Wednesday, December 6, 2006
Too good for the business cycle
Over the past few years, the Feds have decided that they are too good for the business cycle. The only things they are interested in is the short run economy and keeping a positive spin on things. This results in eventual economic disaster, which is just on the horizon. What are the Feds good at? Creating bubbles and shifting liquidity. There was the stock market bubble...eventual crash. There is the housing bubble...now crashing. These artificial bubbles, often created by low interest rates, always end up popping. It is a simple economic concept called regressing to the mean. Let's look at housing briefly. After 5 years of unprcidented growth, the housing bubble peaked and is starting too look pesimistic. All of the crap that you hear on CNBC, CNN, and other news channels about the housing downtrend being almost over and having a soft landing is a load of crap. Most of these economists that are saying this load of jargin are on the payroll of some real estate firm. They spin this, because they get paid to spin it. So we haven't seen nothing in the case of real estate. Without getting much into the specifics of the whole ordeal what does it all mean? All long overdue recession, and what I believe to be a depression coming. When will this occur? Well I strongly believe we are in a recession now, but it will be public in the first half of 2007. The action of the Feds will be to immediately lower interest rates, once again bending the American consumer over. Higher interest rates are the last pillar holding any value that the fiat U.S. dollar holds. How far will the dollar drop...really low. Maybe 1/4 or 1/3 of evento 1/2 of its value today. Instead of riding the recession out responsibly, they are going to try and inflate through it. BAD BAD BAD for you and me. That will be the straw that sets us into depression. Ouch. Not allowing the business cycle (which is not a naturally occuring cycle, and is something we created) to act accordingly carries dire results. And that is exactly what the Fed is doing. Have a nice day.
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1 comment:
The US, historically, has persivered through tough economic times. Necessity is the drive and cause of invention.
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