Situation still deteriorating.

What is happening now is a total failure of Obamanomics. Do not be fooled by the rise in the Stock Market and bond prices. Do not be fooled by talk of signs of recovery. What has happened is that the FED is flooding the Market with paper currency. As foreign entities have stopped buying Treasury bills (see the graphic), the Fed is selling paper to itself and making banks buy them. The FED in fact added 1.3 trillion dollars worth of currency to the pot. That is what is propelling stocks, bonds and gold. Another $3 trillion is sitting in money market funds and they can either go into stocks or gold.

A friend had sent me an excerpt from Robert Prechter's book "Independent Investor." The exerpt tells you why the FED can not stop deflation. Basically, no matter how low interest rates drop, or how much money the FED pumps into the banks, people will not invest and borrow if they do not feel confident that the economy is heading in the right direction. Roosevelt tried the trick by telling people that the only thing they had to fear was fear itself. He, too, was a great speech maker, the darling of the Socialist Media. But, his words fell on deaf ears. The reason why Roosevelt was unable to resuscitate the economy was not because people were afraid, but because they did not like the Socialist ideas of Roosevelt and the risks far outweighed the rewards because of the high taxes. Essentially, the same thing is happening with the Obama regime. In this case, it is not the high taxes, but the threat of rising taxes that prevents people taking advantage of loans. If the rewards of taking risk will be siphoned away by government taxes, businesses will not borrow and invest. That's why tax cuts worked and simple government stimulus did not. We then have the worst of two worlds: on one hand the economy is deflating and on the other hand, the money is inflating. We saw a mild case of this idiocy when Jimmy Carter was President and it was called STAGFLATION then.

Incidentally, do not be fooled by the propaganda of the Government Media. The Objection to Obamanomics has nothing to do with Obama's race. STAGFLATION created under the misrule of a black President is no more objectionable than under the misrule of a white president. But, it is objectionable. The difference is that when Jimmy Carter was President, he did those things out of ignorance. Obama knows that his policies will create disaster. That is why he and his henchmen are doing it so they can administer "compassion" (meaning dependence on govt dole) to the millions of people they make destitute.

In the case of the Obama regime, the problem is greater than just high taxes. There is also the hidden tax on energy (The Cap and Tax bill to increase energy cost), so it is no wonder that people do not wish to borrow.