[Arsenal]

$this->bbcode_second_pass_quote('Jotapay', '1'). Yes but we grow and produce more than Iceland does. We grow more crops than any other country. But if we can't import oil with a worthless currency, the tractors and fertilizer won't be there for the farmer.
2. US troops prepositioned on the streets.
3. Buy enough food and ammo? A bicycle? If you have surplus cash beyond what is needed for daily expenses I would just buy gold with it and exchange the gold back to currency once the panic is over in a few years.

[MrBean]

$this->bbcode_second_pass_quote('Jotapay', '2'). US troops prepositioned on the streets.

[patience]

Jotapay, Thanks! Have a lot of that, including gardens, new bike/parts, et al. Check your PM.

I really see this at close to critical mass, although my year's worth of crash-course on finance is not enough. It's as much a gut feeling as an educated opinion. My PO background, however is since 1974, with some eye to the economy.

My fear is for those unaware. This could be a monumental tragedy for many.

[Kristen]

$this->bbcode_second_pass_quote('Jotapay', '')$this->bbcode_second_pass_quote('Kristen', 'S')hould I shoot myself now or later?

[MonteQuest]

From my blog:

The Dollar Goes Under the Bus

Yesterday, the Fed Funds interest rate was lowered to a range of 0% and 0.25%. What this means is that the Fed is going to print money out of thin air as fast as they possibly can and flood the world with money.

‘Helicopter’ Bernanke is engaging in an experiment to see if past policies by Greenspan of setting interest rates too low — and making money too cheap — can now be corrected by making interest rates even lower and money even cheaper. Folks, this I nothing short of a double or nothing bet — using your taxpayer dollars to try and cover the losses from the casino gambling that has been going on. Well, as we all know, "when all you have is a hammer, everything looks like a nail."

Bernanke clearly thinks infinite growth in a finite world is still possible when he says, "The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth." There is no such thing as sustainable economic growth. It is an oxymoron. We have never had it and we aren’t going to ever get it.

The Federal Reserve is doing what the Bank of Japan did to try and stimulate the Japanese economy during the 1990s, which has come to be known as “The Lost Decade."

An economic bubble formed in Japan from 1986 to 1990, in which real estate and stock prices greatly inflated. That bubble popped, consumers lost faith in the economy and during the deflationary decade, held on to their savings as economic expansion came to a total halt. Deja vu?

The impact of the Fed’s decision has been a massive flattening of the yield curve for 10 year Treasuries, (which allows banks to make money by borrowing short and lending long) and an implosion of the value of the dollar. This unprecedented move led the dollar to experience its biggest 5-day drop since the inception of the euro in 1999. In short, this means your money is now worth less, your purchasing power has diminished, and the hope is that you will invest your cash into something else.

In the market equivalent of stuffing your mattress with cash, many investors have now parked their money in the world's perceived safest investment – U.S. government debt – and agreed to accept a zero rate of return on short-term T-bills. How bad are things? When was the last time you invested in something that you knew would not make money? Yet, demand was so great even for the no return bills that the government could have sold four times as much at the auction..

Once inflation returns, the central bank will need to sell assets into the market, to mop up the excess money it has created in fighting deflation. How the Fed will rein in all this excess liquidity to avoid massive inflation is not even being discussed. Some predict double–digit interest rates to curb the hyperinflation this much money will create. A bridge we will cross when we get there, I suppose.

As Paul Harvey says, “Stand by for news!”

[shoblever]

They have it all covered, as usual.

When inflation goes to double digits, they will say, "Hey, there are counterfeiters in europe ruining our money!"

and they will blame the inflation on huge amountw of counterfeit bills, they will have numbers showing how much cash is out there.

And they will say, LOOKIT how much they counterfeited!

and they will bering in digital currency and then you are toast.

1. Make the problem.
2. Blame someone else.
#. Take control and solve the problem
4. Repeat until all the money in the world is yours.

Liars, liars, towers on fires.

[smallpoxgirl]

I don't mean to pick Monte, but your post seems a little self contradictory.

On the one hand, you're saying that the fed won't be able to effectively add liquidity and we'll remain in a deflation like the Japanese did. On the other you're saying that the fed will be too successful at adding liquidity and will create run away inflation. You've hit momma bear and poppa bear. Kinda implies there must be an opening for baby bear and getting the liquidity just right.

[MonteQuest]

$this->bbcode_second_pass_quote('smallpoxgirl', 'I') don't mean to pick Monte, but your post seems a little self contradictory.

On the one hand, you're saying that the fed won't be able to effectively add liquidity and we'll remain in a deflation like the Japanese did. On the other you're saying that the fed will be too successful at adding liquidity and will create run away inflation. You've hit momma bear and poppa bear. Kinda implies there must be an opening for baby bear and getting the liquidity just right.

[Snowrunner]

$this->bbcode_second_pass_quote('smallpoxgirl', 'I') don't mean to pick Monte, but your post seems a little self contradictory.

On the one hand, you're saying that the fed won't be able to effectively add liquidity and we'll remain in a deflation like the Japanese did. On the other you're saying that the fed will be too successful at adding liquidity and will create run away inflation. You've hit momma bear and poppa bear. Kinda implies there must be an opening for baby bear and getting the liquidity just right.

[Jotapay]

I pretty much see the inflationary/deflationary tug of war like two teams pulling on a rope. When one team lets go and falls down, it is going to spill out the other side with nothing to stop it. And the Fed has just run out of tools that are still sterilized (debt that backs money creation).

[MonteQuest]

$this->bbcode_second_pass_quote('Snowrunner', ' ')I see it as Monty does, and yes, there IS a very short window of opportunity where they could arrest the inflation once it pops: Vastly raise interest rates.

[smallpoxgirl]

$this->bbcode_second_pass_quote('MonteQuest', 'T')ells us a lot about the uncertaintly associated with this move, doesn't it?

[smallpoxgirl]

$this->bbcode_second_pass_quote('MonteQuest', 'S')ure, the FED can sell assets to shrink the monetary base. Which assets? The toxic waste loans they are going to buy up? Who is going to buy them at any stage of the recovery?

[perdition79]

$this->bbcode_second_pass_quote('Jotapay', '1'). Yes but we grow and produce more than Iceland does. We grow more crops than any other country. But if we can't import oil with a worthless currency, the tractors and fertilizer won't be there for the farmer.

[MonteQuest]

$this->bbcode_second_pass_quote('smallpoxgirl', ' ')I don't think they're trying to shrink the monetary base right now. They're trying to expand it. Presumably once they did need to shrink it, it would be because the economy was recovering and running towards inflation right? Right now they could sell T-Bills, though presumably if the economy starts to recover, T-Bill yields would increase.

[Jotapay]

Monte is two steps ahead of the present. But Monte, if this absolutely massive monetary expansion breaks out onto the consumer level, good luck stopping it. Trying to stop it will produce a whip-saw roller coaster ride for sure.

It is going to be a wild ride the next two or five years. I hope you brought popcorn.

[smallpoxgirl]

$this->bbcode_second_pass_quote('MonteQuest', 'I') wasn't implying they were, SPG. I meant to try and shrink the money supply later to stop inflation.

[joewp]

$this->bbcode_second_pass_quote('smallpoxgirl', ' ')If you were the fed chairman, what would you do right now?

[MonteQuest]

$this->bbcode_second_pass_quote('smallpoxgirl', ' ') I don't mean this confrontationally at all - What would you do Monte? If you were the fed chairman, what would you do right now?

[MonteQuest]

$this->bbcode_second_pass_quote('joewp', ' ')If I was the Fed chairman, I'd blow the whistle on the whole corrupt deal. I'd testify to Congress what fools they have been for nearly 100 years, allowing bankers to coin money and regulate the value thereof, in direct violation of the Constitution. I'd point out that the worst economic collapses in the country's history have come on the watch of the very institution that supposedly is charged to prevent said collapses, and admit that the Fed has failed in its mission. I'd go as far as pointing out that the stated missions of the Fed wasn't the real mission, which is to help concentrate the wealth of the country in fewer and fewer hands, in which is has succeeded beyond expectations. I'd advise Congress to repeal the Federal Reserve Act of 1913 and all amendments, and restore commodity based money, like defining the dollar as 371.25 grains of silver.