#1 TARP, QE1 and QE2 just extended what would have been the second Great Depression into a long rolling Great Recession. Less intense but dragging on and on and on.
And will it just end in worse disaster? Every spree of easy money has just inflated the next bubble with disastrous consequences.
1) LTCM / Y2K easing of monetary policy --> internet stock bubble
2) collapse of internet stock bubble --> MORE monetary easing under Greenspan
3) More monetary easing --> cheap credit --> housing bubble
4) housing bubble pops dragging down the banks and threatening entire fiscal system. Instead of letting bad banks fail, US Government steps in and SOCIALISES losses.
This is NOT capitalism.
4) Socialisation of losses plus MORE loose monetary policy plus BIGGEST keynesian stimulus experiment since WWII --> some money tied up on bank balance sheets + other money fleeing to sexy overseas destinations: Brazil, China, Australia.
5) excess money printing -----> US $ falling
6) falling value of US$ -----> higher prices of agricultural goods, oil, materials, commodities (priced in US$)
7) higher US$ prices of necessaries of life --> riots in poorer countries where consumers spend 75 per cent of their wages on food. ---> even higher oil prices.
8) NOW we are approaching the end of QE2. The housing market is showing downturn again. Jobs have only "picked up" because of the statistical counting magic trick that doesn't count people not registered as being in the labour market (ie: those that gave up looking).
QE2 is running out in June. Congress is bickering about raising the debt ceiling - when it was set at $1 trillion back in 1981 and that didn't stop them increasing it 15-fold since then.
Banks are still failing.
In Australia I am starting to see LOTS of US citizens - young people - here applying for citizenship and looking for jobs. They are fleeing your country looking for a better life.
I am so sorry this has happened.
But the way I see it the state of play is this:
The US can NO LONGER afford to have troops in Iraq/Afpak. That is costing a billion a day. Bring them home.
The US can not afford its contribution to the UN. Cut that funding drastically.
The US can not afford its foreign aid program. Cut that out completely.
That is where you need to make your budget cuts.
Stop spending money on the citizens of foreign countries and start spending it on your OWN country where it can make jobs and cut the debt.
Otherwise you are going to end up poorer than sub-Saharan Africa or else defaulting on your loans.
The US dollar is on a fast track to total collapse.
One Aussie dollar was worth US50c when I visited your great nation in 2002.
Today my dollar is worth $1.06 with some pundits predicting $1.50 before the year is out.
Your dollar is collapsing.
Your wealth is being eaten away - if you own $100,000 in stocks on the Dow.
And you had them the last 5 years.
And they didn't lose even 1 cent of value in the market crash.
Then today your stocks are worth 30% to 40% less just in currency devaluation alone.
This is the reason gold has been skyrocketing.
Things you can do to protect your wealth:
- buy agricultural land
- grow your own food/keep chickens
- buy physical gold and silver (recent crash notwithstanding) and stick it under the mattress
- buy soft commodities (grains, cocoa, corn, soy, pork bellies, bananas, food)
even if the Bernank tightens monetary policy after QE2, the stock market will then crash and the outlook is still grim.
I wish you all the best.
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[Iran Press TV] Banking regulators have announced the closure of two banks in Georgia and a small bank in Washington, bringing the total number of US bank failures so far this year to 43.