We see comment frequently about the eroding value of money due to the massive growth as a result of the Fed's printing (buying U.S. Treas. Bonds with nothing but a book entry as payment). Recent remarks by Liz Sauders of Chas Schwab (a very bright woman) says that we have nothing to worry about because the velocity of money is very low. (few borrowers and low spending) Well I'm disappointed in her. What would you expect, if the banks can make loans to the U.S Gov't. by buying Tr. Notes with free money (cost less than Inflation rate) borrowed at lower rates why make loans to any business that has even a smigeon of risk? So the Fed has in effect smothered inflation temporarily but since there is no way they are going to sell all the Treas Bonds (competing with the Treasury) the inflationary effect can only be delayed. So what do you do? Where is there hard money? I say it's large cap stocks of the top U.S. companies. When you buy a share you are buying the brick and mortar assets and the earnings power they generate. Your alternative is commodities such as gold, silver, etc. but those don't earn anything and they cost you to own them. I think you can consider good stocks as money since they are very liquid and unlilke dollars are backed with real assets. WW
The goal of the Fed is to re-inflate the bubble and increase the solvency of the big banks (who still carry bad assets that we're never marked to market). Of course, Obama is taking the money out, almost as fast as the Fed can pump it in!
Bet on JPM: They'll continue to own the Fed long after Obama is gone.
What planet are you on? Inflation is a very low 1.2% right now. We just came out of the first deflationary period since the Great Depression. Interest rates are very low because the recovery is hampered by tight fiscal policy (low government spending). The deficit is shrinking. The government can do more to stimulate growth but the GOP will not allow it. The Fed has no choice except to keep interest rates low. This is great for stocks. If the GOP were really the party for the wealthy they would be supportive. Instead they seem to be intent on driving the markets down.
Yes, you and I are on a different planet if your personal experience supports the 1.2% inflation rate. Everytime I get a new insurance policy, go to the grocery store, or do much of anything the price is up a lot. The deficit is shrinking? You have to be looking through a very narrow window. The goverment's debt is growing out of control and I support any politican who would aggresively oppose the spenders. WW