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  • Who Cares About America's Financial Mess? Let’S Just Print More Money 0 comments
    Mar 25, 2013 1:02 PM

    By George Leong, B.Comm. for Profit Confidential

    Money printing by the Federal Reserve will continue into the near future. And while it will help America avert a recession, the flow of easy money will be disastrous over the longer term.

    The reality is that the current bull market and rebound in the housing sector that has made some people very rich is a by-product of the Federal Reserve, as the central bank has built this artificial economy in America that's driven by the availability of cheap money. Recall the subprime mortgage crisis in 2008 was also driven largely by cheap money.

    The problem is that the Federal Reserve had some tough decisions to make. Either let the country revert back to a possible recession or offer loose monetary policy to drive spending. Of course, the Federal Reserve only really had one choice.

    While I agree with the Federal Reserve, with the economy now in recovery, you kind of have to wonder why the Federal Reserve continues to allow the flow of easy money; based on the central bank's policy statement from its Federal Open Market Committee (FOMC) meeting last Wednesday, the cheap money will continue. The Federal Reserve will continue to buy $85.0 billion a month in bonds, adding to its debt in the process.

    The Federal Reserve said it would maintain its interest rates at record-low levels until the country's unemployment rate falls to 6.5% from the 7.7% in February. However, the Federal Reserve predicts this will not occur until sometime in 2015, so that's another two years of easy money and the building up of massive debt. In reality, achieving an unemployment rate of 6.5% may not happen until even later, based on current jobs creation. (Read "What the Government Doesn't Want You to Know About Jobs Creation.") According to the Federal Reserve, the unemployment rate will fall to 7.3%-7.5% this year, 6.7%-7.0% in 2014, and 6.0%-6.5% in 2015. The longer-run projection is 5.2%-6.0%. (Sourc… Read More

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