{"id":7079,"date":"2011-04-28T09:02:15","date_gmt":"2011-04-28T13:02:15","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=7079"},"modified":"2011-04-28T09:57:57","modified_gmt":"2011-04-28T13:57:57","slug":"bernanke-speaks-gold-silver-and-stocks-rise-but-retirees-get-screwed","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=7079","title":{"rendered":"Bernanke speaks. Gold, silver and stocks rise. But retirees get screwed."},"content":{"rendered":"

Governments can do two basic\u00a0 things to fix an ailing\u00a0 economy.<\/p>\n

1. They can fund projects (like highways and bridges) and buy things (like military planes).\u00a0 The companies that sell these things to the government will employ people. That reduces unemployment.<\/p>\n

2. They can reduce interest rates. That’s Bernanke’s job. He believes\u00a0 that low interest rates will stimulate companies to borrow money, invest in new factories and employ more people. This is rubbish. No businessman ever borrowed because interest rates were low. They borrowed because they had a sound business idea and needed money to fund it. In an ailing economy, there simply aren’t that many great business ideas. Which is one reason so many people can’t get a job.<\/p>\n

Keeping interest rates low has one major consequence: It screws retirees who are trying to live on their savings. Bernanke has hurt millions of them. No one thinks of them. They are the forgotten newly-poor.\u00a0 Not one reporter asked about them at yesterday’s press conference.<\/p>\n

Keeping interest rates low has other consequences:<\/p>\n

+ It keeps the dollar weak. I’m earning 6.3% on a bank CD in Australia. I can’t even earn 2% in America. Why would anyone leave their money here? The Australian dollar is climbing and climbing. It’s now $1.08 — a record,\u00a0 I believe.<\/p>\n

+ As the dollar declines, everyone desperately looks for anything that will hold value —\u00a0 gold, silver, stocks, Internet startups (e.g. Groupon) and collectibles. Bernanke is encouraging yet another boom — one that will end in yet another nasty bust. The last time the Fed kept interest rates low for too long was in housing. And we know how that ended. today’s two biggest bubbles are in silver and a handful of recent highfliers, like the ones I mentioned yesterday — NFLX, TZOO, AAPL, AMZN, PCLN, UA, CMG, OPEN and SINA.<\/p>\n

+ The dollar’s decline\u00a0 stimulates commodity bubbles which leads to inflation — which of course, hurts everyone, especially those of who are not rich — the bulk of the population.\u00a0 Have you seen the price of gas or bread recently?<\/p>\n

+ Keeping interest rates ultra-low is charity for the banks. No one is limiting what they can lend money at — as much as 30% on credit cards — but Bernanke is setting what they can borrow at. This is government sanctioned price-fixing. If any other industry tried this, they’d be in jail. Bernanke loves banks. He sprinkles money over them as if it were Pixie Dust and free. I guess it is free since his government endlessly prints the stuff. He seems to believe in trickle-down economics. What’s good for the banks is good for all of us.<\/p>\n

+ Keeping interest rates low also discourages banks from lending long-term, because they figure that, one day, interest rates will rise. So why lend now at low rates for long-term? Some projects can only be financed with long-term money. Like big factories. So they don’t get built. Of course, this is precisely the opposite effect of what Bernanke is trying to achieve — i.e. stimulate the economy and grow jobs.<\/p>\n

I’m not a big fan of Bernanke. You can read the transcript from yesterday’s press conference. Click here.<\/strong><\/a> You won’t learn much.<\/p>\n

Bernanke’s latest FOMC statement — click here <\/strong><\/a>— <\/strong>says he’ll keep interest rates at basically zero for as long as he feels. While they’re low, I’m guessing stock prices will continue to rise. Gold still looks cheap. I like SGOL and GLD.<\/p>\n

Domain Registry of America is a scam.<\/strong><\/span> I have a few web sites. These guys sent me a “Domain name Expiration Notice”\u00a0 and psuedo-invoice. It’s a scam. My web sites are not expiring and if I gave them money I’d be moving my web sites over to them and be paying a much higher price.<\/p>\n

Meanwhile Quest <\/strong>“slammed” my long distance from my carrier to them, and sent me a bill which I never authorized.<\/p>\n

There are too many of these heady scams and fake invoices\u00a0 floating around. Be wary.<\/p>\n

The Pakistan AAA saves a car.<\/strong><\/span> Watch till the end of this short video. You’ll die laughing. Click here.<\/strong><\/a><\/p>\n

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Harry Newton who is enjoying New York’s Springtime. Here are the cherry blossoms on Roosevelt Island under the 59th Street Bridge.<\/p>\n

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Cherry blossoms with Roosevelt Island Tram and Manhattan skyline.<\/p>\n

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Closeup of cherry blossoms.<\/p>\n

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Park Avenue is exploding with cherry blossoms and tulips.<\/p>\n

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Sculptures on Park Avenue.<\/p>\n

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Whimsical metal bug on flower.<\/p>\n

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Shades of Paris. A New York East side restaurant, with its doors flung open for the nice Spring weather.<\/p>\n

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Photos courtesy my iPhone4.<\/p>\n

\n","protected":false},"excerpt":{"rendered":"

Governments can do two basic\u00a0 things to fix an ailing\u00a0 economy. 1. They can fund projects (like highways and bridges) and buy things (like military planes).\u00a0 The companies that sell these things to the government will employ people. That reduces unemployment. 2. They can reduce interest rates. That’s Bernanke’s job. He believes\u00a0 that low interest […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7079","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/7079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7079"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/7079\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}