Economic Bubbles: The Federal Reserve’s Manipulation Games

Never before, in our recent history, has there been as much concern about the state of our economy. Many Americans today are understandably apprehensive about their future and their eroding savings accounts.  This current recession is likely to be one of the worst in our country causing the most damage as the Baby Boomer generation is retiring.

[googmonify]4494413162:right:250:250[/googmonify]Everywhere I go I hear how concerned people are about our economy, real estate and life in general.  Who or what is causing this reoccurring phenomenon in our system?  Bubbles are.

Bubbles originate when the Federal Reserve manipulates the interest rate and adopts loose monetary policy.  We can observe first hand the consequences of lending with no thought to borrower's ability to repay the obligation.  How could they allow this to happen?  How can they violate such a fundamental tenet of lending?  Because the government loves creating bubbles.

Bubbles allow the government to hide their blunders,   to prolong the agony in favor of the short term gain.  It would be all right if the feds just get the hell out of the way and allow each bubble to liquidate naturally, but no that's not the way they like it!  They must further regulate, create another layer of bureaucracy to monitor the last.  Once a bubble bursts, rather than allowing these bad investments to liquidate, they fight one bubble by creating another. By not allowing the liquidation of the bubble, the Fed only ensures that the next crisis will be worse than the first. This is what I call the multiple layers of insanity.  Doesn't this behavior remind you of the Titanic?  A massive bureaucracy that is slow to act or steer and it finally crashes and sinks!  Our government seldom acts.  It always reacts.  It's always in a reactionary mode, managing crisis.  For my part, I am personally determined to do what I can to save our country from going down the tube like many other past great civilizations.  To do this I need you all to become more aware of what's being done and help form a cohesive unit of responsible citizens to restore sanity to our system.  Please attend our seminars and bring your friends along.  We have a long way to go before we can affect change.  But we need to start now before it's too late.

Speaking of bubbles, I believe we might have a bubble in oil prices.  Unlike the past oil crisis, which was always an issue of the supply shortage, this one is more about greediness.  I'm amazed that oil is abundant when we pay $140 per barrel but suddenly it becomes scarce at $100.  So, it's not the supply issue but rather what we are willing to pay for it.  So, the price of oil will move upward some more but it could suddenly crash to half its value.  And what if it did? You can be sure the government will step in again to further regulate the industry and create the next bubble.  We must put an end to this out of control behavior and allow the system to self regulate, to self correct itself.  Allowing the Feds to run rampant will only mean one thing: an emergence of a socialist government.

I also wish to impart one more notion here.  Bursting of the oil price bubble can also mean a rebound in real estate values.  And what if you miss out on this down cycle again? Any form of hesitation, fear of getting involved, and misjudging the impact of the bubbles can cause you major heartaches down the road.  Roll up your sleeves, get in the trenches and fight for your freedom.  As always, I am always available for your questions and comments.

Best regards,

Sam Sadat

Posted in  Mortgage, Real Estate

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