U.S. NEWS: The news reports are all over the place regarding the effects of low interest rates, bank bail outs, falling commodity prices, and the hope that spring will bring prosperity to our economy. I don't buy it.
The human being is one adaptable animal, but one with a very short memory. For instance, headline news reports on Friday announced, "Oil and gold plummet." Plummet from what? They plummeted from the highest prices ever seen all the way down to extraordinarily high prices. Well whoopee.
Oil is still over $100 per barrel and gold is hovering around a thousand dollars per troy oz. The old timers like me can remember way, way back in history, say as long ago as 2004, when oil was trading at under $40 per barrel and gold could be had in the ancient year of 2000 for under $275 per oz.
What's all of this called? Yes, inflation spelled with a capital "I." And what does inflation do? It robs you when you're asleep by making your saving and your retirement evaporate. And who induces this terrible inflation? "Bronco Ben Bernanke and the Inflation Five" as I like to call the voting members of Federal Reserve Governors.
To touch on another of the insidious elements of inflation, it creates liquidity by flushing savings and retirement funds back into the stock markets and back into flowing cash. Or, the alternative plan; you could be earning upwards of 3.3% in a current IRA, you lucky dog.
Let me clarify that last statement. First, the term liquidity when referred to by the Fed, simply means that there is ample money flowing around to create the consumption based economy that we live and breathe.
When there isn't sufficient money, the Fed prints more and passes it out to the banks who loan it to you. In reality that's called counterfeiting, but the Fed has diplomatic immunity and doesn't do any hard time.
Now when you don't borrow all that money from the bank, it causes a problem. When you save your money in the bank, it causes an even bigger problem. Our government only pretends not to understand why Americans have negative savings, in reality they assure that Americans don't save money.
Thus, the motto of the Fed; "Saving too much money? Retirement account growing too large? Feeling far too financially sound? We are the Fed and we can help prevent further occurrences of these terrible symptoms. We have lowered rates to the point that your savings are nearly worthless and borrowing money plainly makes good economic sense."
Lowering interest rates to a level where interest on savings is less than current inflation, forces savers to try and preserve their wealth by moving money out of savings and into the more risky area of the stock market. Doing so preserves wealth; wealth that is, for the fat cats on Wall and the investment bankers who have your best interests at heart.
If this sounds like a game that you can't win; it is. But I remind you that the masses can change the game, it says so in the rules. Those rules are called the United States Constitution. There isn't anything wrong with the rules, it's the players who need redressing.
Wake up Middle America, you're being dealt out of the game.
