10-15-2012, 10:45 AM
The reason for QE is because the Fed has no choice, really. They have to resolve the insane deficits that there is no game plan for, they have to prop up the stock market (which, when you account for the inflation caused by all these QEs is still in the toilet), and they have to prop up the housing market. We are the casualty of the new global economy.
I think punishing the baby boomers is a just argument, frankly. Their generation got us into this mess, so devaluing their savings is OK with me. Most of them have pensions that our generation will not. My parents live comfortably off social security and my Dad's pension. They don't even touch their 401k account. Plus that age group are not consumers at a base level. They will not be buying the newest gadgets or cars that hit the market. They don't hit up a nice restaurant weekly. Advertisers generally ignore their age group.
Of course, the end result of all this is complete disaster. You can not inflate your way out of a problem. The end value of every fiat currency in history is 0. The best success we had with tackling debt was during the 80s when Volcker raised the interest rates to crazy levels and people became a savings society which gave us another 15 years of a decent run before Greenspan dropped the rate to nothing after 9/11. But with the housing market in the toilet I don't know if that is an option right now. The only savings people have nowadays is their equity and devaluing that makes things worse.
I am planning for retirement with the knowledge that the only way to survive is to get as much money into my 401ks and IRAs as early as possible. I can see myself just trying to live off a 3% savings rate on a large chunk of money.
I think punishing the baby boomers is a just argument, frankly. Their generation got us into this mess, so devaluing their savings is OK with me. Most of them have pensions that our generation will not. My parents live comfortably off social security and my Dad's pension. They don't even touch their 401k account. Plus that age group are not consumers at a base level. They will not be buying the newest gadgets or cars that hit the market. They don't hit up a nice restaurant weekly. Advertisers generally ignore their age group.
Of course, the end result of all this is complete disaster. You can not inflate your way out of a problem. The end value of every fiat currency in history is 0. The best success we had with tackling debt was during the 80s when Volcker raised the interest rates to crazy levels and people became a savings society which gave us another 15 years of a decent run before Greenspan dropped the rate to nothing after 9/11. But with the housing market in the toilet I don't know if that is an option right now. The only savings people have nowadays is their equity and devaluing that makes things worse.
I am planning for retirement with the knowledge that the only way to survive is to get as much money into my 401ks and IRAs as early as possible. I can see myself just trying to live off a 3% savings rate on a large chunk of money.