Today, millions of Baby Boomers are:
1) Retired and out of the work force; either voluntarily or involuntarily (lay-offs, health issues).
2) Assessing leaving work force within 5 years.
3) Winding down their peak earning years.
Financial planners recommend that as retirement approaches people should shift more assets (401k, IRAs, Investments, Savings) toward capital preservation (cash, fixed income, etc.) and less toward stocks or other risk classes.
This is established life-cycle financial planning advice.
Meanwhile, in recent testimony to the Congress, Federal Reserve chairman, Mr. Bernanke, was asked (paraphrased): what do you say to people who are concerned that the value of the dollar is being reduced by X% each month? His reply was astonishing to Baby Boomers (paraphrased): First I would say that the primary investment method for people who ask this, is a mattress....
What does this imply for all those people who are trying as hard as possible to save and protect their hard earned money by shifting more away from higher risk assets?
Does the fed believe that any genuine economic recovery is possible if Baby Boomer assets are eroded, if they have to stay in, or return to the work force and compete for jobs against the younger population, and if their substantial economic buying power is diminished?
Facts: 76 Million Baby Boomers were born from 1945-1964 and studies have shown these Baby Boomers currently hold over 80% of personal financial assets and generate more than 50% of U.S. discretionary spending power. They are responsible for more than half of all consumer spending, buy 77% of all prescription drugs, 61% of OTC medication and 80% of all leisure travel.
Read or watch this Yahoo finance video interview today of David Stockman, former budget director for Ronald Reagan. Savings are being killed, which will demolish boomer generation middle class wealth and sustainability. Watch the money flow and how many times it circulates in the economy.
QE3 is totally unnecessary. The current administration should review some of their policies that affect business. With the policies this admin has, you could through large sums of money and you may as well be trying to #$%$ up a rope.
The real worry will be lower tax revenues from retiring boomers with probably less consumption.
But the FED has to print and kill the dollar, it is the only way to pay off debt.
Already the reserve status of the dollar is weakening, China Russia India and Brazil are doing trade with their own currencies and India uses gold to buy Iranian oil.
The use of the dollar for oil will stay strong as long as the House of Saud runs Saudi Arabia, but even that is shakey at this point.
Is the Federal Reserve willing to destroy the dollar reserve status in a currency war with China? Does the new policy of communication and transparency cover topics like this? Is trying to "talk" the economy up going to instill confidence? Most people realize "quantitative easing" is an untried and unprecedented experiment rather than quantitative. Banks get fed while the middle class shrinks. So transparent everyone can see right through it.