Is the Fed killing the US dollar? Well, let's put it this way. If the US economy were a hospital patient, Bernanke and Obama would be the docs who are seriously discussing how to revive the patient... as they are standing on its oxygen tube.
Bernanke doesn't have a lot of choice, however. If he allows rates to rise, the amount of interest paid by the tax-payers would rise considerably. It would not take a large percentage increase to raise the $400B in interest that we now pay each year to a trillion dollars or more.
Additionally, benefits programs that are tied to US interest rates or Treasury rates would also rise, making Social Security and other federal retirement payments a lot higher. To put it bluntly, folks, we simply do not have the money for this. Lenders are having 2nd thoughts about loaning more money to the US and printing the money only "solves" the problem temporarily while making it much worse in the longer term via the creation of inflation.
In short, the government and the Fed, either by design or incompetence, have created a monster that is now wreaking havoc both here and abroad and they have very little idea how to handle it. By the time they figure it out, the fix will exact a terrible price on just about everyone. Like a snowball rolling downhill, the sooner you stop it, the easier it is to stop... and the politicians keep putting it off for later, probably in the hope that someone else will do the dirty work of stopping it.
Posted 09/01/2011 4:18 pm
Bubbles != an economy. /rant
