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
even more.”
“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.
http://www.google.com this: “U.S. derivatives bubble”
“Derivatives: The $600 Trillion Time Bomb Set To Explode”
“In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.”
http://moneymorning.com/2011/10/12/derivatives-the-600-trillion-time-bomb-thats-set-to-explode/
###
Global derivatives:
“The Horrific $1.5 QUADRILLION Derivatives Bubble”
http://beforeitsnews.com/alternative/2013/06/the-horrific-1-5-quadrillion-derivatives-bubble-2-2687352.html
Reinstate Glass-Steagall or Die in a global economic crash from which there will be no recovery, – not ever.
http://larouchepac.com/glass-steagall
Dan, I am not a financial wizard by any stretch of the imagination and don’t claim to have the answers to America’s financial woes. However, during my adult life, I have lived within my means, saved first and invested wisely. As such, I have learned a little about economics, banking, real estate and the stock market.
One does not need a Ph.D in Economics to understand the Federal Government is out of control and living well beyond it’s means. When you spend more money than you make, it is called deficit spending. If you or I did that, we might be able to make up the difference with savings for a while, but in the end we would be bankrupt. The Federal Government doesn’t play by the same rules that we do. When they spend more than there is revenue coming in, they just crank up the presses, print some additional money and add it to the National Debt. As the National Debt approaches 17 trillion dollars, the wizards of Washington want to raise the ceiling higher. Even an ordinary citizen understands there is a limit to the credit of the United States government and sooner or later the house of cards will collapse. Then overnight, the dollar becomes worthless and chaos prevails. When will that happen a concerned person might ask? No one knowsfor sure, could be next week, next year or five years from now. The one thing most people in touch with reality agree on is, it isn’t a question of if it happens, but rather when it happens?
The Federal Reserve is not a friend of the American people and is controlled by the wealthy elite and bankers who have all that wealth tucked away. Still, that is not enough to satisfy their greed and lust for power. Many believe there is an organized plan to gain total control by economic collapse. They have no interest in creating jobs for ordinary Americans? While I haven’t discussed this with Allan Bartlett, I suspect that is part of the logic for his comments. One hopes such an event will never occur. Unless we get government under control, mandate a balanced budget and start living within our means, I think the future looks pretty bleak.
The debt ceiling is to cover bills we’ve already incurred Pat. And if the Bush administration didn’t go to two wars on a credit card while cutting taxes, we wouldn’t be in this mess to begin with. Oh to be trapped in Bill Clinton’s economy….
Can’t blame just George Bush for this mess. Both Republicans and Democrats in Congress have caused the problem and if it were up to me they would all be fired and whipped in public. But then, what the hell do I know, I’m just a taxpayer who like yourself, pays his taxes and lives within his means. Have a great weekend.
Actually, Bush’s policies are largely responsible for the shape we are in. Read a CBO report sometime Pat. How about FactCheck.org?
Yep, it is always GWB’s fault, even four years after he left office. Meanwhile your fearless leader Comrade Obama has tripled the National Debt. Don’t have to read a CBO Report or do fact check to know that this country is up to it’s ears in that proverbial brown stuff. The only question is, how soon will the big crash come that takes the country to it’s knees?
Bush’s policies have long lasting effects. Two wars on a credit cars Pat. I really wish you’d do your homework. A massive stimulus was what we needed to pull back from the edge of global economic catastrophe.
Pat,
I will stop blaming Bush when conservatives admit his policy decisions are part of the reason we are in this position.
The party of personal responsibility never admits to responsibilty when they are the problem. But certainly demands it of others.
LtPar wrote: “Meanwhile your fearless leader Comrade Obama has tripled the National Debt.”
Huh? To quote Megyn Kelly from Election Night 2012:
“Is this math you do as a republican to make yourself feel better?”
When Bush’s last budget expired (9/30/12), the National Debt was almost $12T. It is currently about $17T with a deficit that is about 40% lower than when Obama took office. I must have missed that part of basic math where 17 was three times larger than 12.