The Great Rush to Economic Ruin has Started

Famous investment gurus Warren Buffet, Jim Rogers, and Marc Faber all have gone on record over the past few months to say that the U.S. government would start buying its own debt… which would stoke inflation down the road. Today was the start of that dangerous attempt to boost the fast dying economy.

The Federal Reserve announced today that it would buy $300 billion of long-term Treasuries to keep interest rates low and help along the economic recovery. Of course, it is only fiat money. No real work or toil will create the money it takes to buy the debt. The money will be created at the stroke of a computer key. Short-term, it will boost a lot of asset classes but long term, the move is going to be a massive disaster… so get ready. Own gold, real assets, and bet on higher rates not all that far down the road.

The Federal Reserve’s move was one of several actions taken Wednesday aimed at making it less expensive to borrow money. The Fed signaled that it will boost the size of its balance sheet to more than $4 trillion. Today’s moves double the amount of money the central bank has poured into the economy to try to stimulate economic activity. “The Fed has upped the ante on its policy actions, and in a big way,” said Richard Moody, chief economist at Forward Capital LLC in Austin, Texas.

Has the great panic started? It would certainly seem so.

The gold market exploded on the Fed action news and the gloomy nature of the FOMC report,with the spot price advancing by more than $60 an oz. Look for gold above $1,000 an oz. again by the end of next week. The dollar plunged against major currencies. This is the signal that the dollar doom and gloom traders have been waiting for. During the period of deflation which we are presently in the Fed is sowing the seeds for hyperinflation.

The Fed, especially Chairman Ben Bernanke, are foolish to think that they can fine tune the trillions of dollars in cash that they are unleashing. Never in the history of the world has a central bank been able to control events once the printing presses were turned on at flank speed. It appears to be a doomsday scenario for the already fatally flawed US dollar.

The government, lead by the Federal Reserve bank, is on its’ way to creating the worse of all worlds. Russia and the UN are already calling for an end to the dollars reign as a reserve currency. China, our largest lender, for the first time stated publicity that they are nervous about their dollar holdings.

The dollar’s fall from grace as a reserve currency will hit Americans hard and further reduce living standards. America will not be able to spend beyond its means and then borrow to cover deficits nearly as easily, if at all.

If you live in America hard times they are a coming. By far the worse is yet to come. I see nothing on the horizon that will mitigate the long crisis.