by Craig R. Smith
Last week, three days before the Federal Reserve pulled the trigger on their new "open checkbook" money creation policy, Fox News anchor Neil Cavuto asked me this question: "Who benefits from another round of stimulus by the Fed?"
"Could Fed easing help President Obama and hurt Mitt Romney?" (Remember, Romney has announced plans to replace Ben Bernanke)
I told Americans that another round of Quantitative Easing (Q.E.) stimulus will not do anything different than the last two rounds of Q.E., except to inflate the stock market temporarily and perhaps Obama's approval ratings.
We do not have a liquidity issue, we have a confidence issue. American workers and investors have lost confidence in leadership and wonder if their job is secure or if their taxes are about to rise dramatically in 2013.
The Fed tipped their hand!
By voting themselves an open checkbook to create more liquidity to prop up the U.S. economy - including both the stock and housing markets - The Federal Reserve has clearly demonstrated to the world they are more frightened about rising deflation (which benefits savers) than about rising inflation (which punishes savers, retirees, etc.)
2012 is not 1979 - it's worse!
At least during the last painful bout of inflation during 1979-80 savers and investors could protect against out-of-control 15%+ inflation rates by buying T-bills or CDs which paid 16%+, slightly outrunning the rocketing cost of living.
Not so today. Owning T-Bills or CDs today is like owning a "Certificate of Debasement". With negative returns promised by the Fed until 2015, what are savvy savers to do? This was the subject of my last book, The Inflation Deception: Six Ways Government Tricks us... And Seven Ways to Stop It!.
We must learn from economic history and take action to protect our assets from further dollar debasement and rocketing inflation - or be doomed to pay the price.
To help Americans get ready prior to the release of my fifth book this fall, I would challenge readers to request a free copy of "The Future of Money" audio CD.