While the Media, the Stock Market gamblers and the casual observers rejoice at the Fed’s 1/2 point rate cut, there are indications that this move will open the trap door to the Dollar’s complete collapse even though it will be seen by most as “helping” offset the current banking and mortgage crisis spreading like a plague on the globe.
With current rates of inflation being kept hidden or not even calculated in economic forecasts – I have to wonder if history will repeat itself over the policies of greed and stupidity as they played out in Weimar Germany right before it collapsed into dictatorship?
Read John Galt’s excellent analysis HERE: Blundering Into History
I’m not economic saavy – but this looks to me to be an act of absolute panic to keep the banking systems afloat – especially after seeing the bank runs in Britian the last few days.
Will we see bank runs and $10 gallons of milk and $8 loaves of bread here?
No.
People think the government will bail us out of any problems, give us free health care and any other desire the populace wishes for.
But $10 milk and $8 loaves of bread are unlikely.
If you look at what TODAY’S example of hyperinflation is in Zimbabwe – where a loaf of bread goes for several HUNDRED dollars, perhaps we will get an idea of what awaits us in the near-term future if history proves itself correct once again.
More to follow as the days unfold.
And I would bet it will not be pleasant.
UPDATES:
Bloomberg weighs in on what they see:
World Economy at `Scariest Point Since Depression,’ as fallout from the U.S. subprime mortgage crisis crimps access to credit, said Ethan Penner, a pioneer of the $600 billion commercial mortgage-backed securities market in the early 1990s.
“We’re probably at the closest point to a big meltdown, a depression-type meltdown than we have been in our lives,” said Penner, 46, now a principal at real estate fund management firm Lubert-Adler Partners LP in Philadelphia, during a speech at a Real Estate Media Inc. conference in New York.
Dollar hits Record Low After Fed Rate Cut
The dollar fell to a record low versus the euro on Tuesday after the Federal Reserve cut its key interest rate by an aggressive half a percentage point to prevent the U.S. economy from weakening further on turmoil in the credit and housing markets.
