As the outside world looks in, what do they think?
ayn-rand-reason
I’m pretty sure I have the answer, the majority don’t spend more than a second thinking about QE3, because they don’t understand how connected they are to it.
Understanding QE3 is easy. QE1 failed, QE2 failed, and most everyone knows that QE3 will fail as well, but will it help cover up the stink till December?
QE3 works directly as a wealth transfer from those who were stupid enough to save the US Dollar. You may not know that you are a saver, but if you paid into a union, corporate, or private pension fund, or towards Social Security, those dollars WILL inflate further. Going to the store each day, you know that inflation is real. How will a pension fund survive when it has no earnings, and pay outs to pensioners are made out of diminishing principle each month? Yes, there is no magic, no fairy dust..
What the FED is doing today with QE3 simply continues the theft of your money. It denies you any opportunity of making an interest rate, and forces you to take on high risk in search of >any< type of income. If you allow it to sit in a savings account, it is essentially being confiscated through the FED’s ‘planned’ inflation.
You need not ask if this is true, just look at the interest your savings account earned over the last 10 years. But do see the problem as being far larger than this fact alone!
America has simply decided to run it’s house on credit, and as you watch people in this Administration spend borrowed money on every sort of pipe dream, do consider that it >is< causing your pension fund to fail.
What is the FED thinking? The answer… they think no further than tomorrow.
What are you thinking? Well, you should be thinking about the ‘Catch 22’. The Prostitutes in Government who willfully sell our future in order to stay in power for another term.
Here’s the simple truth… the FED claims they do QE3 to allow easier home mortgages at ultra low interest. What this essentially does is throw a wrench into the gear works that attempt to correct a very bad situation.
There is no way these houses will be sold under the artificially low interest rate.. as the loans only allow people to live in the house until they or others discover they can’t afford it. Here’s how it will play out..
Your dollar is no longer real money, as it no longer earns any kind of interest, and you do remember not long ago, pension funds calculated your lump sum based on 7% earnings!
So what to do? I guess it’s better to ask what every one else will do shortly when they finally figure out they’ve been swindled, and that will be to flee the US dollar in any way possible.
And these homes they claim to have arranged mortgages for? Is it not obvious that the Government has effectively arranged to loan the money to people that really can’t afford the house? Isn’t this just more of the same?
What is that definition of insanity? To do over and over again something that proved not to work last time.. well that be your government 🙂 And now.. we’ll watch to see how many people will sleep walk to the polls and vote. They’ll vote for the easy road, the sweetest teat. All they vote for is a happy tomorrow… and of course, politicians offer just that.. the day after? Well, that’s your problem…
We should thank the greatest generation for caring enough to worry about our future. They sacrificed so much to give us what they did. And we need ask.. Did we teach our children to believe in magic?
The best you can do is scale back, live modestly, and pay off debts. It’s going to be a rough ride. Buy your garden tools now, before the cost of a hoe is more than the last TV you bought. And.. as you drift off to sleep tonight, Remember that your all caring Government put you on the hook to underwrite a lot of those pension funds…
But now we can see how this will all play out. The US Government has punished every type of desirable behavior.. savers punished, borrowers and even vagrants rewarded. And successful people are now targets of ridicule and disdain? Humans naturally flee from punishment, and shouldn’t we revisit that old definition of insanity? To save the US Dollar over and over again when it bears no interest and only inflates? Are you insane ?
And the typical response from my generation, and those after it? “Hey dude.. you trying to bum me out?
And I pause to think about my Senators.. especially Patty Murray, all knowing, all caring, cocksure she understands that taking care of every ill she sees today is all that matters. She reminds me of the lifeboat Captain who scuttles the boat as she has no clue the boat has a limit to what it can carry in a single trip.
But we need ask… What would Patty Murray and others who have no critical thinking skills do to us IF only they could alter our Constitution ? An Ayn Rand thought?
“…It cannot be repeated too often that the Constitution is a limitation on the government, not on private individuals—that it does not prescribe the conduct of private individuals, only the conduct of the government—that it is not a charter for government power, but a charter of the citizens’ protection against the government.” | The Virtue of Selfishness
Happy Constitution Day!”
GB
“The best you can do is scale back, live modestly, and pay off debts. It’s going to be a rough ride. Buy your garden tools now, before the cost of a hoe is more than last TV you bought. ”
If this is all true, the shouldn’t I ignore my debts or even take on new ones to buy physical goods which can be later sold for inflated dollars to pay off the now worthless debt?
Sure thing.. if you want to operate with the same lack of ethics as many of your elected officials, go ahead. Think how many drew unemployment and never once looked for a job! That wasn’t government money, it was our money they were burning. As Quinn says.. once you give up your ethics, and good name, what do you really have left?
This post is simply a reminder that MOST of us realize that things are not getting any better, and that it may be that the majority vote QE4,5,6,and 7… start laying in some useful supplies now. If you buy durable goods, it could be a better move than Gold.. only the future will tell us for sure what value gold will hold against durable goods in high demand.
I owe Pete an apology! Yes Pete, if you have the income to keep your debts paid up, no doubt that is a good way to go. In the early seventies, I had a lot of friends lose their jobs and default on loans. It was hard times here in Pacific North West. I was totally oblivious to how bad it was.. I had a most reliable job. Not a lot of money, but I knew I’d make all my house payments. We bought a house in 1975 right when inflation started to take off. So.. it wasn’t the plan, but we did pretty much what you suggest. The key is keeping your job.
Thanks for the apology George. I wasn’t implying one should be irresponsible, as you correctly discerned.
If one is going to go into debt I think the key is not needing a job; reliable self employment. I don’t think anyone can count on not loosing their job. And using it to acquire productive assets which will appreciate in value in the long term.
The truth of the matter is I don’t think anyone should go into debt and we’d be a lot better off in a non-debt based economy. The banks are crooked and I for one am utilizing non-bank, non-debt methods of financing (things like crowd funding).
Its just a lot of folks who push the idea of inflation don’t act like it by taking on soon to be worthless debt. Amoung those who think outside the box on economic matters (and saw this depression coming) there is disagreement on whether to expect inflation or deflation and there is good reason to believe we’re seeing both at the same time.
There is also a matter of history. The Fed did this before around the great depression: build up an inflationary debt bubble and then contract the economy through deflation (which allows the rich to soak up all the assets of those who over extended themselves).
Pete, thanks for accepting my apology and for the gift you give in this latest post. Lots to think about. Many of us older guys have equitiy in our homes, and this might allow us to sleep far better than to take the risk of leveraging the equity in such uncertain times. Younger guys, have more time to recover from errors.. It’s obvious to me, there’s folks who have commented here that have done far more thinking about our situation that I have.
A key is knowing that interest rates returning to ‘sane’ levels will destroy the house of cards the FED has created. So, so we need figure out what else to do..
Atlas shrugged. We will be lucky to have the Japanese style deflation of the last 20 years. The Japanese got away with their QE up to now because they have had an export surplus (more Yen to buy their own debt). We do not have the surplus and the Fed has taken us in to uncharted waters.
A little whoops in China
A great comment Jack! We here seem to have a growing segment of the population that abhors people who are sucessful…. how short sighted is that? If only I could buy stock in the Ayn Rand Corporation.
Yes Jack.. we are where no one dared go before.. and we ‘ve apparently raised a few generations of people who think the Government has some type of magic, basically they’ve run out con games to play.
Whoops in China: http://www.reuters.com/article/2012/09/16/us-china-steel-warehouse-idUSBRE88F0EJ20120916
I posted the whoops in China to point that out across the globe the bankers have dropped the ball and the central bankers have dropped it big time. I used to think these guys were smarter than most of us. Now, I think they are pathetic as they believe they can control the outcome. All we can do as individuals is capitalize on their mistakes and vote their muppets out.
I do think getting out of debt is good for any reason but at least as a thought, I agree with the earlier post. Having fixed rate debt in hyper inflation could be a very good thing and not ethically challenged. I just wonder if there during hyper inflation the government would modify mortgages to elimate early pay offs as another favor to the banks.
http://www.minneapolisfed.org/community_education/teacher/calc/hist1800.cfm
This is the Feds cost of living index 1800-2008. Notice how from 1800 to 1910ish the consumer price index dropped 50% of its 1800 price. Then notice after the creation of the fed and fiat money it went up over 600%. Before the fed you could have put your cash in a shoe box and bought more than you saved at retirement. After the fed you have to take it to wall street and hope after they’ve screwed with it and got rich there’s some interest left for you. That was their plan. This is also why this parasitic class tries to con us into believing deflation is a bad thing. We are reminded how inflated money lubes the economy, yet the prefed deflation years were the ones where america grew from a backwater to the greatest nation that had every existed. Post fed we see the unravelling of America. Post fed inflation economy gives us oversized homes, no savings and lifetime debt. Prefed gives modest homes, modest cars and savings.
Of course machine tools or other equipment for small industry, energy, gardening and self sufficiency is a better investment.
You’ll note that I made an apology to Pete, for some reason I read into his post something he didn’t say… and of course.. he and everyone else were polite about my poor response, and didn’t beat me up.. I deserved as much..
The key is knowing you can continue to tender your debt.
Let me tell you the story about a friend who did very well in business. He retired, built a nice house in a rual area where he could have horses, out buildings and more. As he got older, he decided it was too much to care for and he moved onto his daughter and son it law’s property. They had a very nice and new garage and he used a good chunk of cash to turn it into a very nice house for him and his wife. The kids came over fron right next door.. and they enjoyed their Grandchildren like never before.. .. The Son in law was buying houses for rentals, and my friend used the majority of his liquidity to help fund same..
Then the bottom fell out! The appraised value of his son in laws assets fell big time, and this unraveled the works. My friend forced off the property with a foreclosure.. He’s in his 80s, lives in a trailer home just outside of town. I doubt he buys a new car every two years like he once did.
It’s all about knowing you can tender those payments and meet the terms of the contract. Not all of us are in our 60s like me.. so if you are lots younger, you have more time to recover from a mistake, you CAN make a larger gamble..
This would be good advice for the us gov. Is there anyone who thinks they can meet the terms of their debt?
I think you are right on Bill.. another half of the population think you’re just tring to scare the kids..
Cash is good to have if the deflation scenario (what the Fed really fears) plays out.
http://www.zerohedge.com/news/guest-post-if-you-want-help-poor-and-middle-class-encourage-deflation
Excellent article. I was going to bring up the electronics industry but they said it better.
Jack,
This is a lot like ‘wack a mole.’
Great point on the bankers, but I think the problem here started when politicians leaned on bankers to loan money zero down, zero interest, zero job…. they thought home values could only go up……
GB…..
Just mumbling……
Didn’t the prices go up…Or at least until the people that could not afford there zero everything loan because of the rest of the debt they had aquired. Then all of the Banks forclosures were taken care of with a taxpayer bailout…..Then the forclousers were dumped onto the market to help us out even more. All of those cheap houses out there with cheap loans and nobody is buying..??! The stock market even got into the frey……I really don’t know myself……but it sure appears like they are playing instead of saving….
Dave.. I’m easily confused, but… “Then all of the Banks forclosures were taken care of with a taxpayer bailout”
I don’t think anything has been taken care of.. More like creative ideas to hide a stinking pile, and it keeps getting uglier and uglier.
The only way to fix a thing is let the market set the interest rate, and keep the FED from stealing the loans traditionally made by pension funds and other critically important entities to our survival and success. The FED is killing us.. we don’t need ememies when we have these guys in charge.. The Mafia knew better than to kill their host! But the pain will be enromous. Imagine finding a person who can afford to buy your home with a 6% interest rate.. It’s the reason rational men don;t venture into uncharted territory. It also give you pause as per investing in houses for resale.. But I have only the questions, and I don’t even know if they’re good ones..
Other interesting news.
Obama wins right to indefinitely detain Americans under NDAA
http://rt.com/usa/news/obama-lohier-ndaa-stay-414/
I’m sure this sounds a lot like what people fled when they came here.. Ileana for one..
Here’s a great example of so called ‘educated’ people ignoring the reality of gravity itself? No wonder the elite don’t leave their kids in Chicago public schools!
http://blogs.the-american-interest.com/wrm/2012/09/20/chicago-teacher-strike-ends-pension-crisis-begins/
These people are seriously grid tied to a source of income that they have no control over. It is pure arrogance when they demand more and assume all the cash will keep flowing and that they are deserving.
Here’s how it will likely play out.. The Boomers will assure there’s a lump sum option. They’ll retire in the next few years, take their large portion based on low interest earnings and run!
Since the Fed is committed to denying pension funds earnings long term.. , the fund will be bankrupt in about half the time predicted.
In three years, the Chicago Teachers will smell the stench.. they’ll open the bag they’re holding and find all that’s in there is dog dew. It’s the classic play.. and they are the easy dupes 🙂
The younger Teachers might look back on this and remember how enthusiastic they were on the picket line. How ‘cocksure’ (there’s that word again) they were that this was all in their best interest. But in the end, they’ll blame the failure of their pension fund on the free market and capitialists 🙂
These educated Teachers will never put two and two together, it’s what makes it so easy to steal from them, and they were bred for the purpose, just like Chickens in a pen 🙂
And it brings us right back to that term ‘educated’ … and we ask… in what?