Global criticism of current stimulus and what the Federal Reserve action means to you

[Jeffersons Ghost]

China, Germany and South Africa criticise US stimulus
Germany, China, Brazil and South Africa have criticized US plans to pump $600bn (£373bn) into the US economy.

German Finance Minister Wolfgang Schaeuble said the US policy was "clueless" and would create "extra problems for the world".

The US Federal Reserve could weaken the US dollar and hurt exports to America.

China's Central Bank head Zhou Xiaochuan urged global currency reforms, while South Africa said developing countries would suffer most.

http://www.bbc.co.uk/news/business-11697483

What the Federal Reserves action means to you

If you are thinking of buying a house or refinancing a mortgage, this action helps you. The Fed is pumping money into the economy by buying Treasury notes, which has already pushed down long-term interest rates, including mortgages.

If you have investments in the stock market, it helps you, because lower interest rates on bonds have prompted investors to bid up stock prices.

If you live on a fixed income, like Social Security or a pension that does not adjust for inflation, it hurts you. This action will push inflation a bit higher than its current rate of around 1 percent. In effect, higher prices without inflation adjustments reduce real income.

If you rely on interest payments as a major source of income, it hurts you. Lower interest rates cut cash flow for Americans who live off payments from bonds, CDs or other fixed-income investments.

If you travel abroad frequently, or consume imported goods, it hurts you. In anticipation of the Fed's effort to reduce long-term interest rates, currency investors have been selling off dollars in recent weeks. The dollar has already weakened relative to other major currencies.

[BzaDem]

1. Um, Social Security and Pensions adjust for inflation. Inflation is at dangerously low levels

right now. People are hoarding because there is no incentive to consume (and lots of fear of consuming), increasing the chances of us going into deflation.

[paulk]

2. there's been no social security COLA for two years now

same with RRB

[Jeffersons Ghost]

3. Social Security didn't adjust for inflation this year

[BzaDem]

9. That's because the projected CPI did not go up. When the CPI goes up, they adjust. n/t

[northernlights]

17. and CPI leaves out a few minor essentials, doesn't it?

Like food? They make sure CPI doesn't go up.

[elleng]

4. 'People' aren't hoarding, corps and banks are.

and we have all the incentives to consume anyone needs: LIFE. Lack of jobs/future prospects discourage spending. Not rocket science, imo.

[DBoon]

5. corps and banks are people too!

They have feelings that can be hurt just like you and me

Just ask Anthony Scalia. He knows

[elleng]

6. ...

:silly:
:wtf:
:crazy:
:thumbsdown:

[BzaDem]

10. People are saving at a much higher rate than they were before the crisis. They are afraid to consume

for the reason you mention: they are worried about losing their jobs.

Those that are not saving are often paying down debt, which is also not consumption.

People with no money/jobs are also not consuming.

In general, people are not consuming at nearly the rate they need to in order to get the economy going. Similarly, businesses are not investing at nearly the rate they need to in order to get the economy going.

[Naturyl]

7. No SS COLA for two years in a row, as others have said.

Not surprised some don't know this, though.

[Davis_X_Machina]

8. There are tens of millions of voters....

...who are convinced that the GOP is the fiscally responsible party, and that markets perform better under Republican presidents. And that their taxes went up under Obama. All the empirical evidence on both is all the other way

Zombie memes.

[BzaDem]

11. And that's because... wait for it... wait for it... the COL did not go up!

I'm glad to hear you admit though that there is in fact a cost of living adjustment (which by definition is an adjustment taking into account inflation).

[Naturyl]

14. Hahahahaha hahahahahahaha ahahahahahahaha hahahahahahahaha

The cost of living "did not go up?"

Yeah, that's what the letters from SS administration said too. I guess you both have a bridge to sell me.

My grocery receipts say what they say, and it sure ain't "COL did not go up." LOL.

[Greyhound]

12. K&R. What this really means to you;

The Fed just sold another $600B of banksters losses to you and your kids. Of course the people that took that money thank you as well.

[Gin]

13. do I understand this correctly? the money was printed and given to

the banks hoping we would refi or purchase homes...and the banks need this additional $$$$ because the stash they are hording isn't big enough????

what if we don't want to refi or buy? do they give the money back?

Hell....send me money...I need a new car.

[Kurt_and_Hunter]

15. The other nations complaining is a clue

They prefer the dollar strong because that is better for them.

A weaker dollar is, however, better for America.

[PA Democrat]

16. Here comes a new asset bubble!

Hold on, there could be very rough roads ahead.

Also, expect increasing food and fuel costs.