The Coming Devaluation: The Fed and You

Posted: July 26, 2012 in Blog, Economics
Tags: , , , , ,

The Current World Economy continues to crumble amid concerns about Europe’s ability to get themselves out of this current mess.

The Fed will meet next week and the option of an open ended QE3 will be on the table.

What is QE3?  That is the creation of money by the federal reserve that is pumped into the U.S. economy

QE1 was released in 2008 following the crisis and QE2 was pumped in 2010

What this means for you is that your dollar is worth less.  This is cleverly hidden by numerous slight of hand trick and we really dont see the impact right now of all of this, but this signals a bigger bust when the whole thing collapses.  Its pretty simple, just like gold, diamonds or shelby cobra’s the more of something that is out there the less it is worth.  If there were 50 million shelby cobras on the roads we wouldnt see it as an exclusive and rare car (which equals value).

The unemployment rate will not drop before 2014 as hoped, so the Fed is being looked at to change this.  Look for a QE3 next week as Obama I am sure is putting pressure on them to pull the unemployment down before November, this I can guarantee you.

THE EUROZONE

With Greece in a massive depression and Spain’s debt crisis building to a climax, the Eurozone is only getting worse

The U.K. reported a Q2 (second quarter of the year) GDP contraction of 0.7%, versus 0.2% estimate and business confidence in Germany dropped to a 2 year low

Today, Asian and European markets have opened “in the green” after receiving a comforting pledge by Mario Draghi, President of the ECB, that the bank will do “whatever it takes” to preserve the euro. “To the extent that the size of sovereign premia hamper the functioning of the monetary transmission channel, they come within our mandate”. The ECB and the Bank of England meet on August 1, a day after the start of the FOMC meeting, and expectations are high for additional bond purchase programs to counter the bond vigilantes. Spanish and Italian bond yields have dropped on the words from Mr. Draghi…the Spanish ten year yield dropped from 7.69% to 7.24%, still high, but moving in the right direction. Exactly what tools for growth are deployed, and what additional stimulus the central banks bring to the table remain to be seen.

Eurozone banks have run from the U.S. in the last five years cutting their assets here by a third.

(portions of this come from an article in the Financial Times)

In short the economic “recession” is in truth a depression, we just havent felt it yet, like a kick in the ass all we feel right now is the toe, which will soon be followed by the rest of the boot!

Prep now!

Get ready

GREAT NORTHERN PREPPER OUT!


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