Thursday, October 14, 2010

The Fed to Buy Back Government Debt, European Central Bank Warns Against War of Currencies. Dollar: Fifteen Year Low Against Yen. Gold: Record High

October 14th, 2010

Yesterday, it was reported on Los Angeles Radio (KNX 1070AM) that the Federal Reserve System (The Fed) plans to buy back some of the Federal government’s outstanding debt. The Fed said this move would hopefully stimulate economic growth - by putting more dollars into the economic markets. Later the same day (or the next morning European time) the European Central Bank warned against perceived currency wars whereby currencies would be continually devalued to gain an advantage in exchange rates relevant to the exporting of goods. This evening, it was reported on San Diego’s Fox Radio affiliate (600 AM) that the dollar hit a fifteen-year low in exchange rates against the Japanese yen. Also today, it was reported that the value of an ounce of gold attained a record high dollar value of approximately thirteen-hundred and seventy-five dollars ($1375/ounce).

Despite the fact that the Federal Reserve System claims no fiduciary responsibility to the American nation, one could argue that the long continued effort by The Fed to forever devalue the dollar will help the American nation and workforce by stimulating exports as the dollar would then be less valued than the currency of foreign nations that buy our exports. However, as the fiat dollar has been devalued for decades on end to date, the continued devaluation is a likely culprit to the continued economic depression to which the nation is currently afflicted. Therefore, any continued devaluation of the dollar is likely another as yet unforeseen debt to be paid by the populace or by our future descendants.

Also worthy of note, to continue decreasing the value of the dollar aids any presidential administration by inflating prices which helps with any economic reporting concerning the Consumer Price Index (CPI) and the Gross Domestic Product (GDP). If the GDP were shown to increase because of the devalued dollar, then the current economic recession/depression officially could be ended by the definition of a recession (which is dependant on a repeatedly decreased GDP). Any official ending of the recession/depression is to the political advantage of any administration in power. But a devalued dollar also increases prices which severely hurts the American people. (Remember when a gallon of gas cost five dollars a few years back? Most of the increased price was probably due to a devalued dollar, not the oil producers trying to gouge us.) However, such a numbers game to reflect a better economy is nothing new - regardless of the presidential election drawing closer. But as The Fed has no stated fiduciary responsibility to the president either, if The Fed moves to better the economic appearances of the presidential administration, one can only wonder what type of relationship truly exists between the White House and The Fed. For instance, do the President and his people have all their asset holdings in gold as well, or is The Fed actually trying to help the American people?

Reiterating the point of many of my previous blogs/diatribes, as The Fed maintains no fiduciary responsibility to the American people and The Fed, of course, has massive gold holdings, one can only make assumptions as to what is the true intent of any actions taken by the U.S. Federal Reserve System. That is, are the actions of The Fed to benefit the American people or to further line the pockets of those in power at The Fed and those in power within our government? As our politicians, court systems, state governments, and lawyers don’t seem to have any distaste for this forever continued devaluing of our currency nor do they seem to have any other difficulties with any actions or on-going policy regime at The Fed, one sooner or later has to assume that the lawyers, state governments, court systems, and politicians must also be profiting by the continued policy regime of the Federal Reserve System – a policy regime which is arguably nearly criminal. As such, I must wonder, do the lawyers, court systems, and politicians have all their asset holdings in gold as well?

Anyway, is anyone out there still waiting for ‘change.’? Well, you just got some change, that is to say, more change in the form of the further-decreased value of the dollar. Sometimes I wonder if by merely insinuating these types of questions as in this blog, whether one may need to seek political asylum in a nearby neighbor nation.

Adam Trotter / AVT

Update, November 9th, 2010:

Over the last few days, it has been widely reported that the Chinese government is warning against this move by the Fed in that such an infusion of dollars, according to the Chinese, will cause widespread instabilities in the [currency and debt] markets. Duh, ya’ think? To their credit, though, the Chinese did catch on before the Fed really took them to the cleaners any further, anyhow. It’s been said that the Chinese have sold off much of their holdings in US Government debt some months ago (back in February), regardless.

PS. For more information on this topic of the Fed's actions and an interesting attempt at interpretation/"translation into plain english" for laymen of the Fed's recent statement, See:

PSS. So whose been reading the textbook as to what to do in a liquidity trap? But they still have not hired me. :)

November 11th, 2010,

Devaluing the currency to inflate prices for the upcoming election - or whatever, is most likely not the answer to our economic mess. Funny, even The Fed doesnt seem to understand what probably constitutes much of the problem. Guess I better apply for a job there, huh? Think they will have me? Doubt it, prbbly huh?