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December 16th, 2008

Federal Reserve Cuts Rates to Zero to One Quarter Percent

The Fed has cut the target rate for the Federal Funds rate to 0 to 1/4 percent. They also said the Fed will buy treasury bonds and mortgage backed securities. The punch bowl has been given to the economy and it’s been spiked. Asset values should rise and the economy should pick up. Long term there will be inflation but for now things should improve.

Why did Bernanke wait till the end of the Bush administration to do what’s necessary to improve the economy? Could it be that it’s because he is a Democrat and wanted to harm the economy to elect Democrats? Bernanke and the Fed allowed the economy to sink which helped elect Obama and the Democrats but after the election of Obama, pessimism set in causing a sharp economic decline. The Fed is now expanding the money supply at unprecedented rates with record low interest rates to get the economy out of a potential collapse that will result in inflation problems down the road.

Posted by admin as Economics, General, politics at 3:25 PM UTC

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December 15th, 2008

Social Security Ponzi Scam About to End?

With the news about a ponzi scam costing some well known people and charities billions of dollars, it raises concerns about the biggest ponzi scheme of all, Social Security. A ponzi scam is where investors are paid, not out of profits on their invested money, but by new investors to the scheme. When not enough of new investors can be found to pay previous investors the ponzi scam comes to an end as people find that they have been taken by the scam artists. The Social Security system is set up the same way as a ponzi scheme. People are paid social security out of money from new contributors. Social Security has no money invested with profits and interest growing to pay off those that collect in retirement.

If there is a point where there isn’t enough new people paying in to pay those collecting the ponzi scheme will be broken and the Social Security system will be bankrupt. In the early 1980’s and earlier there were reports that Social Security will be bankrupt but it didn’t happen, yet. The economy had a strong period of growth for 25 years stretching from about 1983 till 2008 with many jobs created, higher wages, and business growth resulting in more people paying into Social Security. With many women entering the job market for the first time there were millions more people paying in to Social Security. With the economy slowing and job growth no longer growing and even possibly jobs being lost, there will not be enough new money from new contributors to pay the increasing numbers of people collecting. The ponzi may be coming to an end in the next few years. People will expect the government to bailout the Social Security ponzi system but with government already in debt by trillions it will be difficult to make up for the large short fall in Social Security.

Posted by admin as Economics, General, politics at 5:12 PM UTC

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December 4th, 2008

The Economy Hits a Brick Wall with Obama Election

By most economic measures, as soon as Obama was elected the economy hit a brick wall. The stock market also tanked after Obama was elected. Sales of many things like cars dropped off the cliff. People are running scared about the Obama election, who is the most socialist candidate ever elected.  The Fed and Treasury are pumping the economy with loans to improve liquidity. The added money may hold the economy up or it will go into inflation. Those that thought electing Obama would be positive for jobs and the economy got a rude awakening to the fact that socialists running government from the Congress to the President isn’t good for economic confidence which harms investment and harms the economy.

Posted by admin as Economics, General, politics at 6:45 PM UTC

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