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Wednesday, June 20, 2012

QE 3 and Barry's "Lemon-aid" stand...

So … here is the conundrum that I face… how much information to give you at one time.  I don’t want to give  much too quickly … It can over whelm you and cause you to turn off to keep reading… so this post I’m going to focus on the subject of the Federal Reserve and how damaging things are about to become due to their actions.

First off watch this video… it will take you a few minutes and it is downright scary but it should help add some clarification to what I’m going to share with you below;

So… you a bit worried now… well it’s about to get worse… remember that “QE 3” thing? 

Well its happening now… the Fed met today and guess what… QE 3 is a go…. Well almost. Big Ben Bernake just has to come out and say it.

Come on Ben … just say it… just say that you’re about to fire up the money printing presses and increase inflation to attempt to stave off the collapse of the American dollar better yet… it will contribute to the coming “Event”. 

Both WSJ and the Daily Reckoning have articles on it today.

This Gentlemen and Ladies is a very, very bad thing for the economy. 

Why you ask? 

Well here is the simple and best answer I can give you.  But I’ll use an analogy to explain it.

So our fable opens up on a scene of little Barry Obama with his lemon aide stand on the corner in some suburban town in America.  “Bitchen Barry’s Bodacious Lemon-aid” is what the sign says on the front, its great… he built the store with his own two hands and with his own money that he earned from working in the yard last year.  It’s all his!

Barry’s business is booming, lemonade is leaving the stands like secret service men running from hookers in Columbia!  More and more people are coming everyday to ask for more and more!

But there is the thing… it is booming so big that he has to borrow from his brother Benny Bernake (they have different Dads…but hey … this is America). 

Like any good investor Benny looks at Barry’s books, (a yellow legal pad written with crayon with a booger smeared on it) and determines that he really shouldn’t invest in Timmy’s stand…there isn’t really any collateral to secure his investment… what if Barry looses the stand…? Benny could lose his investment!

But Barry has a plan… he is going to sell Benny a “bond” in his company. 

“Benny…” Barry begins… “I’ll tell you what, hows about I sell you interest in my “Lemon-aid” company and I’ll give you this piece of paper that says in 10 years you can have your money back plus 1.25% of your initial investment!... What do you think?”

…”Wait a minute Barry...” says Benny, “I just told you that I won’t invest in you because you have nothing to offer me..!” 

“Here is the beauty of this Benny, why don’t you take what I’m offering you, and then go sell it to the little Chinese boy, Hu Jintao on the corner?  He is rolling in the cash and if you offer him more interest on a bond you sell him…you could make a real killing off of this deal! Wouldn’t you and your buddies love to have extra cash?”

Benny is in hook, line and sinker…

So this process goes on and on for the next few years….

Now Barry is in pretty deep with Benny and likewise Benny is in deep with Hu Jintao.  Time keeps passing but here is the problem… Benny is out of money… he has loaned all he can to Barry.  But Barry keeps asking for money.

Now … here is the thing… in this crazy mythical world that I am writing about … Benny can print and hand 
 Barry more money! Benny read up on it somewhere… it’s called “Quantitative Easing”.  Benny puts more money into Barry’s business to make everyone more happy at the “Lemon-aid” stand!

But the worse part… Hu Jintao doesn’t know that… well, he suspects something is up because the German kid told him what Benny has been doing.  But right now he really doesn’t care… “Benny will make it right…” he says…  He is going to make more money on the Bonds that Benny is selling him!

Sounds crazy huh? But hey…! It’s currently working!

Well, more time passes and now and the date for the bonds comes up… Hu Jintao comes knocking on Benny’s door asking for his money.  Benny tells Hu Jintao he doesn’t have the money… that his money is actually coming from Barry.  Hu Jintao goes to Barry… who is really busy running his Lemon-aid stand. 

During the time that Barry is borrowing from Benny, and Benny from Hu JIntao, Barry has been offering people lines of credit for his delicious “Lemon-aid” … and better yet.. Barry is letting a lot of the kids in the neighborhood drink the “Lemon-aid” for free because they can’t afford it themselves!  They just hang out all day… not mowing their Dad’s grass or helping Mom with the laundry… they just drink Barry’s “Lemon-aid”!

Wow… isn’t Barry a nice guy?

So… Now Hu Jintao heads over to Barry’s “Lemon-aid” stand asks for his money and Barry tells him he has nothing to give him… and he never will.  Hu Jintao is really really mad… so what does he do?  He tells all the other kids in the neighborhood that Barry and Benny flaked out on what they owe him and now no one will loan Barry or Benny any more money!

WELL… we NOW have a big problem… Barry’s operation has gotten so big that he always needs money from Benny to fund the “Lemon-aid”… and guess what?  Hu Jintao cut off Benny and won’t loan him the money, thus Barry can’t get his money to give everyone the delicious, intoxicating, addicting Lemonade!
Barry and Benny try to borrow money from the other kids in the neighborhood, but they all heard from Hu Jintao how the boys burned him!  They are out of options!

Now the next morning the kids at the Lemon-aid stand start asking for their cups and find that Barry can’t give anything to them… They start to get mad… really mad and the next thing a large crowd of kids builds up and then begins throwing rocks and old lemons at Barry and Benny!  The boys run into the house and watch as their stand is torn down and burned!  Over the next couple of month’s Barry and Benny’s house gets TP’d, windows broken and eventually broken into … stuff gets stolen and well general mayhem breaks out in the Obama / Bernake Home…!

Get the picture? 

I hope you realize that the state that our country is in and the current coming “Quantitative Easing” is going to cause a real problem very shortly…. It isn’t going to work for very long… infact it is going to cause more issues.

Our Government needs to cut out the entitlements before its too late! Yes… it will be painful and there will be really un-happy people… but there are still lawns that need to be mowed and laundry that needs to be done. 

Until next time…


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