Irvine Finance Commissioner Allan Bartlett issued a public service announcement on Facebook yesterday, warning his friends to take appropriate steps to protect their assets due to the pending catastrophic economic collapse that Bartlett feels is inevitable in light the Federal Reserve’s decision to continue funding the federal stimulus.
Bartlett wrote: “Allan’s PSA of the day: The Federal Reserve, by continuing on their current path, is setting the stage for the largest financial collapse the world has ever seen. When will this happen? I’m not sure, but it will happen. Plan accordingly.”
I’m sure Bartlett will urge the Irvine City Council to start stockpiling gold and weapons at the next Finance Commission meeting.
The Fed’s decision surprised the market in a most pleasant way yesterday. From the story in the NY Times: “Investors cheered the Fed’s hesitation. The Standard & Poor’s 500 stock-index rose 1.22 percent, to close at a record high, in nominal terms. Interest rates also fell; the yield on the benchmark 10-year Treasury reversed some of its recent rise.”
The move yesterday made the rich even richer. And for those conservatives who worship the late Ronald Reagan for his failed trickle down economics policies, the Fed’s move was a very welcome surprise.
How did the Markets respond? According to the Wall Street Journal, “U.S. Treasury bonds posted the biggest one-day price rally since November 2011, with the benchmark 10-year yield closing at 2.706%. Prices in the mortgage-backed securities market, where the Fed has been buying bonds, leapt
“The Federal Reserve isn’t just inflating markets. It’s also shifting a massive amount of wealth from the middle-class and poor to the rich, according to billionaire hedge fund manager Stanley Druckenmiller.
In an interview on “Squawk Box,” the founder of hedge fund Duquesne Capital said that the Federal Reserve’s policy of quantitative easing was inflating stocks and other assets held by wealthy investors like himself. But the price of making the rich richer will be paid by future generations.
“This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.”
“Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs—essentially betting on “trickle-down economics.”
“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”
According to the Washington Post, “The Fed also lowered its forecast for growth through next year. Officials now believe the nation’s gross domestic product will increase between 2 percent and 2.3 percent this year, down from 2.3 to 2.6 percent. GDP is expected to pick up to 2.9 to 3.1 percent next year. Their forecast for the unemployment rate remained relatively constant for the year at 7.1 percent to 7.3 percent, then falling to from 6.4 percent to 6.8 percent next year.”
If the Republicans in Congress really want this nation to come out of an economic morass, we hope that they’d pass the stalled Jobs bill which directly helps the poor and middle class to secure good jobs at good wages so that the strongest economic engine of the nation remains our shrinking the middle class.
As far as Bartlett’s warnings of economic collapse, well we’re in a much better place today than we were in 2008 when the last global economic crisis hit. We’re not buying it.
The nation’s biggest banks have more than $1.5 trillion in their reserves, and American corporations have more than $2 trillion set aside. The problem is these corporation are using their capital to protect investors instead of creating new jobs and without creating new jobs, the economy lacks the middle class consumers needed to buy product and create profits.