Is there enough trees to print all this money?

[Magox]

Yesterday's decision from the Fed is seen by many as bold.

 

In my view, it is wreckless.

 

There is no doubt in my mind, that this was the single largest decision that will impact the dollar since the 1985 Plaza Accord.

 

The fed is basically deciding to finance our deficit by buying our own national debt.

 

The logic behind it is that it will bring down rates in mortgage/consumer/credit card/school loans.

 

In the short run, it most likely will.

 

It was just a few months ago the fed's made a similar move, and the committed and spent $800 Billion in Mortgage/consumer loans. It brought down rates.

 

for just a little while.

 

Mortgage rates on the 30 year loans came down to as low as 4.96%.

 

Then gradually they went higher as I knew they would.

 

Now the fed has commited another $1 Trillion dollars and rates this morning for the 30 year came down to as low as 4.98%. So we are right back where we were just a few months ago, except now we have committed an additional Trillion dollars. Now I wouldn't be surprised to see rates go lower in the coming weeks, but it will just be temporary.

 

Bernanke was a big student of the Great Depression. I believe he feels as if he was destined to be the Fed Chief.

 

Comments from the fed chief offer support for this argument. In his famous address on fighting deflation in 2002, Mr. Bernanke said the fed wouldn't run out of ammunition to influence prices even after cutting interest rates to zero: "The U.S government has a technology called a printing press... that allowes it to produce as many U.S dollars as it wishes at essentially no cost."

 

This is your fed chief

 

I honestly believe that the value of the U.S dollar is in for a very hard landing.

 

according to U.N economists, and mind you, this was before the potentially disastrous decision that the Fed's made yesterday, "that the U.S external debt has risen to new heights thatr could provoke a dollar collapse"

 

they also went on to say "an accelerated fall of the dollar could bring new tumroil to markets. Investors might renew their flight to safety, though this time away from dollar-denominated assets, therby forcing the US economy inta a hard landing and pulling the global economy into a deeper recession"

 

If the Obama administration pushes through another stimulus plan, the dollar is done.

 

the reason why I am sharing this with anyone who reads this is so that you can be aware of what is happening.

 

I know people will criticize what I am saying, but for those who actually know how to read in between the lines, of what the federal reserve, U.S Treasury and the U.S president are looking to do.

 

Invest in things that protect yourself against a devalued dollar and inflation.

 

TIPs is a good way to invest. Basically it is a bond that protects yourself against inflation. Right now they are priced very cheaply because of this deflationary whirl wind that we are in. But people are starting to get into them now, so they are rising in value.

 

Precious Metals, another way to protect yourself. If the Central banks across the world are not going to make responsable decisions, then you have to be your own central banker.

 

anyway, I am a passionate and concerned investor. I thought I'd share this with you.

[Stussy109]

I remember reading that taking on debt is deflationary in the long term. Short term it is inflationary due to the increase in money supply, but every dollar printed today will have to be paid back with the principle $1 plus interest in the future, therefore taking money out of the supply. The chinese are financing a majority of our debt, and all of this money plus interest will end up in their economy in the near future.

 

In the past inflating our way out of a financial mess has worked. Prices on everything rise, hosuing prices rise (getting people from being upside down in their mortgages), wages increase, stock market goes up, commodities go up etc etc. If you want to protect your money invest in commodities or commodity based stocks. I invested in natural gas and bought gold and platinum a couple months ago for this exact reason. You could argue that real estate would be a solid investment right now as well.

[Magox]

I remember reading that taking on debt is deflationary in the long term. Short term it is inflationary due to the increase in money supply, but every dollar printed today will have to be paid back with the principle $1 plus interest in the future, therefore taking money out of the supply. The chinese are financing a majority of our debt, and all of this money plus interest will end up in their economy in the near future.

 

In the past inflating our way out of a financial mess has worked. Prices on everything rise, hosuing prices rise (getting people from being upside down in their mortgages), wages increase, stock market goes up, commodities go up etc etc. If you want to protect your money invest in commodities or commodity based stocks. I invested in natural gas and bought gold and platinum a couple months ago for this exact reason. You could argue that real estate would be a solid investment right now as well.

I absolutely agree with investing in commodity based stocks. The chinese right now are buying up lots of commodity based companies, M&A activity has been picking up significantly out east, because they know this will benefit their expansion, and it is a way to hedge themselves in case if the value of the U.S dollar depreciates, which I think is inevitable.

 

There have been recent statements from foreign governments (like the chinese, who just recently said that they were "worried" with their U.S investments, largely Treasuries)suggest the rest of the world finds much fault with U.S systems that, it perceives, allowed the current crisis to metastasize. Global leaders may seek to impose significant international finance changes that would alter how the U.S operates.

 

Perhaps the U.S will concede on some demands, but possibly at a price, the acceptance of a substantially weaker u.S dollar over the lon term.

 

The reasoning behind it is that a weaker dollar allows the U.S to compete better globally by boosting exports, helping shrink the exploding current-account deficit, and the treasury has massive debt to sell to pay for all these sundry bailouts. Debasing the currency allows the treasury to repay its debt with cheaper dollars.

 

 

My concern is, up to what point will the chinese decide to not buy any more of our debt, or maybe even start dumping it? After all they do have their own pressing needs and they do need to watch over their investments. I mean, the fact of the matter is, the more debt we rack up, the more at risk we are of defaulting on our commitments with foreign holders of U.S debt.

 

I am fearful that as a result of all this government spending, that inflation could be "the canary in the coal mine" . I could see their being an unhealthy inflationary whiplash. One that doesn't so much consist of actual strong, robust demand for commodities, but one where a "freefall" of the U.S dollar will have serious implications on where investors park their money.

 

In times of inflation fears, as you astutely pointed out, investors would rather hold on to tangible assets as opposed to paper.

 

My fear in commodity stocks though, is that if the U.S dollar falls precipitously, then you may see a serious devaluation of all U.S dollar denominated assets, including U.S stocks. The underlying commodity may rise, but that doesn't mean that the value of the stock will.

 

Take a look at the performance of Gold Mining stock index and the value of Gold bullion. The value of Gold bullion has risen over %200 in the last 5 years, where the value of Gold mining stocks at an average has risen less than %50. It is still a paper asset.

 

I guess what I'm saying is that i trust tangible assets more than paper assets.

 

For now

[stuckincincy]

You could argue that real estate would be a solid investment right now as well.

 

What about ammo?

 

[H2o]

Why does it seem like I am the only one who see's this?

My friend, you are not the only one. I'm a Christian so I look at things in a different manor than alot of people do. From my perspective and what I understand of prophecy, this is all a set up. All of these things are going on at this point in time because we are rapidly heading towards the days of the book of Revelation and Daniel being lived out upon the earth. With all of the wars, utter rebellion against God, and economic unstability worldwide the end is soon near. When the great collapse finally takes place it will be the Anti-Christ who steps in with his plan to save the world. He will seemingly have the answer to all things and people will embrace him and worship him. He will also have a cloak of religion around him with a false prophet. Many signs and lying wonders will take place before the eyes of all. God will send a strong delusion upon the people who did not receive the Lord Jesus Christ and they will be drawn in that much more. They will cry out "Who is like the beast and who can make war with him?" He will then be mortally wounded, die before all, and then come back to life by the power of Satan himself. People laugh and say it sounds like something out of Hollywood or a comic book. They try to brush it aside, but it's coming my friend and seemingly soon with the way things are shaping up. All the stuff you see now is nothing more than the road to tribulation.

[erynthered]

My friend, you are not the only one. I'm a Christian so I look at things in a different manor than alot of people do. From my perspective and what I understand of prophecy, this is all a set up. All of these things are going on at this point in time because we are rapidly heading towards the days of the book of Revelation and Daniel being lived out upon the earth. With all of the wars, utter rebellion against God, and economic unstability worldwide the end is soon near. When the great collapse finally takes place it will be the Anti-Christ who steps in with his plan to save the world. He will seemingly have the answer to all things and people will embrace him and worship him. He will also have a cloak of religion around him with a false prophet. Many signs and lying wonders will take place before the eyes of all. God will send a strong delusion upon the people who did not receive the Lord Jesus Christ and they will be drawn in that much more. They will cry out "Who is like the beast and who can make war with him?" He will then be mortally wounded, die before all, and then come back to life by the power of Satan himself. People laugh and say it sounds like something out of Hollywood or a comic book. They try to brush it aside, but it's coming my friend and seemingly soon with the way things are shaping up. All the stuff you see now is nothing more than the road to tribulation.

 

obama???

[Magox]

My friend, you are not the only one. I'm a Christian so I look at things in a different manor than alot of people do. From my perspective and what I understand of prophecy, this is all a set up. All of these things are going on at this point in time because we are rapidly heading towards the days of the book of Revelation and Daniel being lived out upon the earth. With all of the wars, utter rebellion against God, and economic unstability worldwide the end is soon near. When the great collapse finally takes place it will be the Anti-Christ who steps in with his plan to save the world. He will seemingly have the answer to all things and people will embrace him and worship him. He will also have a cloak of religion around him with a false prophet. Many signs and lying wonders will take place before the eyes of all. God will send a strong delusion upon the people who did not receive the Lord Jesus Christ and they will be drawn in that much more. They will cry out "Who is like the beast and who can make war with him?" He will then be mortally wounded, die before all, and then come back to life by the power of Satan himself. People laugh and say it sounds like something out of Hollywood or a comic book. They try to brush it aside, but it's coming my friend and seemingly soon with the way things are shaping up. All the stuff you see now is nothing more than the road to tribulation.

I wouldn't ever discount anyone's beliefs on their faith. Whether the world is coming to an end or not, it doesn't really matter to me. What I mean by that is that, it won't change the way I live my life. I am looking to better myself every day in every single way. Of course, there are many setbacks along the way, but that is a main focus in my life.

 

According to the Bible, God helps those who helps themselves. It happens to be, that money is a way that helps make things easier for my life. That doesn't mean that I enjoy making money for the purpose of having money. I make money so I can put a roof over my head, have a vehicle to get around in, food to eat, clothes to wear. But other than just needs, I make money with the motivation to make my life more comfortable and enjoyable, and I don't see that as a sin.

 

I basically live my life to be happy, or at least I try to live my life that way.

 

I have a strong interest in the economy, as my job is to advise people in how to handle their finances. I enjoy what I do, I love the research, I love communicating with people, and I have a genuine interest in helping others.

 

I strongly advise for people to take another look at their finances and investments. The decisions today that the Fed, Treasury and Government are making, has and will continue to impact very heavily people's investments moving forward.

 

Some people have the view that hope is a good strategy. I can tell you that Hope is a terrible strategy. It is mind boggling to me, that people will work hard all their lives, and put a % of their income into their 401k, IRA etc. but not put no where near enough emphasis and time tending to their investments.

 

It is counterproductive to spend all your time working, and very little time researching and taking care of your investments. Many people that I speak to have lost over half of their life savings through their 401K's. They lost this money partially because they listened and entrusted their life savings to these "financial guru's" or as I call them "stock cheerleaders".

 

You have to be either misinformed, misguided or just deciding to turn a blind eye to believe that these huge decisions that the government is making won't impact your investments.

 

Hope is a terrible strategy. So for those who have their investments, and are down significantly. You still have a choice in where to put your money.