Comments on: Markets could force Fed to empty the chamber http://blogs.reuters.com/breakingviews/2011/08/10/markets-could-force-fed-to-empty-the-chamber/ Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Independent007 http://blogs.reuters.com/breakingviews/2011/08/10/markets-could-force-fed-to-empty-the-chamber/comment-page-1/#comment-8397 Fri, 12 Aug 2011 17:20:26 +0000 http://blogs.reuters.com/columns/?p=6772#comment-8397 Bernake has no choice. And deflation or no, more money will be printed which will have an inflationary effect on the economy. How much? That is the million dollar question or rather trillion dollar question. But you should have at least explained what deflation is for most people outside of Economists or those with Economics degrees won’t pick up the concept as easily as you threw it around.

You buy a house, money supply contracts, prices go down, the price of your home goes down but you still owe the same amount on the house so in real terms you now have to pay more for your house. That is deflation.

Okay, why not also discuss currency problems that has resulted and will continue to result in the dollars fall. Remember, when the people on fixed incomes realize that their SS check does not buy what it once used to buy, you will have unrest.

China as we speak is getting rid of its dollar reserves by the tens of millions, slowly of course, but they don’t trust the US dollar. And there you have a problem. If Chins does not trust the Fed, then you will have a crisis of confidence that could spread around the globe with countries dumping the dollars in favor of gold or the Swiss Franc.

My suggestion: Have the Fed print money specifically for banks to give 200k max loans to citizens. They will spend it, start businesses, and even pay off debt with it.
Make it at a decent rate of interest, and you may be able to create some demand. Banks will make money as people start paying the loans back, and be able to loan out more money. Inflation stays the same 4 percent tops, due to low unemployment. This may work, but at least it eliminates the middle man in all of this. May not work, but hey, its off the top of my head.

IF Bernake continues this course, you WILL see hyperinflation and it will occur sooner than you or I think. Deflation occurring during a depression? When was the last time you saw that? Hint: Bernake wrote a book about it.

So Bernake prints more money, the bankers continue to hoard the money, they do not collect on the toxic assets, but restrict credit, capacity is idled, and WHOLA, banks start falling like flies.
Bank of America will be the first, of the big ones to fall IMAO. I wonder if the government will take it over. Maybe it will. But this is what led to the Great Depression no?
History DOES repeat itself.

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