The following is a quote from correspondence received by Chris Whalen:
“I want to extend a most sincere message of appreciation for one of the comments you made during recent participation in an American Enterprise Institute symposium. You are the only financial guru /analyst whom I have heard make any reference to the devastating impact of extraordinary quantitative easing on “grandma” and her carefully laid financial plans. Many middle class retirees have no generous government or corporate pension. We have had to plan and save prudently for retirement. Now, as we watch returns on CD’s plunge from an average 5% to an anemic 1.5%, we also experience a plunge from a comfortable retirement into a state of severe “penny-pinching”. You were correct…not only do we have to cut back on gifts for the grandchildren, we are also drastically curtailing many discretionary purchases, travel to spend time with family and so forth. I have heard NO other analyst speak to this impact on responsible retirees who thought they had done all the right things to prepare for the “golden years”. It just felt good to realize that there is at least one individual who has given any consideration to this fallout from “Fed” policies.”
Mr. Whalen is one of the few analysts/economists that foresaw the crisis and fully understands its implications. I encourage you to read his article which concludes as follows:
If the FOMC does not soon allow interest rates to rise and thereby rebalance the policy equation between American savers and borrowers, then we fully expect to see gold prices climb further. Fed Chairman Ben Bernanke and the FOMC will hand the detractors of the central bank led by Rep Ron Paul (I-TX) the political issue they need to eliminate the Fed once and for all. And President Barack Obama will be wearing the concrete booties that once belonged to President Herbert Hoover. Unlike your worthless greenbacks, you can take that to the bank.
Mr. Whalen’s article is short but a bit technical. He believes that the three largest US banks will fail regardless of what the Fed does. From this perspective, the Fed has imposed great damage on the country with no hope of achieving what they wanted. In other words, they have worsened the situation and continue to do so. All of this damage has been imposed on the hard-working citizens of the country.
Mr. Whalen believes that gold will rise regardless of whether we have inflation or deflation.
Welcome to Great Depression II.
Here is an earlier interview with Whalen and Nouriel Roubini:
suppose all this strife is deliberate. what then would the motive be? comunism? world governance by an invisible few. lifetime slavery to the tax and regulation crowd? what? when it reaches the apex of bad a war delibertly started to wash out the system?the musulim problem might well be used as a catalist ? what do you and others think
your fan in st louis
bob
Whalen is exactly right about interest rates. But Whalen is a contradiction, a complicated fellow. He sees the dollar as becoming worthless paper because of low interest rates and QE but then he calls this phenomenon “deflation” twice:
Who is he trying to fool? Is he just trying to impress his college professors, the Keynesians like Prof. Roubini who don’t believe that inflation is possible? So he calls “inflation” “deflation”. I’m glad he’s trying to save the old people’s retirement money, though it may be too late for that. But part of the trouble is that even the analysts who seem to get something right are terribly muddled.
Edmund Burke, on the more things change…
You began ill, because you began by despising everything that belonged to you. Respecting your forefathers, you would have been taught to respect yourselves. Compute your gains: see what is got by those extravagant and presumptuous speculations which have taught your leaders to despise all their predecessors, and all their contemporaries, and even to despise themselves, until the moment in which they became truly despicable. By following those false lights, France has brought undisguised calamities at a higher price than any nation has purchased the most unequivocal blessings. France has not sacrificed her virtue to her interest, but she has abandoned her interest, that she might prostitute her virtue.
James,
An appropriate find for our times. Thanks.
Monty