The Fed announced $600 Billion of “quantitative easing”…double-speak for flooding the economy with one helluva lot of fake money. Coupled with failed “stimulus” packages that already generated $2 Trillion of bogus bucks, the dollar is fast becoming an international joke. We are going to have to come up with another term to describe the effects of this travesty. We were already looking at hyper-inflation sometime next year as a result of the "stimulus" packages. This pathetic attempt to stave off the inevitable will only make the penalties for past excesses far more harsh. Some indicated today that the Fed has made a few noises about even more "quantitative easing" of between $2 Trillion and $5 Trillion. Indications are that they intend to keep pouring it on until it works.
You will certainly see the stock market go higher in an attempt to make up the lost values caused by this extreme dilution of our currency. Gold will continue much higher....it closed near $1390 per ounce today - up $45 at one point. It is most certainly headed for $2000 an ounce and likely higher than that once inflationary pressures become apparent.
Many suppliers are already slipping it to us by casually introducing smaller packaging at same prices. There is no way we're going to see wages go up any time soon...except for unions that will strike for higher wages in an attempt to keep up with the falling purchasing power of the dollar. The rest of the workforce will, as always, lag way behind the extortionists.
This chart is the scariest thing I have seen in over 30 years of watching the markets!
To the extreme right is a 'giant' Head & Shoulder formation that began 10 years ago. Although charts don't always accurately predict future market movements, the Head & Shoulder formation is cause for serious concern by market watchers. If the right shoulder that is currently forming should top out between current value and around 12,000 +/- and make a major correction toward the 8,000 mark, it could signal as much as a 6,300 point drop, from the base of the head formation, in the value of the Dow Jones Industrial Average. That would take us from the current 11,430 range to as low as 1,300…last seen in 1985.
World economic conditions, U.S. debt, devaluation of the dollar, hyper-inflation and falling confidence [domestically & internationally], continued belt-tightening by consumers, combined with other yet-unknown events such as increased terrorism, higher unemployment, government over-regulation and so on, make the prospects indicated by this chart even more frightening.
Although this formation has taken over 10 years to develop, when considering the above possibilities, I expect the shoulder could peak sometime between now and June 2011. If it does, and continues to slide downward for the rest of the year or perhaps less.....we could experience a months-long, or even a rapid drop in market values. The formation may not complete itself at all.
There are no sure things in the market, except that it will go up and it will go down. I bring up this ugly possibility only to suggest that you keep a close watch on it during 2011. The Congress must do the right things to reduce government's reckless spending and regulation if we are to avoid an economic tragedy. The piper will be paid some day...there is no avoiding that reality. It's just a matter of how painful it is going to be. The longer we wait to address it, the more devastating will be the consequences.
The Fed and the Treasury Department know full well that they have dug a hole too deep to climb out of without violence in our streets. They are simply trying to stall the inevitable. They don't have a clue about what to do, but they want us to believe that THEY are the only ones that can fix it. WRONG!
THEY SCREWED IT UP....THEY DIDN'T KNOW WHAT THEY WERE DOING THEN AND THEY MOST SURELY HAVE NO IDEA WHAT THEY'RE DOING NOW….except perhaps attempting to insulate themselves and their ‘friends’ from the inevitable fallout.
They're already making apologies, referring to what they call 'uncharted waters'….just another way of saying that THEY DON'T KNOW WHAT THE HELL THEY'RE DOING!
Once again, refer to government expertise and the Post Office, Amtrak, Department of Energy, Social Security, Medicare, Welfare of all descriptions, the Gulf oil spill, so-called Obamacare, Cap & Trade and Algore's global warming lies, Fannie Mae, Freddie Mac. Need I go on?
No need to consider jumping off the roof yet. Just stay vigilant. Don't take your eyes off the ball for a minute. Hold the feet of those clowns in Disneyland on the Potomac, to the fire. I am hoping for the best, but the best will only come to us if we recognize the dangers we face and take the steps necessary to protect ourselves. We made a good start on Tuesday. We can’t afford to let up one bit.
One more thing….If Republicans choose to fight the Tea Party folks, where do you think we’ll be headed?
