I was surprised to see this cover on Barron's October 19 issue:
It's an interesting conundrum: should the Fed try to slow an economy that is dead in the water or try to prevent inflation caused by policies of the Obama administration? Apparently, there is no alternative such as "let the markets work."Here's what is going on:
- The federal government is flooding the world with dollars that have no real backing, thus diluting the value of the dollar against other currencies [inflation within the U.S.]
- The Federal Reserve is trying to protect the banking system by keeping the cost of their money low while trying to figure out how to deal with insolvent banks
- U.S. trade and tax policies encourage the gutting of U.S. manufacturing and the rise of U.S. unemployment creating a greater "dependency class"
- U.S. unwillingness to enforce immigration laws is flooding our cities with uneducated, social services dependent masses that have strained cities' and states' budgets to their breaking points
- Despite optimism in the stock markets, most investors have lost substantial amounts in the past three years leaving personal finances in a mess
- Real estate is a cesspool and now Congress is trying to re-institute the very policies that caused the mess
- On top of all of this, the Obama administration is trying to pass energy and health care legislation that will further cripple the economy and place inflationary pressures on the dollar
Soon to come... big increases in taxes.
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