We all know both the US government and the Federal Reserve are going full bore with one tweak after another to “save” the banking system and supposedly, thereby the economy. At least, that’s their argument to Congress and the American people. Hank Paulson and Ben Bernanke on news talk shows or testifying in front of Congress are constantly using the tired refrain of “helping the American public”.
The real truth is all this government and central bank meddling will do very little to help the average American. And in all likelihood, the economy will actually suffer from it.
Let’s take a look at some trends since Hank and Ben have been hard at work.
- Unemployment is up…and getting worse…hurting those looking for work.
- The stock market is in the tank hurting pensioners and others who live off of equities or dividends.
- The price of gold is steadily declining as of March this year hurting those who were counting on this safe haven instead of stocks to provide for retirement.
- Real estate prices are still falling hurting anyone wanting to sell or refinance and draining government coffers which depend on property taxes.
- Consumer confidence is at all-time lows meaning retailers are screwed in the coming Holiday shopping season and the economy in general since consumer spending is what drives it.
- All of the above is getting replayed in Europe and around the world.
Great job guys!
After months of governmet tweaks from Billion Dollar Stimulus Packages to Billion Dollar Bailouts to Billion Dollar War Spending…the economy is heading where it was always heading…south.
The cold, hard truth is government is not bigger than the economy. Government is not bigger than consumers. Yet those in power would have us all believing they are.
At the Fed meeting next week, Ben will lower rates again showing us just how much control over this economy he thinks he has. But this latest lowering of interest rates will do nothing to kick-start the economy…and in all likelihood is responsible for the stock market sell off this past week.
Every time Bernanke or some foreign central banker lowers rates he is signaling his disregard for future inflation. There is nothing more devastating to the real economy, the average worker, or the retiree than even modest inflation.
Be prepared. Many economists, pundits, and market watchers (including myself) believe a bigger stock market crash is coming since this massive inflation effect is already baked into the cake…it’s just a matter of time.
Of course, one silver lining of an inflation tsunami…real estate prices go up!
Photo Credit: hansol