Trend: Money creation by the Fed will devalue the dollar.
Bill Fleckenstein at MSN Money warns about the Feds plan to increase the money supply. Excerpts below.
Link: Whatever we do, it will be wrong - MSN Money.
Last Wednesday, it was announced that the Treasury plans a special series of bill auctions to help the Fed expand its balance sheet. Read: The Fed is going to print money to buy Treasurys so that the Treasury Department can lend money to all these institutions. In other words, the printing presses are setting about monetizing all of our problems.
Of course, this will lead to other problems, and it's why gold exploded by $80 an ounce last Wednesday.
(The chart below shows the price of the ETF GLD, which tracks the price of gold.)
Foreigners are finally watching. Last Tuesday, China's People's Daily said that the world is "threatened by a financial tsunami." In essence, the paper said, countries need to consider building a new financial and currency order that is not dependent on the United States and the dollar. After all, who wants to lend money to somebody who uses a printing press to pay you back? Obviously, the script you get paid in can easily become worthless.
Events continue to move at a fast and furious pace. I don't think we've seen the last of startling actions. As for the investment ramifications of all of this action and potential future action, I think folks need to understand that amid the crosscurrents and head fakes, the potential to make mistakes is going to be extremely high. Probably the fewer decisions made right now, the better.
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