05

11/10
The Federal Reserve Is Killing Grandma
03:21 by Administrator. Filed under: Whatever

By John Galt
November 5, 2010

My dear readers, the picture above might look like a photo shop job which exaggerates the reality we see today. Thankfully my abilities with Adobe Photoshop are limited so this could be no greater a myth that this was an “altered” photo than the statement by Ben Bernanke on June 3, 2009 that the Fed would “not monetize the debt.” This exaggeration was used by a certain political party which our current President belongs to however, when they pitched that the elderly were eating cat food because the ______________ (fill in the name of the opposition administration) allegedly opposed giving blanket increases in various benefits to the elderly and retiring. During the 1980′s and early 1990′s, the willingness to pass those benefits was granted despite protestations about the dangers of creating an entitlement society which were ignored. The cries of “that’s all my Grandma can afford to eat” were heard through the halls of Congress and via the various propaganda mainstream outlets to the point where the Republicans simply whimpered and surrendered without understanding the consequences of their inaction.

Fast forward some twenty years later and let’s review this chart from the FDIC of the aging population:

Despite popular belief, this trend continues as the life expectancy expands to a later and later age, thus destroying the foolish theories proposed backing the various social programs enacted by radical Socialists in the past. Yet even today, one private corporation has escaped scorn for the hardships they have imposed on the elderly and the Baby Boomers while the politicians poke each other in the eye with sharp sticks and call each other names. This corporation deserves to be called out because their policies are destroying the quality of life for Grandmas everywhere, and killing them in silence with their evil policies.

An example of their insipid monetary destruction was on full display with the Federal Reserve, that’s right, a private corporation, openly announcing that they will monetize more of the debt of the United States per the November 4, 2010 FOMC Statement because:

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities.

Thus what they are saying is that the banks are not profiteering enough off of the elderly who live on fixed incomes and played by the rules all of their lives so they have decided it was more important for Grandma to eat cat food than for a banker to do with one less Ferrari. The Babbling Babes and Bubbleheads on Bubblevision will continue their celebration of the various equity markets skyrocketing because it means their average 132,000 viewers during the peak hours can now go out and act like the infant in the E*Trade commercial and ride their Labs around the house while listening to commercials and hucksters pumping stocks currently at unjustified valuations, but the celebration in the retirement homes of the soon to be evicted elderly is somewhat muted.

To understand why, let’s look at the Federal Reserves favorite measure of inflation, the Implicit Price Deflator versus the 1, 3, and 6 month Certificate of Deposit Rates currently being paid by Fed member banks:

As you can see from the chart, on a year over year and quarter over quarter basis, the deflator is considerably over the sub 0.5% level even on a year over year percentage basis. While this might not seem like a big deal to the average middle class “happy to get 2.1% return on my mutual fund” investor, to an elderly person raised on the idea of a conservative program of saving their income in an interest bearing FDIC protected savings account or CD it’s a disaster. Well by golly, we can’t worry about those old folks now can we? Jim Cramer needs a new girlfriend and the boys at the Fed have to reward their banksters for making all of those idiotic decisions over the years and the new strategy of monetization is openly designed to force conservative investors, like the elderly, into either accepting negative returns on their savings or participating in the grand casino known as the stock market.

So what does all of this ranting by me have to do with the elderly eating cat food?

Let’s review a story and headline from the November 4, 2010 Wall Street Journal:
Food Sellers Grit Teeth, Raise Prices

No big deal, everyone knew this was coming, right? Then again when you see what the Social Security Administration announced on October 15, 2010, it is a big deal if you live on a fixed income with a negative return from your savings and depend on the supplement from the government:
Friday, October 15, 2010 Mark Lassiter, Press Officer
For Immediate Release

SOCIAL SECURITY
News Release
Under the Law No Social Security COLA for 2011

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 58 million Americans will not automatically increase in 2011, the Social Security Administration announced today.

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a cost-of-living adjustment (COLA) was determined to the third quarter of the current year. As determined by the Bureau of Labor Statistics, there is no increase in the CPI-W from the third quarter of 2008, the last year a COLA was determined, to the third quarter of 2010, therefore, under existing law, there can be no COLA in 2011.

I guess that’s no big deal. Why should anyone care about ninety year old women who planned and saved all of their lives for their retirement, lived by the rules, trusted their financial advisers and stock brokers, and now are having to bag groceries at a local store just to get by. Despite the proclamations by the Federal Reserve about inflation being sub-par, that is only true if you take the entire hedonically manufactured index into perspective as a whole. The reality is that inflation is a cumulative problem for the Baby Boomers and those retired for a decade or longer now and is destroying their quality of life because the cost of necessities to survive has skyrocketed. Now do you see where this is going? For the average person above the age of 80, the persistent inflation and the Federal Reserve’s policy of punishing the elderly, er, savers, so they can save their banksters is going to increase the need for more, not fewer government programs to assist them beyond the meager allotments being provided by Social Security. The worst part about the monetization and deliberate currency depreciation is that the price of consumer items that the elderly need the most, food and medicine, have accelerated at the fastest pace over the last decade. This chart from the Fed itself validates the previous statement:

The gist of this posting is to wake a few of you up who are not paying attention to what the “man” behind the curtain is attempting. The Wizard of Bull in concert with our political elites have elected to sacrifice the middle class and even more so, the elderly, so as to retire the excessive debt created by their own ill-conceived leveraging process accelerated during the early part of this century. Instead of allowing those institutions to fail and inflict a short duration of pain and suffering on the nation, the process has now been extended over eight years and will continue to follow this pattern for at least another decade if not longer, until the resolution is allowed to complete its natural course. The damning danger of hyperinflation is staring our central bankers in the face but the majority would rather accommodate the political class rather than gamble on a proper solution.

In the end, the only ones injured by their ignorance are those in retirement already, or about to retire in the near future.

Pass the salt for the Seafood Delight, would you please Mr. Bernanke.

AUTHOR’S NOTE: One of the most wonderful people in my life, my last grandmother, passed away several years ago. Her wisdom and education about the Great Depression in the Midwest, the struggles of our family during that era, and the different America of that time was a lesson I shall never forget. She warned me years ago that hard times were coming and I shall be eternally grateful for an education no professor in college would dare teach as it would have offended their sensibilities. I Love You Grandma and miss you dearly.
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05

11/10
11/4 Voice of Galt Archive is Now Available
01:22 by Administrator. Filed under: TheWatchmen.FM

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04

11/10
THE FAT FINGER GUY HAS BEEN WORKING ON THE RAILROAD (CSX)
20:00 by Administrator. Filed under: Whatever

By John Galt
November 4, 2010


Bubblevision of course said it had to be an erroneous trade so of course all down moves are errors. Thankfully there were thousands of non-errors or “boo-boos” by this guy to keep the general market skyrocketing. The 5 minute candlestick chart tells the CSX tale:

ARTICLE:
http://johngaltfla.com/blog3/2010/11/05/the-federal-reserve-is-kill...