Interesting move by the Fed this afternoon. By announcing that they would continue the quantitative easing, the stock market responded with record highs:
NEW YORK — The stock market hit a record high Wednesday after the Federal Reserve’s surprise decision to keep its economic stimulus in place.
Bond yields fell sharply — their biggest move in nearly two years. Meanwhile, the price of gold jumped as some traders anticipated that the Fed’s decision might cause inflation.
In a statement, Fed policymakers voted to maintain the central bank’s $85 billion-a-month bond-buying program, which has been in place in one form or another since late 2008. It is designed to keep interest rates low to spur economic growth.
What this decision does is pump more money into the economy. And whenever you do that, the cost of stuff goes up.
Consider an “economy” made up of 100 gold pieces and 20 loaves of bread. In this case, bread costs 5 gold pieces per loaf. Now, if we double the number of gold pieces floating, does anyone not believe the cost of bread will also not double?
So, when the Fed continues a policy that is pumping money into the market, the price of the “market” doubles.
So the next time a liberal is hollering that the income of the wealthy is rising faster than the income of the poor, you can point to Obama and his Federal Reserve. After all, the primary source of income of the wealthy is the market and not salary.
Obama is the one responsible for the income disparity that we have recently seen.