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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Alex23 on November 03, 2010, 11:13:39 PM
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.... Watch out.
It won't be pretty.
China will hurt eventually.
It's not protectionism but it will spark US based manufacturing.
Finally Bernie has done something right.
ZOG. All the way ZOG.
(http://www.click2houston.com/2008/0110/15022387_640X480.jpg)
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done something right for who?
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QE2 is GREAT.
It will help the US. A lower USD is good for manufacterers, and for exporters. And its good for tourism. Basicallu it makes the US cheaper and encourages investment.
QE2 will also encourage spending, which will help create employment.
And QE2 will help reflate housing prices, which is one thing we need to quickly get out of the housing mess.
Its also great for other countries. Look at asset prices in Asia. China, Hong Kong, Singapore will all have strong asset gains (stocks and property) over the next 6 months and QE2 rolls out.
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QE2 is GREAT.
It will help the US. A lower USD is good for manufacterers, and for exporters. And its good for tourism. Basicallu it makes the US cheaper and encourages investment.
QE2 will also encourage spending, which will help create employment.
And QE2 will help reflate housing prices, which is one thing we need to quickly get out of the housing mess.
Its also great for other countries. Look at asset prices in Asia. China, Hong Kong, Singapore will all have strong asset gains (stocks and property) over the next 6 months and QE2 rolls out.
thats the billing of it anyway, its very doubtful that it will have the impact that the FED wants to.
Some ppls concern with it is that it may cause severe inflation instead of the 1.5-2% the fed wants and do you know what bernakes response to those concerns were?
THAT QE1 didnt do that as evidenced by the lack of movement in the money supply and amount of bank deposits...
so the first one didnt cause a noticeable increase in money supply or bank deposits? THATS WHAT IT WAS SUPPOSED TO DO!!!!!!!
so where did the money go?
well if they werent spending it on consumer goods and they werent putting it in the bank...they were probably paying down debt...which is what my guess will likely happen here.
we will probably see the stock indicies continue to rise but its likely that will have another couple years of recovery and thats IF the QE doesnt create another bubble...
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Yea fuck em. I'll make it without help from theses pricks.
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QE2 - - FAIL FOR THE AVERAGE SCHMUCK
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Companies Raise Prices as Commodity Costs Jump
The New York Times ^ | February 14, 2011 | STEPHANIE CLIFFORD, MOTOKO RICH and WILLIAM NEUMAN
A package of Oscar Mayer cold cuts. A pair of Nine West boots. A Whirlpool washing machine.
By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products.
Cotton prices are near their highest level in more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Copper recently hit its highest level in about 40 years, and iron ore, used for steel, is fetching extremely high prices. Prices for corn, sugar, wheat, beef, pork and coffee are soaring. Labor overseas is becoming more expensive, meanwhile, and so are the utility bills to keep a factory running.
“There are cost pressures from virtually everywhere,” said Wesley R. Card, the chief executive of the Jones Group, whose brands include Nine West and Anne Klein. After trying to keep retail prices flat or even lower during the recession, Jones says prices for its brands will climb 15 to 20 percent by autumn.
(Excerpt) Read more at nytimes.com ...
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check your PM 8)
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QE2 is GREAT.
It will help the US. A lower USD is good for manufacterers, and for exporters. And its good for tourism. Basicallu it makes the US cheaper and encourages investment.
QE2 will also encourage spending, which will help create employment.
And QE2 will help reflate housing prices, which is one thing we need to quickly get out of the housing mess.
Its also great for other countries. Look at asset prices in Asia. China, Hong Kong, Singapore will all have strong asset gains (stocks and property) over the next 6 months and QE2 rolls out.
________________________ __________________
Did not work out so well now did it?
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QE2 - - FAIL FOR THE AVERAGE SCHMUCK
________________________ __________________
Companies Raise Prices as Commodity Costs Jump
The New York Times ^ | February 14, 2011 | STEPHANIE CLIFFORD, MOTOKO RICH and WILLIAM NEUMAN
A package of Oscar Mayer cold cuts. A pair of Nine West boots. A Whirlpool washing machine.
By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products.
Cotton prices are near their highest level in more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Copper recently hit its highest level in about 40 years, and iron ore, used for steel, is fetching extremely high prices. Prices for corn, sugar, wheat, beef, pork and coffee are soaring. Labor overseas is becoming more expensive, meanwhile, and so are the utility bills to keep a factory running.
“There are cost pressures from virtually everywhere,” said Wesley R. Card, the chief executive of the Jones Group, whose brands include Nine West and Anne Klein. After trying to keep retail prices flat or even lower during the recession, Jones says prices for its brands will climb 15 to 20 percent by autumn.
(Excerpt) Read more at nytimes.com ...
Yes, but my numerological friend, Bernanke has clearly stated that the goal of QE2 is to raise stock prices. so from the day it started until June (i think that's when qe2 officially expires) the stock market is doing nothing but going up because the fed's printing money and buying up debt. Yes, it'll crash one day, but as long as the other countries in the world crash worse, we're still number 1.
In the interview (it was done by the Washington Post i believe) he says indirectly, "buy stocks, they're doing nothing but going up because we're pumping them".
Then check stock charts from the day it started until today.
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thats the billing of it anyway, its very doubtful that it will have the impact that the FED wants to.
Some ppls concern with it is that it may cause severe inflation instead of the 1.5-2% the fed wants and do you know what bernakes response to those concerns were?
THAT QE1 didnt do that as evidenced by the lack of movement in the money supply and amount of bank deposits...
so the first one didnt cause a noticeable increase in money supply or bank deposits? THATS WHAT IT WAS SUPPOSED TO DO!!!!!!!
so where did the money go?
well if they werent spending it on consumer goods and they werent putting it in the bank...they were probably paying down debt...which is what my guess will likely happen here.
we will probably see the stock indicies continue to rise but its likely that will have another couple years of recovery and thats IF the QE doesnt create another bubble...
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Yes, but my numerological friend, Bernanke has clearly stated that the goal of QE2 is to raise stock prices. so from the day it started until June (i think that's when qe2 officially expires) the stock market is doing nothing but going up because the fed's printing money and buying up debt. Yes, it'll crash one day, but as long as the other countries in the world crash worse, we're still number 1.
In the interview (it was done by the Washington Post i believe) he says indirectly, "buy stocks, they're doing nothing but going up because we're pumping them".
Then check stock charts from the day it started until today.
the FED has probably only done about 100 billion in buying bonds right now...not sure though...
the market always rallies in the 4th quarter for the most part and especially so in years with mid term elections.
youre giving to much credit to QE2 than it deserves...you see the interest rate increases? that is also b/c of QE2 and ppls expected inflation as a result so another adverse effect, depending on where you stand I guess.
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the FED has probably only done about 100 billion in buying bonds right now...not sure though...
the market always rallies in the 4th quarter for the most part and especially so in years with mid term elections.
youre giving to much credit to QE2 than it deserves...you see the interest rate increases? that is also b/c of QE2 and ppls expected inflation as a result so another adverse effect, depending on where you stand I guess.
always rallies for the most part? sorry, not convincing enough of an argument for me to invest into.
ben bernanke saying "buy stocks because I, the guy who prints money will prop them up" is a much sounder investment base for me.
I still don't see any interest increases. I think Benny's too afraid of turning into Japan, so he errs on the side of caution, probably a little too much.
I'm guessing by the time he does raise them, it'll be a huge clusterfuck. I just don't know the history of the moves he's copying enough to predict the future, but it should be fairly easily predictable, it's just math.
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i filled out my w2 as well
good luck to you sir :o
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always rallies for the most part? sorry, not convincing enough of an argument for me to invest into.
ben bernanke saying "buy stocks because I, the guy who prints money will prop them up" is a much sounder investment base for me.
I still don't see any interest increases. I think Benny's too afraid of turning into Japan, so he errs on the side of caution, probably a little too much.
I'm guessing by the time he does raise them, it'll be a huge clusterfuck. I just don't know the history of the moves he's copying enough to predict the future, but it should be fairly easily predictable, it's just math.
LOL its not my argument its the facts and the markets have rallied every year during a mid term election in the 4th quarter for like 30 years now... ;)
intrest rates went up a week after qe2 was announced and im not talking about at the FED window so I have no idea why you think ben has complete control over them
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Bernake is literally robbing the lower and middle class to pay for his pump and dump scheme.
Its nothing more than theft and stealing and Bernake should be jailed for it.
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Bernake is literally robbing the lower and middle class to pay for his pump and dump scheme.
Its nothing more than theft and stealing and Bernake should be jailed for it.
They decided that the survival of the institutions are more important than personal wealth. It's fucking nasty, but maybe its kind of grimly logical, if you think about it.
Oh, and get ready for QE 3 and 4 ;)
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Thought this thread was going to either be about Fedor and/or a huge ocean-going luxury liner.
I am disappointed.
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They decided that the survival of the institutions are more important than personal wealth. It's fucking nasty, but maybe its kind of grimly logical, if you think about it.
Oh, and get ready for QE 3 and 4 ;)
Inflation is theft of purchasing power, and the criinals like bernake, obama, geithner, paulson, and all those who support this spending spree are stealing your money knowing most peole are too unsophisticated to know ow it is occuring.
Hope & Change bitches!
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Bernake is literally robbing the lower and middle class to pay for his pump and dump scheme.
Its nothing more than theft and stealing and Bernake should be jailed for it.
same old shit ;D
(http://www.jayseverin.org/Quickstart/ImageLib/anti-jewish-propaganda-256x300.gif)
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same old shit ;D
(http://www.jayseverin.org/Quickstart/ImageLib/anti-jewish-propaganda-256x300.gif)
Looking into my crystal ball, I'm seeing a timeout in your future.
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The inflation tax is the cruelest tax of all. Its theft of purchasing power of those on the bottom and middle class by the money changers.
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i got my glock cocked and im strapped
you can take that to the bank
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i got my glock cocked and im strapped
you can take that to the bank
in before pellus makes a fake cock joke at your expense ;)
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:o
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yeah ill do it for him,
fake plastic cock power yo!!!
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:o
what a fucking scam all of it is. SOMEONE got those 500,000,000,000 dollars and it sure as hell wasnt the american citizens ::)
these shifty eyed international banker assholes are handing each other unimaginable sums of money and hiding it behind a ridiculous wall of overly-complicated gibberish, paying themselves 7-8 figure 'bonuses' even as their companies and policies fail, and 99% of the wealth stays circulating among 1% meanwhilst the other 99% are toiling away busting their asses doing actual, tangible work and get beans in return.
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what a fucking scam all of it is. SOMEONE got those 500,000,000,000 dollars and it sure as hell wasnt the american citizens ::)
these shifty eyed international banker assholes are handing each other unimaginable sums of money and hiding it behind a ridiculous wall of overly-complicated gibberish, paying themselves 7-8 figure 'bonuses' even as their companies and policies fail, and 99% of the wealth stays circulating among 1% meanwhilst the other 99% are toiling away busting their asses doing actual, tangible work and get beans in return.
They must have friends in government ;)
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Seems like this international banker conspiracy stuff is getting very widespread amongst people, when will there be an uprising? :o
:P :D
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Seems like this international banker conspiracy stuff is getting very widespread amongst people, when will there be an uprising? :o
JFK was against the Bankers(fed)...He's died...
He was the last true american president
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A new world order..Not the law of the jungle.. :-\
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JFK was against the Bankers(fed)...He's died...
He was the last true american president
:'(
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US warns extreme food prices will stay
Financial Times ^ | 2/25/2011 | Javier Blas and Gregory Meyer
The world faces a protracted bout of extremely high food prices, the US government has warned, overwhelming farmers’ ability to cool commodity markets by planting millions of additional hectares with crops.
The US Department of Agriculture on Thursday forecast nominal record farm-gate prices for corn, wheat and soyabeans in the crop year that begins with the 2011 harvests. It added that food inflation would surge in the second half of this year as wholesale prices filtered through the supply chain, affecting consumers.
The warning at the USDA Outlook Forum in Washington, the biggest annual gathering of the agribusiness sector, is likely to fuel global concerns about rising inflation and the potential for destabilising food riots in developing countries.
Joseph Glauber, USDA chief economist, told the conference that in spite of higher planting for corn and soyabeans this spring, grain and oilseed markets were “still forecast to be tight” in 2011-12 due to strong export and biofuel demand.
“While it is often said that the cure for high prices is high prices, even with additional supplies expected this year, it is likely that the tight stocks-to-use situation will not be entirely mitigated over the course of one or even two growing seasons,” he said.
Mr Glauber forecast that the heavily subsidised US ethanol industry’s demand for corn would continue to grow in spite of higher input costs, consuming about 36 per cent of the domestic crop.
(Excerpt) Read more at ft.com ...
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Yay! Everything is just fine and dandy. Qe2 was a smashing success. The brains on getbig always impress.
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QE2- Another in a long, long line of massive Federal Reserve failures.
What's the score card showing now?
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Yay! Everything is just fine and dandy. Qe2 was a smashing success. The brains on getbig always impress.
Its utterly embarassing how uninformed so many are on these issues.
Hope & Change bitches!
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QE2- Another in a long, long line of massive Federal Reserve failures.
What's the score card showing now?
A SHORT LIST OF ITEMS WE ALL SAID WOULD SKYROCKET WITH THESE MONEY PRINTING SCHEMES:
Silver, food, oil, gold, health care, commodities, metals, etc.
Obama and Bernake need to be jailed for what they are doing.
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It's nice to see that there is still a huge contingency of morons on getbig that can't manage their personal lives or finances but think that they have the expertise to make predictions about the American economy. Unsurprisingly, most of the idiots who support QE2 on getbig don't actually live in America.
QE2 is a disaster that will harm the global economy as well as the American economy. It is an unnecessary, unprecedented and reckless attempt to fix a problem that doesn't exist. Just more par for the course by President Obongo and the rest of the Bush era flunkies that were purposely kept in key positions to expedite the destruction of America.
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It's nice to see that there is still a huge contingency of morons on getbig that can't manage their personal lives or finances but think that they have the expertise to make predictions about the American economy. Unsurprisingly, most of the idiots who support QE2 on getbig don't actually live in America.
QE2 is a disaster that will harm the global economy as well as the American economy. It is an unnecessary, unprecedented and reckless attempt to fix a problem that doesn't exist. Just more par for the course by President Obongo and the rest of the Bush era flunkies that were purposely kept in key positions to expedite the destruction of America.
QE1 was a total failure.....so the Fed went and did QE2 was a total failure, spurred further inflation, damaged our currency, hurt anyone that wasn't a bank or major corp and allowed the govt. to borrow at artificially low interest rates (this is what the fed does anyways), oh, and you can't forget the smokin' hot printed money loaned out to major institutions at near 0% rates! It's now chasing asset/commodities bubbles the world over!
So, QE1-2 didn't work and did plenty of damage, what will the Fed do now? Realize it's mistakes? Own up to its failures?
Fuck no, time for QE3!
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QE1 was a total failure.....so the Fed went and did QE2 was a total failure, spurred further inflation, damaged our currency, hurt anyone that wasn't a bank or major corp and allowed the govt. to borrow at artificially low interest rates (this is what the fed does anyways), oh, and you can't forget the smokin' hot printed money loaned out to major institutions at near 0% rates! It's now chasing asset/commodities bubbles the world over!
So, QE1-2 didn't work and did plenty of damage, what will the Fed do now? Realize it's mistakes? Own up to its failures?
Fuck no, time for QE3!
Did you seethe GDP number released today?
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Depends on what Pass/fail means to you. The FED is spending 1.5 trillion to get 5% gdp growth. Not exactly sound numbers right now.
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Depends on what Pass/fail means to you. The FED is spending 1.5 trillion to get 5% gdp growth. Not exactly sound numbers right now.
We dont have 5% GDP growth.
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We dont have 5% GDP growth.
That's the goal. 5% GDP growth is the number they're shooting for.
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That's the goal. 5% GDP growth is the number they're shooting for.
And they failed and skyrocketed the price of everything.
FAIL.
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And they failed and skyrocketed the price of everything.
FAIL.
Depends on what your time frame is. One could easily say when GDP does hit 5% (and it will) that it is a consequence of QE. You will see it otherwise but you can not draw an absolute conclusion that it was not in part due to QE2 or 3 or 500000.
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Depends on what your time frame is. One could easily say when GDP does hit 5% (and it will) that it is a consequence of QE. You will see it otherwise but you can not draw an absolute conclusion that it was not in part due to QE2 or 3 or 500000.
::) ::)
Dear God are you blind.
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::) ::)
Dear God are you blind.
Dear god do you not understand anything other than what you're told by schiff and others? Weak.
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Dear god do you not understand anything other than what you're told by schiff and others? Weak.
Dear god do you not understand anything other than what you're told by Obama and MSNBC? Weak.
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Dear god do you not understand anything other than what you're told by schiff and others? Weak.
Problem is that we hve been spending like there is no tommorow and it has not done a damn thing but make matters worse. But oh yeah, that next trillion will do the trick!
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Dear god do you not understand anything other than what you're told by Obama and MSNBC? Weak.
hahahaha ;D
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Depends on what your time frame is. One could easily say when GDP does hit 5% (and it will) that it is a consequence of QE. You will see it otherwise but you can not draw an absolute conclusion that it was not in part due to QE2 or 3 or 500000.
sorry, but I cant stop laughing......what are you even saying here? lol
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sorry, but I cant stop laughing......what are you even saying here? lol
I know, I don't even know where to start.
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QE2: An Unmitigated Disaster?
Submitted by asiablues on 03/06/2011 18:44 -0500
http://www.zerohedge.com/article/qe2-unmitigated-disaster
By Dian L. Chu
There was a debate recently between Rick Santelli of CNBC and James Bullard, President of the Federal Reserve Bank of St. Louis regarding the inflation effects of the QE2 initiative.
Bullard, the economist, cited the core inflation rate, and even the headline inflation rate as illustrative of a lack of serious inflation pressures in the US economy. Santelli, on the other hand, talked the trader`s perspective of inflation wanting to use the CRB Index (Fig. 1) as a true indication of inflation effects since QE2 was brought up at Bernanke’s Jackson Hole Speech in August 2010.
So let us compare two scenarios and ask ourselves would the US economy be doing better without the QE2 initiative?
Pre-QE2 Prices:
1.2.50-2.70% 10-Year Treasury Yield
2.$2.64 US Gasoline Price (August 2010)
3.Cotton Prices at $85 (Contract Size 50,000 pounds)
4.S&P 500 Index 1100
5.Copper Prices $3.25 a pound
6.US Dollar Index at 83.00
7.Lumber Prices at $200 (Futures Contract –Contract Size 110,000 board feet)
8.Sugar Prices at $17.50 (Futures Contract-Contract Size 112,000 Sugar #11)
9.Cattle Prices at $92 (Futures Contract-Contract Size 40,000 pounds)
10.Milk Prices at $14 (Futures Contract-Contract Size 200,000 pounds Class III)
QE2 Effects So Far:
1.3.50% 10-Year Treasury Yield
2.$3.50 US Gasoline Price
3.Cotton Prices at $215 (Futures Contract -50,000 pounds)
4.S&P 500 Index 1320
5.Copper Prices $4.50 a pound
6.US Dollar Index at 76.40
7.Lumber Prices at $303 (Futures Contract)
8.Sugar Prices at $30 (Futures Contract)
9.Cattle Prices at $114 (Futures Contract)
10.Milk Prices at $19.50 (Futures Contract)
About That Unemployment Rate...
This just gives a snapshot of some of the inflationary effects for the US consumer. I cannot think of any argument where higher interest rates resulted from QE2 are good for the housing sector, which is the most troubled part the US economy.
Nevertheless, I must add that the unemployment rate is better, and we have created more jobs since QE2 but with a highly fluctuating job pool where workers give up looking and leave the labor market it is hard to gauge the real unemployment numbers.
Plus how much of the job creation is due to other factors like more business friendly policies from the Obama administration, a Republican Landslide in the Midterm Election, and the extension of the Bush Tax Cuts and a reduction in the payroll taxes for businesses?
Equity Gains Don’t Mean Much
The S&P 500 is 230 points higher which can be argued is good for the “wealth effect” but stocks usually have a year-end rally so some of these gains probably would have occurred even without QE2.
Clear Present Danger – Inflation
There are some substantial price increases in a lot of these inflationary metrics for both businesses and the US consumer, not to mention the reduced purchasing power of a much lower US dollar (Fig. 2).
More importantly, inflation data utilized by the core and headline rates are behind the curve of futures prices by anywhere from 3-6 months so the true inflation pass through effects of these higher input prices at the futures level have yet to be realized in the Fed`s measures of inflation data.
For example, gasoline prices at the pump probably lag the futures prices established by the RBOB contract by 20-30 cents. Likewise, the full effects of higher cotton prices will take much longer to work their way through the supply chain to consumers at the retail level for clothes they purchase. It may take another six months for the damage that has already occurred at the futures level to be fully experienced by consumers of cotton products, which would lead to an underestimate of the current inflationary effects in the economy.
Biflation at Work
It should be noted that parts of the economic data are deflationary in nature like housing and wages, which serve to artificially keep the inflation numbers utilized by the fed down, which is the biflation phenomenon I previously discussed. And if you add in the 6 month lag factor for inflation effects to pass through to the data, a completely different inflation story starts to emerge.
Wanted – Lower Inflation & Interest Rate
However, this still misses the important barometer for analyzing QE2 which should be the following question: “Which scenario is better off for the US economy?” and not any argument of what the current inflation level is in the economy.
This assumes that some inflation is better than no inflation, and I would argue that being able to finance a home mortgage at 100 bps lower, and a dollar per gallon cheaper gasoline is better for businesses and consumers, and that this scenario is far better for fostering sustainable economic growth than the current scenario of QE2 and its effects.
Really Better Off with QE 2?
So the question for Bullard misses the mark if one argues with him what the current or even future inflation effects are for the economy due to QE2. The real question for Bullard is would the US economy be performing that much better without QE2? If you add up all the pros and cons of QE2, guess which scenario would 9 out of 10 independent economists pick for an environment that fosters economic growth?
It seems regardless of what the inflation data says is the overall inflation rate in the economy, QE2 gave us all the negative, anti-growth, lowered standard of living type of inflationary effects that act as a major tax and headwind for both businesses and consumers going forward, and very little of the much needed “Record GDP Growth” and “Eye-Popping Job Creation” bang for our costly buck.
Right Back Where We Started
It seems we pretty much could have gotten this same level of current GDP growth and job creation without massively devaluing the dollar in the process. Sometimes a little patience goes a long way, and if the fed would have waited until the November elections where both the business climate and economic data were improving all on their own we could have had the best of both worlds with a low inflationary price stable environment, and a slow but steadily improving employment situation.
The real fear and irony is that once the full effects of QE2 are realized in the US economy, that we start reacting to said inflationary effects both through tightening monetary policy and consumer/business behavioral changes, and the US starts giving back some of its recent economic gains, and becomes vulnerable to the very scenario that the fed was trying to avert in the first place, a double dip, deflationary downturn in the economy.
EconForecast, March 06, 2011 | Facebook Page | Post Alert | Kindle
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The Fed's Promise Of Inflation Means More Unemployment...
TMO ^ | 3-6-2011 | Bob Chapman
Economics / Inflation
Mar 05, 2011 - 03:11 PM
By: Bob Chapman
The Federal Reserve tells us we need inflation to overcome the overhang created by debt and its inflationary aspects. The inflation does not create jobs – it just distorts prices upward. We are told by the head of the Fed, Mr. Bernanke, that he can end inflation when he thinks it is necessary.
That is not true, because if inflation ends deflation takes command and the economy collapses. There is no finely honed instrument for turning these two opposite effects on and off; thus, inflationary instruments have to be blunt and overused. That means more often than not that inflation is over implemented.
This is the opposite of the Fed’s mandate of promoting price stability, full employment and in fact is used to prop up the banking system.
Over the past three plus years the Fed has been attempting to assist the banks in getting rid of bad assets and these efforts may last for another fifty years. These banks hold more bad assets then they have ever held before. These problem assets are the result of excessive lending and speculation between 2003 and 2008, and low interest rates that lasted far too long.
The quality and existence were recognized in the credit crisis that began in 2007. Most of these impaired assets are still on bank books, but the Bank of International Settlements, the FASB, the accounting agency and the government say it’s perfectly fine to keep two sets of books. If you did that in your business you’d end up in jail, but it is perfectly fine for the financial sector and transnational banks to do so.
That is what QE1 was all about – bailing out the financial sector and other elitist corporations. These bad assets, that haven’t been sold to the Fed, are frozen on the balance sheets of these institutions, perhaps in perpetuity.
Fed created inflation raises the real value of assets artificially, so that these bad assets appear to be appreciating when in fact they are not. Toxic securities that are being held by banks, brokerage houses and others, that were worth $0.30 on the dollar, are now worth even less.
All the inflation in the world won’t change the value of these assets. It may help interim earnings, but it won’t help in the long run. These policies won’t work long term. The interest on debt now and in the immediate future will be greater than revenues generated.
At the same time $900 billion is a nonsense figure. When all is said and done the figure will be almost double that at $1.7 billion. QE1 will provide for 14% real inflation in 2011 and QE2 will provide 25% to 30% inflation in 2012. QE3 will give us hyperinflation. Monetization will be king.
The die has been cast and it is disturbing to see Mr. Bernanke lying to Congress. What will he tell them when he has to admit he created $1.7 trillion, which has been monetized into inflation and that he still holds official interest rates at just above zero, but real rates on the 10-year T-note went to 4-1/4 then 5-1/4? The American public is going to be stunned.
Again, the Fed and the US banking system are in a box and they cannot get out. If they were to officially raise interest rates it would lead to financial collapse. If they do not want to raise rates they could curtail QE2 and as a result the economy would collapse, just like Japan did so in 1992 and they have been in depression ever since.
Either choice would send unemployment to a U6 level of 37.6% matching that of 1933. Worse yet, if the Fed’s commitments were marked to market you would find the Fed to be insolvent, a condition that has existed for some time.
It is not surprising that the Fed and its banker owners don’t want the Fed audited and investigated. Any sale of bonds by the Fed would drive bonds lower and yields higher putting downward pressure on the economy.
Much of what the Fed is holding is MBS and CDO’s from QE1, when they bailed out lenders and select transnational conglomerates and insurance companies.
Such actions would render the Fed officially insolvent, which in fact they are already. Just to show you how terse the situation is their capital is about $60 billion and they have about $3 trillion on the balance sheet. Now you can understand why real interest rates have to be held low. The stock and bond markets have to be held up artificially so that the Fed’s balance sheet won’t collapse.
What many do not understand is that almost all of what is on the Fed balance sheet has been created out of thin air and monetized. Part of that hot money and credit has offset the deflationary undertow; part is exported in dollar foreign balances and the rest of the inflation pass into the economy. This is the beginning of out of control inflation and the Fed is well aware of it.
They quite frankly are not concerned that people lose their life savings. They only care about saving the financial sector, which owns the Fed, the government and transnational conglomerates.
Inflation will not stimulate the economy. It will hinder it and not create jobs, which is already evident. It is all lies, smoke and mirrors and psywar.
QE1 and QE2 have spread across the world exporting part of US inflation. This inflation gets stronger daily enveloping the financial world. Food prices have gone ballistic and in countries where food makes up 75% of income the result has been the overthrow of one government after another.
Even the price of your clothes is going to triple. The cause of these problems lies with central banks and banks that control them in Europe and the US. It is just one giant fraud like too big to fail. There will be no recovery only continual efforts to sustain the criminal enterprise.
As inflation climbs, unemployment will grow and wages will remain stagnant so that the anointed can continue to accumulate wealth. The beneficiaries will as usual be the elitist connected corporations, all those crooks who do not go to jail. Soon profits for smaller and medium sized companies will diminish as they are forced to absorb part of price inflation. Needless to say, there will be no hiring.
People worldwide see the dilemma of the US, UK and Europe and that in part is why you are seeing turmoil that has had its beginnings in North Africa and the Middle East, not that the US, UK and Europe were involved in the uprisings, but the catalyst had been in place as well.
The reason for change is higher food prices. The world public is tired of tyrants and governments that refuse to answer the needs of the people. Again, part of the reason for change is the discovery that these dictators and those who control governments have to be dispensed with. You might say, as Saudi Arabia goes, so goes the Middle East and North Africa.
If the so-called monarchy falls in Saudi Arabia the entire region is up for grabs. That would spell the end of the petro dollar, which would signal the demise of the dollar. That is something to be aware of and to contemplate.
As you know, historically when you have bad episodes such as those we are seeing in North Africa and the Middle East that the dollar has rallied strongly. Not this time. The dollar is falling not only against the six major currencies, but also versus gold and silver. We could be headed toward a test of 71.18 soon on the USDX.
That makes US imports more expensive and exports cheaper, which would cause a balance of payments surplus. The downward dollar pressure would continue though, because the $1.6 trillion deficits would continue. We believe as history is evaluated Ben Bernanke as well as Alan Greenspan will be found to be totally incompetent.
Today we have price and monetary inflation that are terrible. Eventually as the economy and coming hyperinflation becomes manifest we will then see a fall we have all been anticipating for years into deflationary depression.
After three attempts to rally past 82 the dollar in the USDX has faltered again, this time to 76.48. There is technical support at 76 and fundamental support at 74 and 71.18. Current weakness is systemic, but it is being aided by QE2 and stimulus 2.
Finally players are realizing that real inflation is more than 7%, headed for 14% this year, as a result of QE1 and stimulus 1. Next year the result of QE2 and stimulus 2 will start to drive up inflation.
At the same time wages and salaries are under intense pressure, especially by major corporations. Next year we will see inflation in excess of 20% and in 2012 and 2013 we will see the inflation caused by QE3 and stimulus 3. That should take us over 30% inflation and into hyperinflation.
What else can be expected with QE and stimulus spending of $2.5 trillion a year? You are going to find your government, the Fed and Mr. Bernanke along with Wall Street have been wrong about just about everything. That means that August could bring a debt downgrade for the credit of the US. That would bring further pressure on the dollar downward and pressure to the upside on interest rates.
These events will expedite the need for a major meeting among countries, similar to the Smithsonian meetings in the early 1970s, the Plaza Accord of 1985 and the Louvre Accord of 1987, where currencies are devalued and revalued versus one another and some form of multilateral debt default.
They would bring about a recharged dollar with 25% gold banking, or a combination of currencies in an index, also backed by gold. It is coming, but probably not this year. During this coming period unemployment will lie stagnant and the US will begin to experience 3rd world poverty.
Were it not for food stamps and extended unemployment benefits and other forms of government aid the US would look like it looked in the 1930s. At the same time $100.00 oil along with food price inflation signals a loss in consumer buying power of $200 billion and $120 oil will signal more than a $400 billion loss in purchasing power. That means GDP would fall ½% to 1-1/2%.
The above means that any future currency will have to be backed by gold or silver or both, whether the elitists like it or not. Multilateral acceptance is extraordinarily important, because such backing and discipline is the only element that can save the financial system and the elitists know that. On the other hand such backing puts a governor on their wealth accumulation, power and dream of world government.
The euro could have worked had it been structured properly and the SDR is hopeless. The yuan simply isn’t seasoned enough and China has a host of problems, which are seldom discussed. Thus, it is either a reformulated dollar or an index of gold and or silver backed currencies.
Anything less simply won’t work never mind be accepted. The world has seen again that unbacked currencies and corporatist fascist economic policies do not work. They lead to the subjugation of the people and destroy the quality of life for everyone except the wealthy, connected, elitists, who live well while the remainder of the world lives in poverty. The ongoing effect to bring about world government will again fail and mankind will again emerge from the economic, financial and even perhaps the rubble of WWIII. Desperate people do desperate things; so do not be surprised if another war is deliberately started like so many wars throughout mankind.
Sound money is the only answer and really the only alterative is a reformulated dollar backed 25% by gold at a much higher price. An index of currencies or 4 or 6 regional currencies won’t work well either. A gold standard guarantees stability, enforcement of law and the unbridled excesses of Wall Street and banking. We need Glass-Steagall back and we need jail time for the crooks running Wall Street and banking.
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3/9/2011 3:31 PM ET.
|By Anthony Mirhaydari, MSN Money
5 lies the economists are feeding us
http://money.msn.com/exchange-traded-fund/5-lies-the-economists-are-feeding-us-mirhaydari.aspx?page=0
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Reassurances from the Fed on down about low inflation and falling unemployment are ringing hollow as stagflation looms. They aren’t fooling us, but they might be kidding themselves.
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.Related topics: Federal Reserve, economy, Ben Bernanke, investing strategy, Anthony Mirhaydari
Economists aren't exactly held in high regard these days.
The run-up to the 2008 financial crisis and the deep recession that followed were accompanied by reassurances from economists all the way up to Federal Reserve chief Ben Bernanke that the subprime mortgage problem was "well contained."
British economists even issued a formal apology to the Queen after she berated them for not predicting the credit crunch. Their rationale? That many were guilty of "wishful thinking combined with hubris."
Now, the same brain trust of mainstream academics and economists is offering reassurances that ring just as hollow to the person on the street. Their main arguments: Rising food and fuel prices aren't a concern and rising "core" inflation isn't a threat.
Economists tell Queen they're sorry
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While they are at it, they also claim that ultraloose monetary policy hasn't fueled commodity and food inflation -- even though we've seen a 38% increase in the DB Commodity Tracking Index and a 22% increase in the U.N. Food Price Index over the last seven months. After all, they say, measured inflation is still very low, manufactured goods are still cheap, and wage pressures are contained because of high unemployment.
All of these theories have been espoused by Bernanke and other members of the Fed's policy committee, and by prominent Wall Street economists and investment strategists. But growing evidence suggests they just aren't true. In fact, they're flat wrong. So believe these five fallacies at your peril:
1: Inflation isn't a threat
Over the last few months, I've repeatedly discussed the rising threat of inflation and the specter of higher interest rates in a series of columns and blog posts. And for good reason: I think these upward trends will be the economic linchpins for 2011. Higher prices sit at the center of all the current major issues: energy, monetary policy and government credit risk.
Anthony Mirhaydari
.These issues will be critical in determining whether a double-dip recession or period of economic stagnation awaits us.
Interest rate hikes to combat inflation are already well under way in the developing world. On March 8, Vietnam raised rates by 1% to 12%. Market chatter has China raising its reserve requirement ratio for the ninth time since 2010 to tighten lending. Thailand and South Korea are expected to raise policy rates this week, following rate hikes by Indonesia in February.
With the economic recovery now in its third calendar year and with crude oil prices up more than 55% from last summer's lows, central banks in the developed world are being forced to take action. Last week, the European Central Bank signaled that it will more than likely raise rates at its April policy meeting -- despite the fragile state of peripheral eurozone countries like Greece and Portugal.
US vs. Europe on inflation
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But if you listened to Bernanke's recent testimony to Congress, and to the comments of some of the more dovish members of the Federal Reserve, you'd think this era of ultracheap money and low inflation will just keep going. For them, there's no problem at all. Bernanke told Congress he believes big increases in the prices of food and fuel will have only a "temporary and modest" impact on consumers.
Make no mistake, inflation is here and central banks will have to react.
2: 'Core' inflation is all that matters
Of course, there is also the question of whether economists are even properly accounting for inflation. Right now, the Fed's preferred measure -- the core personal consumption expenditure price index -- is rising at just a 0.8% annual rate.
You probably feel like inflation is much higher than that piddling number. That's because the core rate excludes rises in food and energy prices. Don't you wish you could just exclude those price hikes from your household budget?
The reasoning behind the exclusion is that these volatile necessities won't keep going up over the long term. Economists assume food and fuel inflation will be "contained" -- just as rising mortgage defaults and foreclosures were "contained" to subprime borrowers back in 2007.
The latest Beige Book report of economic conditions, produced by Fed researchers, suggests otherwise. The report noted that nonwage input costs are increasing and that "(m)anufacturers in a number of districts reported having greater ability to pass through higher input costs to customers. Retailers in some districts mentioned that they had implemented price increases or were anticipating such action in the next few months."
There's more. The ISM manufacturing and nonmanufacturing prices-paid indexes have surged to levels not seen in three years. Crude material prices are up a massive 52% over the past three months, even if you exclude food and fuel. Inflation is spreading and becoming entrenched in the supply chain for all goods, despite assurances to the contrary.
To get a clearer picture of what's really going on, we turn to John Williams of ShadowStats.com. He holds the official data in low regard and earns his living ironing out wrinkles in the government's economic statistics. By reverse-engineering changes to how metrics like unemployment and inflation are calculated, Williams believes, investors can get a truer picture of what's going on. It's not pretty: His inflation measure is riding at a 9.1% annual rate.
3: The Fed isn't making it worse
You will, of course, find a few economists (and a lot of Tea Party types) who say the Fed's near-zero interest rate policy and its $600 billion "QE2" money-printing operation are contributing to higher food and fuel prices, both at home and abroad.
But the big guy, Ben Bernanke, doesn't believe it. Charles Evans, the head of the Chicago Fed, agrees. He told CNBC recently that he doesn't expect higher energy prices to end up in underlying inflation. He added that "accommodative" policies are not the reason for the recent commodity price rise.
To be fair, there are voices of reason within the Fed. Dallas Fed President Richard Fisher, for instance, recently said that he may vote to halt further QE2 action before the June deadline. He believes QE2 may be counterproductive and that more monetary policy accommodation (or more cheap cash) could actually hurt the U.S. economy by inciting more inflation.
.I couldn't agree more. And the bond market seems to be on board, too.
The McClellan Market Report's Tom McClellan, a former Army helicopter pilot and a veteran chart technician, has found that the yield the market gives two-year Treasury Notes tends to do a better job of setting monetary policy than the Fed does.
The two-year yield suggested tighter policy (higher interest rates) in the 1990s during the tech stock bubble. It suggested tighter policy during the housing bubble years. It suggested tighter policy during the 2008 commodity price spike. And it's suggesting tightening policy now.
4: The 'output gap' will keep inflation down
To get a little wonkier, what of the so-called "output gap" in the economy created by higher unemployment and idled factories? Many, including Bernanke, make the argument that you can't have inflation with so many people out of work. Yet that just isn't so.
The idea that unemployment and inflation are linked gave rise to an economic model dubbed the "Philips curve" and was popular in the 1960s and early 1970s. It suggests a direct tradeoff between unemployment and inflation. And it helped lead then-Fed Chairman Arthur Burns astray by providing intellectual cover for him keeping monetary policy too loose during the oil price shocks of the time -- which, like now, were driven by political turmoil in the Middle East -- in an effort to get the unemployment back down to the sub-4% rate that had prevailed in the late 1960s.
The result was a debasement of the dollar, a spike in food and fuel prices and a painful period of stagflation ( inflation accompanied by economic stagnation). Sound familiar?
I fear a similar scenario is playing out now. Bernanke's Fed has been lulled into a false sense of security that "core" inflation will stay low because of still-troublesome unemployment levels. The idea is that wages will stay low, preventing a wage-price inflation spiral in which employees demand cost-of-living raises while employers increase prices charged to consumers to compensate.
Another contributor to that false sense of security has been provided by the disinflationary influence of China's cheap factories and low-wage workers over the last decade. But that's ending now as the Chinese run out of laborers and the costs of shipping and raw materials soar.
Société Générale economist Aneta Markowska (yes, an economist, but a rare out-of-consensus thinker) finds that China's inflation rate historically affects the U.S. inflation rate -- via import prices -- on a 20-month lag. As a result, holding all else equal, we should expect the U.S. core consumer price index to increase from 0.9% to more than 2% over the next year and a half. Add in the domestic impact of higher food, fuel and commodity costs, and it's easy to see core inflation pushing to 3% and beyond.
All the ingredients for stagflation are in place. Just don't expect Bernanke or other dovish members of the Fed and the economic cognoscenti to admit it.
5: Unemployment is below 9% -- and the old jobs are coming back
For most in the United States, the job market likely feels worse than the 8.9% unemployment rate suggests. Maybe the broader "U6" measure at 16.7% feels more accurate, since it includes those who have become too discouraged to seek work, as well as marginally attached workers.
John Williams' measure of unemployment, which removes unstable seasonal factors and other distortions and adds long-term discouraged workers, stands at 22.1%. Further, the work force participation rate has fallen to just 64.2% -- a level not seen since the early 1980s.
Another problem has to do with what kind of jobs the economy is creating. Many of the unemployed, especially those who had held jobs in industries such as manufacturing, continue to hope they can find new jobs that are just like their old ones. In other words, they won't have to retrain and learn new skills. Bernanke, along with members of the San Francisco Fed, says this is still largely the case. If so, the job market could heal quickly.
This approach centers on what's known as the structural unemployment rate. If it's low, as Bernanke believes, the unemployment rate can drop very low without inciting inflation. But if it's high, it means the unemployment rate will fall gradually as workers slowly retrain and move into new industries. Higher inflation will thus result as wages in fast-growing sectors increase to attract new talent.
Unfortunately, a growing body of evidence suggests the structural unemployment rate is on the rise. That means that many of these old occupations -- such as mortgage brokers and real estate agents -- just aren't coming back.
Markowska says the structural unemployment rate could be closer to 7.5%, rather than the Fed's 5% estimate. Why? She notes that despite current levels of joblessness, many workers are enjoying sizable pay increases. "Interestingly, we tried to look at the relationship for individual sectors and found a very loose link between unemployment rates and wage growth. The most shocking was construction, which is posting the fastest wage growth, at 2.6% year-over-year." Wages are also rising fast in the financial, education, health and information sectors.
This suggests that despite an army of unemployed Americans, businesses have to pay more to get highly qualified workers. Comments from the latest Chicago PMI survey (.pdf file) corroborate this: "Hiring is now above pre-layoff levels. Hiring is targeted to Rock Stars who make MUCH MUCH more than previously eliminated managers." Believe it or not, a skill shortage is beginning to develop.
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Translation: Many of the unemployed will be forced to retrain and move into new areas of the workforce. And the Fed has less room to maneuver than it thinks, because unemployment could fall only from 8.9% to 7.5% before inflation ramps up in a big way. Over time, as workers retrain and move into growing industries, the structural unemployment rate will fall. But that takes time.
Moving the goalposts
So Fed policymakers and government bean counters aren't just failing to tell us what's really happening in the economy; worse, they seem to be fooling themselves. If that's not another round of wishful thinking combined with hubris, I don't know what is.
Overall, the situation is desperate enough that over the past few weeks I've recommended a net short positioning to my newsletter subscribers, along with a scattering of select long position in strengthening emerging market equities and exchange-traded funuds. Both the Market Vectors Indonesia Index Fund (IDX) and the iShares MSCI Thailand Investable Market Index Fund (THD) look very attractive. As does the iShares JPMorgan USD Emerging Markets Bond Fund (EMB) for you fixed-income fans. For individual stock picks, I like two Chinese names: Puda Coal (PUDA, news) and Shanda Games (GAME, news).
Stocks are set for a period of poor performance in the months to come as investors begin to peer through the lies and realize that our economic quagmire has no easy solutions. The last secret weapon -- the $600 billion QE2 initiative -- won't work a third time. And that's because we face an inflation threat now. So avoid sensitive, "high-beta" cyclical small-cap materials, semiconductor and technology stocks. If you can handle the risk, look at short ETFs, including ProShares UltraShort Semiconductors (SSG). If you have to have U.S. long exposure, look at defensive sectors such as utilities via Utilities Select Sector SPDR (XLU).
The last time stagflation took hold, in the early 1980s, it took the iron will of Paul Volcker, a double-dip recession and 22% interest rates to slay the beast. Let's hope we don't go back to those dark days.
Be sure to check out Anthony's new investment advisory service, the Edge. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at anthony.mirhaydari@live.com
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QE2 had no effect on gas prices. Investors employed the use of psychics to predict the Arab unrest and preemptively started jacking gas prices up!
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Bump.
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QE2 had no effect on gas prices. Investors employed the use of psychics to predict the Arab unrest and preemptively started jacking gas prices up!
Quoted for Octane truthfulness.
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Inflation is theft of purchasing power, and the criinals like bernake, obama, geithner, paulson, and all those who support this spending spree are stealing your money knowing most peole are too unsophisticated to know ow it is occuring.
Hope & Change bitches!