Well Chairman Bernanke finally rolled the dice. The question is, what will be the results of this unconventional bet? The U.S. is now officially in uncharted waters. We have never seen interest rates this low before, and the U.S. has never been in such a precarious position.
Chairman Bernanke's proposed solution is a simple one. Let's do everything the exact opposite of what we did during the Great Depression and let's see if we can spend our way out of it. This is an unproven thesis and there's no guarantee that it's going to work. What if it doesn't?
I think right about now we need to have a reality check and look at the facts as we see them:
Fact #1: The consumer is in a state of shock. With the collapse of the stock market, the American people have seen the value of their property rapidly diminish in value as well as the depletion of the retirement programs they may have had in place. This double whammy basically destroyed consumer confidence, which is going be a difficult task to correct as the public is waiting for the other shoe to drop. So, let's say this dramatic drop to record low interest rates doesn't work, then what? Well the Fed will just print more and more money which will create its own set of problems in the future. Mark my words, the amount of money to be printed will be close to $5 trillion as the FED is determined to get us out of this hole. This in turn can only mean one thing in the future ... rampant inflation. This is something that we are all going to have to deal with down the line.