the world has seen many financial crisis the last 50 years or so and it has worked out roughly like this;
$100 dollars invested in 1950 became (Andex Chart)
T-Bills $2700
Farmland $3900
Gold $4200
Long Bond $6000
Balanced Portfolio $27,000
TSE/TSX index $30,000
S$P 500 $60,000
US Small Cap $149,000
Don’t know who is buying Canadian companies – maybe Americans! – but the TSX is about to break 13,000 … again, heh!
ron:
Of course, it’s Americans.
If the Canadian currency was guaranteed to go down 5%, would it not be wise to put your money in foreign markets?
That way, you’re guaranteed to make 5% just on the currency trade, never mind the appreciation in stock value.
0bamanomics 101
Can’t add, can’t subtract, numerically Illiterate.
Create chaos; never let a crisis go to waste (alisnki)
Some (msm?) magic
Secure second term
Finalise destruction of the country by turning it into the U.K. or some other flushable euro has been
?
am I catching the drift here? the fed reserve WANTS inflation to happen because …..?
am I catching the drift here? the fed reserve WANTS inflation to happen because …..?
Ahh, you haven’t heard the new terminology yet! It’s not inflation anymore, now it’s “reflation”. They want to reflate the economy to increase liquidity, even though there’s already trillions of dollars of private capital being kept under the equivalent of a mattress. Not sure how this is supposed to help, but of course it’s an assumption to even believe “help” is even the goal.
US revenues are lower than expenditures, and Obama kicked the expenditure function onto a higher plateau. Add in the Obamacare subsidies which kick in in 2014 , and the new expenditure level has a much, much higher growth rate. Any question whether it is inward or outward directed investment that will accelerate? Obama has created a permanently higher unemployment rate, until someone reverses his entire fiscal program.
Utilities, with a statutorily defined rate of return, will be one of the few decent paying dividend stocks. The others are in for a very wild, downward ride.
Commodities are ok if you want try out market timing as an investment philosophy, just don’t get your exposure too high and watch that your fingers don’t get pinched in the door.
Beagle, They want inflation to prevent the next mortgage crisis. There are still millions of underwater mortgages coming up for renewal. Devaluing the dollar should help floundering homeowners and also help manufacturers (It worked for Chretien in the 1990’s) It is a desperate short term ploy. However, once inflation hits interest rates must rise. Soon we will be back to Jimmy Carter’s 1979. Get ready for an influx of investment into Canada and metals generally.
I-O’600 Billion$ US$.
…-
“World To Fed: Stop Printing All That Money
IBD Editorials ^ | November 8, 2010 | LAWRENCE KUDLOW
The great Bernanke QE2 debate continues to heat up.
In the run-up to the G-20 meetings, China, Russia, Germany and others are all coming out against the Federal Reserve’s quantitative easing agenda. They don’t want hot-money excess dollars to flow into their higher-yielding currencies.
The assault against Bernanke’s easy money has reached such fever that President Obama felt it necessary to defend the $600 billion in new-money printing in a news conference in India.
Meanwhile, World Bank President Robert Zoellick has actually called for putting gold back into global money, in order to use it as an international reference point to measure market expectations over inflation or deflation.
The former Treasury and State Department official wants a successor to Bretton Woods. To my way of thinking, Zoellick is dead-on right.
And then there’s Kevin Warsh’s opus op-ed in Monday’s Wall Street Journal. I have written about Warsh in the past, and his sound-thinking views.
A Critic At The Fed
Taking a bit of a shot at Bernanke’s QE2, the Fed board member basically says: Look, you want better growth, reform the tax code and stop regulating. “The Federal Reserve is not a repair shop for broken fiscal, trade, or regulatory policies,” he writes.
(Excerpt) Read more at investors.com …”
http://www.freerepublic.com/focus/f-news/2623897/posts
“USD erosion is bad news for Canada”
I’ve been trying to understand what the impact would be on Canada of the USA QE2.
What would be the impact on the Canadian dollar?
Any bets if Canada would also try Quantitative Easing? (QE seems like a very bad idea).
I would rather have my economy based on commodities, as Canada’s is, than services that can be replicated across the globe, as is America’s.
No doubt it will be a rough ride, but Canada has a sturdier boat, I would think.