Liquidity Injection Equals Inflation
After clear evidence that the subprime credit market was having a negative impact worldwide, the Fed did what it does best - make more money! The chief U.
S.
economist for Lehman Brothers, Ethan Harris, in the The New York Times calls it simply "a bookkeeping entry".
"What they're doing now is to make sure there's plenty of cash in the system," said Ethan Harris, chief United States economist for Lehman Brothers.
When the Fed injects liquidity, it is not actually dipping into its cash reserves, but crediting a dollar amount to the balance sheets of the banks.
"All they do is write down a number and credit that amount of cash to the bank," Mr.
Harris said.
"It's a bookkeeping entry.
" Of course this was done for our own good to insure we will still be able to to shop till we drop, should we choose to.
Aug.
10 (Bloomberg) - Central Banks Add Cash to Avert Crisis of Confidence "Central banks in the U.
S.
, Europe, Japan, Australia and Canada added about $136 billion to the banking system in an attempt to avert a crisis of confidence in global credit markets.
'The Federal Reserve, in a second day of action in concert with the European Central Bank, provided $38 billion of reserves and pledged more "as necessary,' in a statement unprecedented since after the Sept.
11, 2001, attacks.
" That's 38 billion with a B folks!With a stroke of the keyboard the "Crisis of Confidence"was seemingly adverted and equilibrium was supposedly restored.
NOT!!!!Then what's going on here? What we're seeing is a band-aid measure put on the festering wound of an economic system.
That 38 BILLION injected into the U.
S.
economy means there is a whole lot more money that can be loaned.
It also means that the value of each unit of currency has been further depreciated from the estimated current worth of 4 cents per dollar.
Not to mention, money borrowed must be repaid with interests.
Interest becomes debt service that gets added to the price and goods and services and so voila, we see the cost of living take another leap! As personal earnings continue to fail to keep up with the cost of living the vicious, never-ending cycle of needing more credit will kick-in at an even more ferocious pace! The system's solution is to make you ever more addicted to consuming what you don't really need along with the credit you'll need to keep purchasing at breakneck speed.
Remember:In order to keep the economy pumped-up, personal consumption is 70% of the formula.
You see, as with Orwellian doublespeak, money is now debt, not value and personal wealth has become credit (numbers on a statement).
The economic world has gone topsy-turvy! Time to wake up and smell the deception.
Each of us wants to find safe harbor - naturally.
But as I often say, you will not find it by putting your trust in a self-serving financial and banking industry.
Your best interest is far from their minds.
Over my years of both life experience and study, the word on the street is that breakthroughs follow breakdowns.
Now I'm not talking about you personally, but the system itself.
I believe if enough everyday people ON THEIR OWN find their way out ofdependency on a sick debt-based system via alternative personal finance strategies, at that point, the Powers to Be might be concerned enough to make a systemic shift.
Until then, as they rake in the increasing billions of dollars from compound interest payments made to them from what they cal their "revenue units" (everyday people) they have virtually no incentive to reconfigure the design of the system.
Think about it.
Get out now!
S.
economist for Lehman Brothers, Ethan Harris, in the The New York Times calls it simply "a bookkeeping entry".
"What they're doing now is to make sure there's plenty of cash in the system," said Ethan Harris, chief United States economist for Lehman Brothers.
When the Fed injects liquidity, it is not actually dipping into its cash reserves, but crediting a dollar amount to the balance sheets of the banks.
"All they do is write down a number and credit that amount of cash to the bank," Mr.
Harris said.
"It's a bookkeeping entry.
" Of course this was done for our own good to insure we will still be able to to shop till we drop, should we choose to.
Aug.
10 (Bloomberg) - Central Banks Add Cash to Avert Crisis of Confidence "Central banks in the U.
S.
, Europe, Japan, Australia and Canada added about $136 billion to the banking system in an attempt to avert a crisis of confidence in global credit markets.
'The Federal Reserve, in a second day of action in concert with the European Central Bank, provided $38 billion of reserves and pledged more "as necessary,' in a statement unprecedented since after the Sept.
11, 2001, attacks.
" That's 38 billion with a B folks!With a stroke of the keyboard the "Crisis of Confidence"was seemingly adverted and equilibrium was supposedly restored.
NOT!!!!Then what's going on here? What we're seeing is a band-aid measure put on the festering wound of an economic system.
That 38 BILLION injected into the U.
S.
economy means there is a whole lot more money that can be loaned.
It also means that the value of each unit of currency has been further depreciated from the estimated current worth of 4 cents per dollar.
Not to mention, money borrowed must be repaid with interests.
Interest becomes debt service that gets added to the price and goods and services and so voila, we see the cost of living take another leap! As personal earnings continue to fail to keep up with the cost of living the vicious, never-ending cycle of needing more credit will kick-in at an even more ferocious pace! The system's solution is to make you ever more addicted to consuming what you don't really need along with the credit you'll need to keep purchasing at breakneck speed.
Remember:In order to keep the economy pumped-up, personal consumption is 70% of the formula.
You see, as with Orwellian doublespeak, money is now debt, not value and personal wealth has become credit (numbers on a statement).
The economic world has gone topsy-turvy! Time to wake up and smell the deception.
Each of us wants to find safe harbor - naturally.
But as I often say, you will not find it by putting your trust in a self-serving financial and banking industry.
Your best interest is far from their minds.
Over my years of both life experience and study, the word on the street is that breakthroughs follow breakdowns.
Now I'm not talking about you personally, but the system itself.
I believe if enough everyday people ON THEIR OWN find their way out ofdependency on a sick debt-based system via alternative personal finance strategies, at that point, the Powers to Be might be concerned enough to make a systemic shift.
Until then, as they rake in the increasing billions of dollars from compound interest payments made to them from what they cal their "revenue units" (everyday people) they have virtually no incentive to reconfigure the design of the system.
Think about it.
Get out now!