"I've abandoned free-market principles to save the free-market system"
President George W. Bush
"Obama's stimulus plan makes as much sense as paying my wife and kids to work for me to increase the cash flow in our household"
A reader from the wall street journal
Isn't that an astounding admission from a President of the United States? In other words, we have turned to socialism to save the free-market. Sounds like a bunch of bull crap to me. The reader of the Wall Street Journal also has it right. Bush is the next Hoover trying to fix this economic mess and in the process, he only makes it worse. Obama is going to be the next Roosevelt whose ideas so far are only going to compound the problem. Obama wants to spend more money with his huge so-called stimulus plan. The government cannot spend money to create jobs without first removing the money from the economy. The government doesn't create GDP, it reduces it. What is it these two doofuses don't understand?
Even Europe is beginning to understand socialism is not the answer.
Bernanke has been throwing pancakes at the wall to see which one will stick, but none are sticking, they keep falling to the ground. Each economic policy Bernanke struggles to implement is like the pancake with its farinaceous sticky mass, not quite done, that is hurled in the air. It binds to the wall - the stock market goes up, but then the pancake struggles to cling to the wall. Strands of the sticky substance are formed and stretched. The pancake can no longer hold on to the wall – it struggles but to no avail. The pancake slowly falls to the floor like the stock market dropping when investors realize that the Fed implemented just another stupid economic policy that will not work.
The Fed is now giving out free money - how is that for liquidity? The Fed has been adding reserves to the banking system beyond what is necessary to keep the rate at its target as explained by Liz Ann Sonders of Charles Schwab. Interest rates are now virtually -0- - Free money. So, if you have a money market fund invested in treasuries, you could essentially have a negative yield since there is still an expense the company charges you for the privilege of having the money market fund. But that is not all; The Fed is now implementing a strategy it calls "quantitative easing." Since interest rates are now at 0, the Fed can't do anything with interest rates, therefore it is now flooding the banking system with money by purchasing securities supplying the banks with more liquidity and printing more money "quantitative easing." This is unprecedented and it has never been done before. This world has gone completely insane.
So what will this do to your savings? It is nothing more than the government robbing you blind. Injecting so much liquidity will only lead to inflation possibly hyperinflation which in essence is a hidden tax - so much for the mantra, "No new taxes!"
The Fed however is missing the point altogether. This crisis is not due to a lack of liquidity, it is due to a lack of confidence. No one wants to spend. Everyone is saving their money because no one trusts the government or where they will be six months from now. Consumers are deleveraging (paying credit down) instead of spending on other things. As the Wall Street Journal points out, a major tax cut is what needs to happen to spur the economy, but Obama is focused on spending, so he will only increase the deficit, and devalue the dollar. Democrats always think we can spend our way out of an economic crisis, and lately Bush thinks that way too. Obama's spending proposals will not solve this economic crisis.
If Obama were serious about reviving the economy, he would create jobs by drilling offshore and building nuclear power plants, but I am not holding my breath.
I wish Obama the best, but it simply does not look hopeful.
Kudos to Obama for allowing Rick Warren to say the invocation at the inauguration and not bowing to pressure groups.
And why is everyone so worried about Caroline Kennedy's lack of experience? We have a president-elect with no experience. So, what's the beef?