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April 18, 2011

Legalized Counterfeiting

by Perry Willis and James Wilson

In the movie “Head of State,” Chris Rock says, “I work in a neighborhood so bad, you can get shot while you’re gettin’ shot.”

Something similar can be said of the current economy. It may go into a recession while it’s still in recession. Consider these facts . . .

  • High oil prices preceded the financial meltdown of 2008
  • Oil prices are sky high again now, even though . . .
  • Unemployment rates suggest that the old recession hasn’t ended yet

Why are oil prices rising so high, even when the economy is still sluggish?

The dollar is losing its value because of what The Fed calls “quantitative easing,” or what we call “legalized counterfeiting.”

The Fed has created hundreds of billions of new dollars out of thin air, electronically, to “stimulate” the economy. But these new dollars mean that your old dollars will lose their worth. Price inflation is at 5.5%, and if we used the same measures as in 1979 (when inflation was historically bad), it would be at 9.6%.

Investors are well aware of this problem. They try to protect themselves by buying hard assets, like oil. This flight to hard assets, and The Fed’s legalized counterfeiting, will harm you in multiple ways . . .

  • The diversion of investments from business expansion to hard assets retards economic growth and job creation
  • Your savings get hammered by the dollar’s loss of value
  • And your cost of living rises faster than your income

In short, legalized counterfeiting doesn’t stimulate the economy, it strangles it. It robs you blind. Legalized counterfeiting is theft, pure and simple.

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