The Federal Reserve Open Market Committee announced its intent to devalue the dollar by 33% over the next 20 years. The devaulation will be greater if the Fed exceeds its goal of a 2 percent per year increase in the price measure.
http://www.forbes.com/sites/charleskadl ... dollar-33/
The brazenness is remarkable; no vainglorious protestations that the Fed will work with others to ceaselessly endeavor to persevere to struggle to keep the dollar from falling more than 2% per year (same thing, different spin).
Fed to devalue dollar by 33%
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jennypenny
- Posts: 6858
- Joined: Sun Jul 03, 2011 2:20 pm
As much as I hate inflation, a goal of only 1.5-2% makes me smile when I compare how inflation has been related to the market.
The 2% range usually means things are stable and markets are growing. Deflation may be good for your bank account, but you will lose you a$$ in the market. Excessive inflation beyond what the Fed is shooting for is my future concern with all the spending over the last few years. However, if the Fed lives up to its goal they will raise interest rates if this starts to happen.
For the moment it seems we are in a potential sweet spot for growth...or back to a state of deflation risk that we briefly experienced in the height of the great recession. I hope the US is not the next Japan.
The 2% range usually means things are stable and markets are growing. Deflation may be good for your bank account, but you will lose you a$$ in the market. Excessive inflation beyond what the Fed is shooting for is my future concern with all the spending over the last few years. However, if the Fed lives up to its goal they will raise interest rates if this starts to happen.
For the moment it seems we are in a potential sweet spot for growth...or back to a state of deflation risk that we briefly experienced in the height of the great recession. I hope the US is not the next Japan.
I thought it was generally accepted that 2-3% inflation was the sign of a strong, growing economy, and 0% inflation and deflation was a bad sign (likewise 5%+ inflation).
"Devaluing the dollar by 33%" is a bold headline, but over 20 years it's basically what you'd expect. It's been the stated policy of the US government for decades.
In fact it's basically the mandate of the Fed to keep inflation in line with that goal.
"Devaluing the dollar by 33%" is a bold headline, but over 20 years it's basically what you'd expect. It's been the stated policy of the US government for decades.
In fact it's basically the mandate of the Fed to keep inflation in line with that goal.
Yes, since the Fed was created, the devaluation is about 95%. Warren Buffett had this to say in his shareholder letter:
Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time. Consequently, a tax-free institution would have needed 4.3% interest annually from bond investments over that period to simply maintain its purchasing power. Its managers would have been kidding themselves if they thought of any portion of that interest as "income."
From:
http://finance.fortune.cnn.com/2012/02/ ... er-letter/
Even in the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time. Consequently, a tax-free institution would have needed 4.3% interest annually from bond investments over that period to simply maintain its purchasing power. Its managers would have been kidding themselves if they thought of any portion of that interest as "income."
From:
http://finance.fortune.cnn.com/2012/02/ ... er-letter/
this is neither news nor shocking. 2-3% inflation is the norm (as others, like m741 have said).
It's also particularly funny to accuse the Fed Open Market Committee of trying to devalue the dollar. Their two goals are to protect the value of the dollar and avoid/minimize recession, and they take them seriously.
It's also particularly funny to accuse the Fed Open Market Committee of trying to devalue the dollar. Their two goals are to protect the value of the dollar and avoid/minimize recession, and they take them seriously.
Really the only way to stop them devaluing the Dollar is to freeze the amount now "out there".
No more printing or creating money except to replace bills and coins pulled from circulation from wear.
It would be like us returning to the gold standard at say $250 an ounce...we have X ounces in Fort Knox so we can have X Dollars in circulation...the only way to increase the amount in circulation is to add to the hoard in Ft Knox.
But then remember how they started the devaluation to begin with....they pulled us from the gold standard and told everyone to hand in their gold coins for paper money....but then again not everyone was that stupid to do so...notice the huge numbers of old gold coins still available to be purchased.
No more printing or creating money except to replace bills and coins pulled from circulation from wear.
It would be like us returning to the gold standard at say $250 an ounce...we have X ounces in Fort Knox so we can have X Dollars in circulation...the only way to increase the amount in circulation is to add to the hoard in Ft Knox.
But then remember how they started the devaluation to begin with....they pulled us from the gold standard and told everyone to hand in their gold coins for paper money....but then again not everyone was that stupid to do so...notice the huge numbers of old gold coins still available to be purchased.