Fed News Friday: Grab a Parachute, This is Going to be a BIG DROP DOWN!May 6th, 2011
The Federal Reserve is responsible for controlling interest rates and inflation in America. They participate in foreign market affairs as well, but their listed purpose is for the financial well-being of this government…oh excuse me, I mean nation.
The Federal Reserve so far through this financial “crisis” has offered their two forms of solutions for a shaky economy: artificially setting interest rates and printing large amounts of money to put into the system. Well now that the Fed has lowered the interest rate to practically 0% (fluctuating between .25% and 0%) they are no longer able to use this as potential stimulation to the economy. Not to mention most people are stepping back from financing what they can’t afford and turning more towards a savings-based approach, individually and business-wise.
The Federal Reserve also became famous in the past couple years with quantitative easing…gee I still get a kick out of these euphemisms. Nothing is quantitative about picking “a really big number” and printing it up out of thin air, and I wouldn’t use the word “easing” when describing our country’s monetary policy and current level of fiscal comfortability.
With QE & QE2 past us, with little to no recovery to show for it, I wonder what will be the next trick pulled out of the hat from Bernanke and his central banking posse? With the new threat of stagflation (rising unemployment and rising costs) plaguing economic journalism there lies a possibility for some more gracious rescue tactics from the Federal Reserve. Approved, of course, through Congress.
Thoughts of a third round of quantitative easing are beginning to be tossed around. Earlier in Silver Circle time we were joking about a QE6, QE7, and even a QE16, but wow I thought we were just horsing around to enhance our story. The Wall Street Journal has quoted some Fed officials on their potential interest rate hike, but some skeptics are expecting even more from the bank. With inflation on the rise and jobless claims growing, fighting fire with fire is surely not our best bet to turn this boat around…alas this waterfall is right over the horizon, so put your life jackets on…hell I’d just get a parachute because this will be a BIG drop.
With the top 2012 Presidential issues reaching the surface for discussion, I’m happy to see the Federal Reserve and the economy at the forefront of discussion. Even if Mitt Romney doesn’t want to “waste his time” …it’s already on the table.
Tune in next week for more news from the Fed! Subscribe to our blog if you like what you read and leave your comments!