# Time to Do Nothing



## PalmettoTree (Jun 8, 2013)

Does it ever occur to anyone to do nothing?

I tend to invest based on the current environment and therefore not waste time imagining what the government or Federal Reserve should do. That is what voting is for but consider this.

Greenspan in the months preceding his retirement increased the Fed rate a little each month. It is generally said it takes six months to judge the effects of Fed action.

Unfortunately Bernanke did not pause when he took over. He continued increasing interest rates. Thus when adjustable rate mortgages came due for adjustments they jumped past the ability of first serious homebuyers ability to pay. The net result was both the flippers and home buyers had no chance of holding on. Only the wise buyer electing a fixed rate were able to hold on but still found themselves upside down.

Bernanke never got to manage the Fed like his reputation before becoming chairman had most followers hoping. Congressional bad home mortgage mandates begot a housing bubble that begot adjustable mortgages begot higher interest rates begot mortgage failures begot mortgage backed securities failures begot massive bailouts begot a massive recession begot quantitative easing.

Now we find ourselves with a new Fed Chairwoman and a new problem brought about by government policies and Fed compensations for those. 

The current situation is a steep drop in stock prices because emerging market countries are facing a monetary crises because of anticipated quantitative tapering. (Let me remind you emerging market countries are not necessarily small. China is an emerging market.) 

Monetary problems in emerging markets mean a relatively stronger dollar. Get it! After all this quantitative easing, which normally would have created a weaker dollar. We might come out of this with a internationally stronger dollar. Why? How?

Quantitative easing is a fancy name for increasing the money supply. That need not trigger inflation or a weaker dollar if the demand for dollars increases at an equal or faster rate. The dollar is both the global reserve currency and the currency for global commodity trading. The global middle class and up hoard dollars like libertarians hoard gold. Countries from the European Union to the Chinese/Australian bilateral agreement have been hoping to replace the dollar for fulfilling these functions. 

So what about higher prices experienced in the US? Our higher prices have been the result of a global increase in living standards. Not because of QE.

I said all that to say this. We have an opportunity to come out of this monetary policy mess still on top. NOW IS THE TIME FOR THE NEW FED CHAIRWOMAN TO DO NOTHING FOR SIX MONTHS!


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## alterego (Jan 27, 2013)

I don't think she can do any thing other than increase the bond buying, tapering back as has been discussed would be some what unbelievable by me at this point. 

Interestingly enough, I do not believe the bond purchases to date "increased money supply" I believe they were used to pay off bad existing debt, so they have had little inflationary effect to date.

The US must have inflation to get us out of the current debt crisis. Do I like it no. Is it necessary. It will have to be huge.

Hang on to your asses boys and girls if we make it out of this still standing, you will be stunned what a weeks worth of groceries will cost you.

I will be the old man, instead of my father talking about buying a bottle of pop for a nickel. 

"I used to buy a coke at the party store for a 1.50 and gas was less than 4 bucks a gallon"

Can you hear it, I can.


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## Arizona Infidel (Oct 5, 2013)

alterego said:


> I don't think she can do any thing other than increase the bond buying, tapering back as has been discussed would be some what unbelievable by me at this point.
> 
> Interestingly enough, I do not believe the bond purchases to date "increased money supply" I believe they were used to pay off bad existing debt, so they have had little inflationary effect to date.
> 
> ...


think about those of us that can already say they paid .99 cents a gallon for gas, .50 cents for a can of coke, .30 cents for a candy bar, and .75 cents for a pack of smokes.


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## Ripon (Dec 22, 2012)

You guys realize this income inequality push by libs buys votes and inflates the dollar. Devalue the dollar is the only way to pay trillions in debt and unfunded mandates.


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## StarPD45 (Nov 13, 2012)

Arizona Infidel said:


> think about those of us that can already say they paid .99 cents a gallon for gas, .50 cents for a can of coke, .30 cents for a candy bar, and .75 cents for a pack of smokes.


That's high.
I remember 25 cent gas, nickel Cokes, nickel candy bars, and 30 cents smokes. :razz:


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## PaulS (Mar 11, 2013)

Yep! the good old days... bread was 10 cents a loaf, 2 six packs of Coke for a dollar, during the gas wars you could get gas for 10 cents a gallon and I was making 95 dollars a week. My rent was $90 a month and my car cost me $100.


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## inceptor (Nov 19, 2012)

StarPD45 said:


> That's high.
> I remember 25 cent gas, nickel Cokes, nickel candy bars, and 30 cents smokes. :razz:


My job then was pumping gas, checking oil and cleaning windshields.


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