What is the Real Effect of Borrowing and Printing Money - But Not Letting People Get to It?
Seems like there is a river of money flowing and headed for the falls. Hundreds of billions for corporate welfare. Short term interest rates at record lows. Mortgage rates are still better than any time over the past 30 years.
But truth be told, people and corporations are still going broke at an alarming rate. The reasons are varied but the huge elephant in the room is that cash is not reaching folks who need it the most to create jobs.
The gatekeepers are keeping billions of dollars locked in the, uh... vault. But so much money has been printed and borrowed from our children's futures that the gate is bulging enough to break. And break it will. When it does the result is inflation that that will bring back all those fond memories we have of the late 70's and early 80's.
Money, right now anyway, is not going anywhere. So cash flow and asset appreciation are dampened. And all the rest of the transactions that keep a capitalist economy oiled just are not happening. Ask Tom Persinger, who went from 60k a year at GM to 24k as a nurses aid. But he is one of the luckier ones. There is a 10 percent unemployment rate so one in ten people arent spending. Take that a step further. If you look at unemployment the way they did before the Clinton era voodoo, it is closer to 21% - sounds like the Great Depression. The loss of spending and thus income is staggering.
California is issuing IOU's, Rhode Island shuts down for a couple of weeks - and all the rest of the states are scrambling to raise taxes and cut spending. Nothing is secure anymore.
Nervous about the stock market? Just when it seems equities are stabilizing you and every other investor gets faked out when they dump again. Real estate, though housing markets seem to no longer be in free fall, is still causing anxiety and hand wringing.
Bond trader pros are saying that the Fed is printing money just to keep the interest rates low. This is a long-term policy that is guaranteed to keep the economy anemic if not on all out life support. Until recently the US could console itself in the knowledge that all the other major world players were doing the same thing. Some of them are showing signs of solid recovery now. The reason? They did not sign on to a stimulus policy, took their bumps and the markets are recovering.
So the bankers are caught in a Hobson's choice where the only logical thing is to do nothing and reap the taxpayers largesse. After all, if they loan out all that money so people can buy assets that are not going to appreciate soon and jobs are still hard to come by then they lose.
So the Fed is printing money, the government is madly borrowing, and all that cash is dammed up by the bankers. But they are going to eventually have to open the gates to avoid serious stagflation. When they do we will all be experience what, thus far, "developing" countries regularly see when their economies are grossly mismanaged - very high, if not hyper, inflation. Grab a paddle and try to stay above water. - 23159
But truth be told, people and corporations are still going broke at an alarming rate. The reasons are varied but the huge elephant in the room is that cash is not reaching folks who need it the most to create jobs.
The gatekeepers are keeping billions of dollars locked in the, uh... vault. But so much money has been printed and borrowed from our children's futures that the gate is bulging enough to break. And break it will. When it does the result is inflation that that will bring back all those fond memories we have of the late 70's and early 80's.
Money, right now anyway, is not going anywhere. So cash flow and asset appreciation are dampened. And all the rest of the transactions that keep a capitalist economy oiled just are not happening. Ask Tom Persinger, who went from 60k a year at GM to 24k as a nurses aid. But he is one of the luckier ones. There is a 10 percent unemployment rate so one in ten people arent spending. Take that a step further. If you look at unemployment the way they did before the Clinton era voodoo, it is closer to 21% - sounds like the Great Depression. The loss of spending and thus income is staggering.
California is issuing IOU's, Rhode Island shuts down for a couple of weeks - and all the rest of the states are scrambling to raise taxes and cut spending. Nothing is secure anymore.
Nervous about the stock market? Just when it seems equities are stabilizing you and every other investor gets faked out when they dump again. Real estate, though housing markets seem to no longer be in free fall, is still causing anxiety and hand wringing.
Bond trader pros are saying that the Fed is printing money just to keep the interest rates low. This is a long-term policy that is guaranteed to keep the economy anemic if not on all out life support. Until recently the US could console itself in the knowledge that all the other major world players were doing the same thing. Some of them are showing signs of solid recovery now. The reason? They did not sign on to a stimulus policy, took their bumps and the markets are recovering.
So the bankers are caught in a Hobson's choice where the only logical thing is to do nothing and reap the taxpayers largesse. After all, if they loan out all that money so people can buy assets that are not going to appreciate soon and jobs are still hard to come by then they lose.
So the Fed is printing money, the government is madly borrowing, and all that cash is dammed up by the bankers. But they are going to eventually have to open the gates to avoid serious stagflation. When they do we will all be experience what, thus far, "developing" countries regularly see when their economies are grossly mismanaged - very high, if not hyper, inflation. Grab a paddle and try to stay above water. - 23159
About the Author:
My Market Friend is Paul Kluskowskis's blog. It is chock-a-block with up-to-date financial, economic, and market news. He is a financial manager at T/R Financial Management Group. He has been in the business for over 10 years and writes extensively with numerous articles and three ebooks to his credit. Paul also manages the PINGP Work Control Center Mgr at Xcel Energy. You can sign up for his financial advice and newsletter at My Market Friend
posted by X - Men @ 2:19 AM
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