Article And Comment
I wanted to post this article. It is a wonderful analysis of what is going on now and where we are going. It is a very long analysis, complete with charts and graphs. It was written Wednesday, and warned that the Federal Reserve was going to end up deciding to print money to solve this crisis. This was somewhat prophetic, because the FED made that exact move later in the day. However, I suggest that you read it in its entirety–there are great pieces of information and analysis throughout the piece, and especially near the end.
Well, that very day, the federal reserve did this. The British call this type of action “quantitative easing.” In plain English, this translates to “expanding the money supply,” or “printing money.” This move was effectively the FED printing $300 billion. The article above correctly predicted what would happen–the Fed’s move caused the yield on a 10 year government bond to drop by over .5% (the largest single day drop since 1962) and the value of the US dollar to sink by 3.3% against the Euro. Of course stocks rose, but they only rose by 2.1%–much less than the drop in the value of the dollar, meaning that investors actually lost purchasing power–even though the markets rallied.
Americanly Yours,
Phred Barnet
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