Stop the Presses

December/21/2008 22:47PM
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Cute little statistic. On Labor Day this year the assets of the Federal Reserve were $905.7 billion. Last report, $2.31 trillion. You can check this on the Fed’s own Web page. Open up form H4.1. We know Obama likes big parties, but will we need all these dollars to pay for the inauguration?

What happened? Is this where Bernard Madoff was putting investor’s money? No. Simple, we’ve been printing money as fast as the presses can print. Maybe the foreign investors go to that Web page too, since the dollar dropped last week.

So you can borrow money from the Fed for zero interest. Soon, they may pay you to borrow dollars since they will be worthless.

Peggy Noonan wrote in the Wall Street Journal that 2008 was the “year of the empty suits”. Boy, is she right.

I’m no economist, but I see rampant inflation descending on this country. Paulson, speaking of empty suits,  is twitching to get the second half of TARP released. Bush, another empty suit, approved a bridge to nowhere bailout for the GM and Chrysler. The UAW immediately said, we ain’t giving nothing. Probably the debt holders will say the same thing when offered stock in replacement for debt. 

Obama want to spend at a record rate and the presses will only print so fast. It’s good to get ahead of the spending with lots of new crisp dollars. As they become worth less, he will need more of them to buy all he plans to buy. 

When the foreign investors start dumping their U.S. investments they will become worth less. Guess that will solve the Feds concern about deflation. 

Here’s two investment tips, my Christmas present to you. First, buy a wheelbarrow. You will need it to take the dollars to the grocery store to buy your weekly groceries. Second, more seriously, look into TIPS. These are Treasury Bills indexed to inflation. Sooner or later it has to happen. Commodity supplies will over correct for the poor economy. Too many dollars chasing too few goods will lift it up like a helium balloon.

If 2008 was the year of empty suits, what will 2009 bring? I truly hope Obama and his team can fill out their suits. If they can’t it will be the year of empty promises and will bring more years to come of empty things.  

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Comments (2)

  1. Chris Johnson says:

    Bill…. no comment today, just a hearfelt wish to you and Big S to have a very Merry Christmas!

  2. Bill Robertson says:

    Chris:

    Merry Christmas to you and your fine family. Here’s to no empty suits in 2009.

    Bill

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