PRLog - Sep. 25, 2012 - PALM BEACH GARDENS, Fla. -- #1 Ron Paul * “It means we are weakening the dollar. We are trying to liquidate our debt through inflation. The consequence of what the Fed is doing is a lot more than just CPI. It has to do with mal-investment & people doing the wrong things at the wrong time. Believe me, there is plenty of that. The one thing that Bernanke has not achieved & it frustrates him, I can tell—is he gets no economic growth. He doesn’t do anything with the unemployment numbers. I think the country should have panicked over what the Fed is saying that we have lost control & the only thing we have left is massively creating new money out of thin air, which has not worked before, & is not going to work this time.”
"Helicopter Ben" told us he could drop bags of money from a helicopter . . . .
#2 Peter Schiff, CEO Of Euro Pacific Capital * “This is a disastrous monetary policy; it’s kamikaze monetary policy”
#3 Michael Pento, The Founder Of Pento Portfolio Strategies * “This is the nuclear option for them. This is a never-ending weapon that is being fired at the middle class”
#4 Donald Trump * “People like me will benefit from this.”
#5 Economist Anthony Randazzo * “Quantitative easing—a fancy term for the FED buying securities from predefined financial institutions, such as their investments in federal debt or mortgages—is fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy. It is a primary driver of income inequality formed by crony capitalism.
#6 John Williams Of Shadowstats.com * “That’s absolutely nonsense. The Fed is just propping up the banks.”
#7 Marc Faber * “I happen to believe that eventually we will have a systemic crisis & everything will collapse. But the question is really between here & then. Will everything collapse with DOW 20,000 or 50,000 or 10 million? Mr. Bernanke is a money printer &, believe me, if Mr. Romney wins the election the next Fed chairman will also be a money printer. And so it will go on. The Europeans will print money. The Chinese will print money. Everybody will print money & the purchasing power of paper money will go down.”
#8 Mesirow Financial Chief Economist Diane Swonk * “I think this will end up being a trillion-dollar commitment by the Fed”
#9 Federal Reserve Chairman Ben Bernanke * “I want to be clear — While I think we can make a meaningful & significant contribution to reducing this problem, we can’t solve it. We don’t have tools that are strong enough to solve the unemployment problem”
#10 Credit Rating Agency Egan-Jones * “[T]he FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy &, by extension, credit quality. Issuing additional currency & depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar, & in turn increase the cost of commodities. The increased cost of commodities will pressure profitability of businesses, & increase the costs of consumers thereby reducing consumer purchasing power. Hence, in our opinion QE3 will be detrimental to credit quality for the US….”
We have reached a major turning point in the financial history of the United States. It would be hard to overstate how much damage that QE3 could potentially do to our financial system. If the rest of the world decides at some point that they no longer have confidence in our dollars & our debt then we are finished.]
We now have witnessed the endgame launch of the “Great Currency War of 2012” by the FED. The money that exists in the economy is targeted by all labor market participants who are struggling to obtain that money for themselves by offering their labor in exchange. Having been a participant in the labor market for some 20-30 years, it is safe to assume that the laborer has put away some excess capital over the years in the form of a savings account for retirement. Having earned this money weeks, months or even years ago, capital that has been earned in exchange for labor, then been taxed by the local, state & federal govt., paid social security contributions & FICA, covered healthcare costs, made retirement contributions, living expenses such as mortgage, credit card payments & the light bill, put food on the table, put clothes on the family & paid for the children’s daycare expenses, so what ever is remaining at this point has been fought hard for as the cost of all of these expenses has mysteriously continued to rise while the income level has remained stagnant since 1971.
Enter the FED & their admission that they have been unsuccessful in manipulating the US economy back into a recovery. They have publicly shifted their policy target from partially bailing the banks out while supposedly attempting to get the unemployment problem under control to a new policy of simply bailing the banks out directly & ENDLESSLY by purchasing the toxic derivative investments that are responsible for destroying the economy to begin with. Their new stated agenda is to print & pump $40 BILLION EVERY SINGLE MONTH into the preferred banks who are aligned with the FED & magically absolve these insider banks of any losses associated with these imploding derivative investments that would have never been created without the deregulation of the Glass-Steagal Act during the Clinton administration. Did I mention they intend to do this . . . INDEFINITELY!?!
So what happens if $85 BILLION every single month is pumped into the economy? The dollar will continually lose value & therefor purchasing power which will go a long way towards destroying citizens ability to acquire the consumer goods they need to live. As this consequence begins to manifest the CPI (consumer inflation) numbers will begin to climb with no end in sight & will show a direct correlation to the continual drop in consumer spending. This drop will come as a result of the fall off in consumption as consumers are forced to make the tough decisions about what they really need & what they want. When these tough choices become more & more commonplace (they have been increasing in frequency for some time already) consumers are going to become more frugal by necessity which will only exacerbate the problem.
China will lead a global trade revolt away from the dollar & entice its trade partners, & anyone tired of the FED & their reckless monetary policies, into their arms now that they are offering endless crude oil that no longer requires USD to purchase. With 2/3 of the US manufacturing base in China already they are supplying a majority of global exports & have apparently doubled their nations gold holdings as well. This will all serve well to present China as the new economic super power solution to the failing dollar & the world has been waiting desperately for a new alternative.
The short term impact will certainly be a severely devalued dollar at home that will destroy purchasing power & could very well tip our ugly recession into a nasty depression. The sure bet is that inflation will grow beyond anything you have seen this far in life. This alone is reason enough to get your affairs in order & prepare an inflation hedge. Now that the FED has tipped their hand, the ECB, BOJ, the Aussies, China as well as the UK will follow suit as the “Great Currency War of 2012” has none gone hot & those who don’t fire back will surely be injured gravely. Establish your inflation hedge now in physical gold & silver bullion before it is too late. Remember that it is a far better strategy to PREPARE your portfolio now than to attempt to REPAIR your portfolio once the damage has begun. Tick, tock.