WHY GREENSPAN MUST GO. There is a fundamental difference between a recession and a depression, namely liquidity. We may in actual fact be entering a depression. The only thing worse would be the devaluation of the US Dollar, that would also result in hyper inflation like Germany had, just before Hitler, where it would take a shopping cart full of dollars to just buy a loaf of bread or a pair of shoes. Our spoon fed press, which is economically illiterate, will keep confusing recession and depression, inflation and stagnation, and so on, since glib little sayings is the extent of their world view, for example, "it is a recession if your neighbor is unemployed, it is a depression if you are", and other cute, but very false, sound bites. Greenspan is a complete and utter failure, he should resign, be impeached or otherwise removed from office by the President. Monetary Policy, as in Federal Reserve rate cuts will have no effect for 6 to 9 months, so buckle up, this could be a long one. Oil, the real currency, since Nixon took US off the gold standard, is still too high, the Dollar-OIL standard currency is not in synchronicity with the rest of the economy. Federal Reserve interest rates need to drop to zero rate, that is 3.50% or more, in order to allow "OPEC to EASE" production limits so the price of oil can drop to the proper range of $20 to $25 per barrel and not higher, as it has been for over a year, above $27, even above $30 to $33 even $35 in the spot markets. That leaves only fiscal policy, in the way of tax cuts, and tax rebates, and cuts in federal spending. The alternative is to create money, increase the money supply, by issuing new Treasuries, Bonds, 20 or 30 year paper is the same as currency. The 30 year long bond, which Greenspan and Larry Sommers sought to destroy in order to Europeanized the US Treasury, in favor of the 20 year or 10 year bond, is the source of a large part of the liquidity problem. The only other possibility is to just crank out dollars at the Mint, but of course once that became known it would lead to hyperinflation. Since there is a $5 Trillion Dollar loss of liquidity, paper loss is a real liquidity loss, it has to be replaced. Additionally, knowing the American psychology, and US investors (foreign and domestic) there has to be a restoration of confidence, and that requires, for these mere mortals, a human sacrifice, a scapegoat, a symbolic ritualistic end of the evil that is to blame for this mess. Greenspan must be blamed, and then fired. Greenspan must bear the blame whether he accepts it or not, a leader must emerge to place it on him and then take action. When Greenspan goes, and the fundamentals are repaired, all will be well with the world again. Any politician that fails to take this solution, is part of the problem, and the electorate, and interests of the citizens will deal with them accordingly, rewarding and punishing politicians for their performance, much like investors have punished stocks that underperform.
I am,
Truly your$,
-Crystal Ball |
