The Federation plays with fire

The Federation announced yesterday that it will continue a zero interest rate policy (ZIRP) at least two years and left the door means more leaks, although cases launching QE3 yet.

Stocks have responded with sharp rebounds baachrza, S & P 500 closing at 1,550, thereby restoring most of the ground lost after the downgrade of S & P. price of gold is near nominal highs fail in the above $1,750 per ounce, very close to the level of Jim Sinclair of key $1,764. Sinclair thinks that beyond $1,764 per ounce, the gold price gaps will no longer be arithmetic, but exponential. Goods rebounded with WTI crude rising above the 3% to $ 81.6 per barrel, and Brent crude is of $ 100. Money continues to range trade.

Negative real interest rates now appear to have been established as a permanent feature of economic life. ZIRP since instead of 2008. Of course, as all attempts to price controls throughout history, the effects are exactly the opposite of that intended. Instead of money available, we have scarcity of loanable funds. The penalty by real wrought savers negative return means that the accumulation of capital has been paralyzed, ruling out a recovery based on a real saving.

The only answer to the economic problems of the Federation of America is trying to devalue the dollar but credit growth and the real value of debt. A serious decline in dollar currencies gold safe shelter, such as the Swiss franc, Japanese yen; As a result the Big Mac is now the equivalent of us $ 17.19 in Zurich.

However, the problem for the Federation it like he wants to keep the dollar value decline controlled continues sinking, with inflation averaging around 2-3% for a decade or so – there are other ideas may be foreigners. As Ben Davies, as stated on the page news Hinde capital before, the danger of disorderly than in government debt now port is higher than ever. With some 12 trillion dollars us from all held by people outside of the United States, the Canal itself very high for the US Government and Federal Reserve.