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Central Missouri | Great post ZEN, on top of what you posted from the Husseman Report the fed govt is guaranteeing the FDIC. here have been hundreds of banks taken over by the fdic in the last cupla years with apparentlt hundreds more to go. When they take over these banks they find someone to assume the loans. On top of the fact that the loan portfolios have been overvalued by 25-30%, the fdic is being forced to guarantee approximately 75% of what is then left. Well who is gonna be on the hook when/if alot of those loans fail.
The Hussman info, the fdic loan guarantee info, and the fact that another 700 banks or so are gonna go down is why they are fighting deflation so intensely. IF THE VALUE OF ASSETS CONTINUE TO SINK THE BANKS, THE FEDS BALANCE SHEET, THE CONSUMER WITH HOME LOANS, and THE 700 MORE BANKS THAT ARE GONNA GO KAPUT, ARE IN EVEN HOTTER WATER ALONG WITH OUR ENTIRE ECONOMY.
Therefor Quanitative Easing (or money printing) is the policy. That will remain the policy until the problem is worked out or the system goes kaput due to hyper-inflation or some other economic calamity.
So ya gotta ask yourself "how does QE affect me"? My only answer is this .... When you create more of something in this instance debt or money and it isn't consumed it devalues the value of the same something. In this event it is the dollar. When you do this with a currency by injecting more and more into the economy and then the velocity of money picks up you get hyper-inflation.
Lets hope we don't go there. In any case, QE is more than likely gonna be the policy until it doesn't work anymore. | |
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