Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Conventional Wisdom


Savings must match debt. Period.

The real problem is that we have no savings pool to support sound lending, due to years of misguided Federal Reserve policy. In its desperation to "fix" the problem, the Fed is now creating more imbalances than it's reducing. The banking system is broken from years of cumulative abuse. All the Fed is doing now is changing private debt into public debt by accepting the risks itself. But, even here, it's not really accepting risk for any losses it sustains in the process, as they'll be made up by directly printing money.

A balanced economy needs a savings pool commensurate with its debt pool...period. Any solution that deviates from that is going to make things worse, in the long run, for our children. It took years to deplete it, and it will take years of saving (in conjunction with debt reduction) to balance it.

Notice that the government's solution directly opposes this: They want zero interest rates so that people can borrow even more "money," save nothing, and spend everything. This is ludicrous on its face.

We as a people must return to logic and sound thinking. We must immediately do 2 things: Start encouraging people to save their money (zero interest rates don't do that), and promote productivity (the government cannot do that; only the private market can).

We need to allow interest rates to rise so people can save. We need to cut government spending by 95%. We need to eventually cut taxes by 95%. We need to decentralize government's power. In the short run this will hurt - but in the long run our children and this country will be much, much better off.

Unfortunately, we will never see if this works. We know there will be a large "stimulus" plan from the government. I can only urge the new President to use the bulk of it in the best way possible: for education. If we're going to borrow against our children's standard of living, we should use it to arm them with the best education possible.

Regardless, it seems we'll see what it's like to have our currency completely destroyed by the pompous few we have given power to.

Risk is getting higher.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos