Wednesday, November 2, 2011

The Daily Note - OK Bernanke or "Dear Fed"

I haven't written before nor do I like listening to your Fed reports and I have successfully avoided it mostly because read enough to know what is happening and don't need your interpretation. Nor do I need to listen to the "probing" and droll questioning from the media. I am factitious, of course. But now that I listened attentively to both, I have this conclusion. Do you honestly believe people can do as you say while you work against them?

Let ME be clear. In your words, you advise people to manage their own "financial stability" also that there is a stable 2% inflation. 2% adjusted how? How do you account for food or energy costs rising by about 20%? Do you balance the 20% more people pay for food and energy with the 20% deflation of their net worth? (which for most is their homes if they can still pay the mortgages)  You're also saying that the unemployment will not improve nor the economy until about 2014 and that it's not your job to create jobs but the fed does its best to create them. Huh?  You acknowledge that the low interest rates do not help people yet you want them to save regardless of 0% returns, and on what remains in their pockets they should invest. OK I won't argue about investing, but let's face it; the growth and profits companies are able to post this year is without worry about rising health costs of Obama care or costs associated with hiring employees. In other words their profits  definitely include the fact that they have less employees and that it's not yet 2012.

 You also say that you and rest of commissioners are seeking ways to be more clear so you can be better understood by the public.

Should not be hard.  Take two coffee cans and demonstrate it thus: in can number 1,  put the money you receive and into can numnber 2  move the amount you owe to all the people you borrowed from. What is left in can #1? Nada, Nothing,  Rien, Nichts, Semmi, since Congress owes more than it takes in. So what do you do with the problem child who spends too much? You, the overseer & the regulator,  print fake money to keep it from whining.  And you keep filling up the can with more from where? Certainly not real funds earned. You fill it up with fake money that you can print without real accounting, to your heart's desire and call it "good."

On the other hand  us regular folks have to go out and earn those nothing dollars, you print, with our own ingenuity in order to survive. Why? There is no real value behind those printed dollars, almost 0% interest if we put it aside to be worth probably less in a year. Are you beginning to get the picture? The picture that became the problem before WWII?  The less a dollar's worth the less it can buy. No growth of money earned  will not solve the problem for the people and will not encourage savings or investing.

My guess is that you know all that but for some reason you stick to the idea that what was done in the 1930's was good despite evidence to the contrary that it actually created the hyper inflation in Europe, as it was worse there. People forget (if they ever studied it) that the depression then was worse in Europe then, just as it is now.  Get it yet? History repeats, man, history repeats no matter how you want to deny it.

Want to solve this one fast? Raise interest rates because that way people will earn something and will be more willing to save it in banks, which will free up the banks to lend, which will allow for investing and new production and hiring.  You know it right? If not what are you doing in your position in the first place?

Next, insist on bringing back the gold standard, not confiscate it like back in the '30s depression when the gold standard was dropped. Oh yes, that was really smart as we can see evidence of it today. Many confuse the issue but the gold standard was dropped in the 30's while silver backing was kept until Nixon took it off in the 1960's. End of any backing in currencies, be it Euro, Dollar, Yen or rocks, you have basically nothing valuable. You only have a say so on a promise that is seldom kept since we know what  it means when politicians promise, Right?

 So I ask you why are you taking us down the path of stagnation, deflation of earnings and production & price inflation? The math is much too complicated, many bugs in the system can mess things up and truth is harder to find when convoluted. So, which is purpose?

Happy Trading, Living and Dancing

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