Friday, October 26, 2007

About lighting cigars with $100 bills

Soon enough that may actually be sound financially speaking. The dollar has hit yet another low against the Euro and still there is serious talk of lowering interest rates further. Amazing.

I'm no conspiracy nut but I have to start wondering what in the hell is are Bern Bernake, Hank Paulson, etc up to? I can see lowering the 1st time in August when it looked like a stock market crash was upon us. OK. You lower, you calm people down. It wasn't the ideal thing to do, but I can see the reasoning. But ever since, it's like they are purposely trying to make the $US worthless.

In Sept, there was no reason to lower. The markets had stabilized, employment has OK - not great but OK - and yet the Fed cut by 50 points on 9/18. And sure enough the dollar went from 0.72 to 0.69 in a month. That means your dollars have 4% less purchasing power than they did a month ago. But your stocks got a lift right?? If you have you money in US stocks like most people, you lose. On Sept 18th the S&P500 was 1476. Today it is 1514. A gain of 2.5%.

Lose 4% to make 2.5%. Sweet huh?

So the question is why the hell are they doing this? Is it sheer incompetence? I doubt it. There guys are no fools. I'm sure someone will see some grand conspiracy involving Haliburton and Elvis and I'd love to hear bout it. The most probably answer is debt elimination. We have $10 Trillion of debt. Devalue the dollar by 50% and that debt magically shrinks by 50% as well. This was the fiscal policy undertaken by African and S. American countries in the 80s and 90s. And we all know how well all that worked out.

No comments: