This morning I was reading the WSJ and came across an article called “Fed Leans Toward New Aid to the Economy” http://online.wsj.com/article/SB10001424052748703440004575548252574679386.html?mod=djemTMB_t
Usually, it takes a reading of the New York Times in order to infuriate me, but this article really takes the cake. The author discusses the minutes from the Fed’s last meeting. Delving into the minutes, the Fed states quite blatantly that they want to steal from us. Make no mistake, that if you have money in the bank, they will be lowering the value of that money as soon as they can.
Quote:
“Fed officials discussed ways they could push up short-term inflation expectations or at least ensure they don’t fall further. That could mean being more outspoken about wanting a 2% inflation rate, which is widely seen internally as the Fed’s informal target. The minutes showed some officials also raised the idea of a “price level” target that would allow the Fed to overshoot a 2% inflation rate after periods when inflation had been coming in very low, to make up for lost ground.”
Overshoot? Lost ground? You mean to tell me that because you haven’t devalued my money enough over the last year and a half, you now want to crank up inflation a bit more so that you can take even more of it? This “overshooting” serves no purpose other than to devalue the savings accounts of good honest people. It is stealing with an invisible hand. We should all be outraged!
How would a 10% deflation affect me?
Pros:
- Well, my house would be worth 10% less. That is good news because I am not selling my house anyway and I would therefore have to pay tax on a value that is 10% less.
- I would make the same income because I have a fixed price in my contracts.
- Everything I consume would cost me 10% less.
- Money I put into my savings account right now, would be worth 10% more next year. I would get a 10% return on my savings account! Hey, people might actually save! We all would be better off if we took on less debt and saved a bit.
Cons:
- If I carried a lot of debt, I would have to pay it back with dollars that are worth more than they were last year. However, I don’t care because my income is the same and I don’t carry a lot of debt. Thus, personally this does not have an impact.
- I would have an incentive to save more and not take out as much debt. Again, why exactly is this bad to the common man?
- It would be bad for my bankers. Oh, I feel so bad for these guys.
As a matter of record, I would be quite happy with the opposite of what the Fed is asking… let’s say a nice temporary deflation that could bring back our ten year inflation average to zero and then an ongoing rate of zero after that. So, in my analysis, GIVE ME DEFLATION and get the mother-loving Fed out of my life!
News divisible only by one and itself. 