26 February 2010

things getting a little crazy

my buddy pointed this link out to me
it discusses how Fannie is still in trouble, and needs a lot more bailout money.

here's what i think about this Fannie Mae request and if it were to awarded.

say what you want about healthcare, but at least there are some weak arguments for government intervention in that market.
but the arguments for government intervention in the money/credit market are even weaker and the government involvement in that market through fannie and the fed is much larger.
don't get me wrong, i'm not supporting any govt healthcare proposals, but the money market is much more of a concern.

get ready for some serious inflation.
and currency devaluation hurts savers the worst (the new money is not distributed proportionately, so their money is worth less). in reality, it is a real form of taxation (seignorage tax) on savers.
there are serious long term consequences of inflation on our real gdp per capita growth.
less savings means less investment which means less long run productivity.

definitely not the legacy we should be leaving our future generations.

make your tax sheltered investments, but this is not the time for padding your savings.
moral of the story, perfect time for some house remodeling (or any other consumption of commodities that will hold and/or appreciate commensurate with the inflation rates, cpi).

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