Monday, November 23, 2009

Market Shoots for the Stars as Dollar Deteriorates

Stock prices surged as comments from a Federal Reserve official suggested that the Federal Reserve should continue aggressively purchasing mortgage-backed securities to keep interest rates low. The market received additional support from a 10% surge in existing home sales last month over the previous month.

As short-term interest rates remain at virtually 0% and continued economic life-support measures provided by the US Government and Federal Reserve, it doesn't appear that the markets will ever back down. Unfortunately though, this success may come at a great expense, the demise of the US Dollar. While Fed officials assure us that they have the talents to reduce the amount of dollars in circulation to hold off future inflation, each time they have held interest rates low, it has resulted in severe market crashes and economic downturns.

How can they possibly believe that they will be smart enough to pull the plug this time at the right moment? They have missed it EVERY TIME!

The markets now are truly reflecting the BIGGER FOOL THEORY. Again, asset prices are built like a house of cards, depending totally on immense world-wide injections of liquity and pretty much free money to the banks. I know so many people are happy to be getting back what they had lost but be careful. A much greater crash looms on the horizon.

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