Once More Into the Breach

Finding Nonsense and Beating it Sensible

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I used to watch TV news and yell at the box. Now I jump up from the couch, sit at the computer and begin to type laughing maniacally saying "Wait until they read this." It's more fun than squashing tadpoles

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Thursday, March 19, 2009

Federal Reserve Planting the Seeds of Inflation

"Nothing is as terrible to see as ignorance in action." - Johann Wolfgang von Goethe

The Federal Reserve, or more accurately the government, will be buying 30 year treasury bonds to "promote economic recovery and to preserve price stability,". While this action may get some immediate intended effect the result will be hyper inflation. There is only one way the Fed can purchase these bonds, by printing money. They are printing $1 trillion. All savings are in danger of losing value and the reason for this action, to keep interest rats low, will be thwarted because no sane banker will willingly lend at a low rate when inflation will destroy the value of that loan.

If one wished to dry up the credit market, this is the single best course of action to take. Stacked up on top of the massive deficit spending already in the pipe line and we are quickly heading toward a third world economy.


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