If you think the Age of Easy Money is here, you haven’t seen anything yet.
Investor extraordinaire Jim Rogers recently decried the growing recklessness of nearly every central bank devaluing its currency. His main concern was reserved for savers, who he said history has shown will be wiped out by the endless money supply.
Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.
In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing.
But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing.
This, long-term, has terrible consequences for any nation, any society, any economy.
– Interview with PeakProsperity.com
Indeed, history has not been kind to those who took the easy way out of their money problems. From the Weimar Republic on down, bad things have happened where politicians and bankers have “eased” their way out of their woes.
Don’t expect the party to let up anytime soon, though.
Comments by Fed Chairman Ben Bernanke and his partner in crime Janet Yellen last month indicate the American printing presses aren’t letting up anytime soon. They can’t politically afford to halt the $85 billion a month in new bills. When Bernanke suggested the “easing” might give way at some point, Wall Street panicked – that is, until he reassured them that it wouldn’t happen anytime soon. Whew.
Around the world, a whole host of serial devaluers are ascending to the ranks of top banker. In Japan, new prime minister Shinzo Abe is making good on his promises to expand the Japanese money supply like never before. Haruhiko Kuroda, his new Governor of the Bank of Japan, reflects that mindset perfectly.
The yen’s hard fall over the last several months was thanks to Abe’s campaign, and his nomination of Kuroda caused a further drop. What would you expect when you select the guy who said “there is plenty of room for monetary easing in Japan”?
Back in the west, committed Keynesian Mark Carney was selected to head up the Bank of England this summer. The interesting thing is that Carney isn’t British; he’s Canadian. It will be the first time a foreigner heads up the BOE.
Carney’s record in Canada isn’t so hot. He’s presided over the largest slide in the value of the Canadian dollar in a year thanks to his policies, and even after giving lip service to raising rates, he now admits that won’t happen.
Now, he’ll get to devalue the pound.
Meanwhile at the European Central Bank, Mario Draghi is working to pull away from austerity measures inspired by Germany.
It appears Ben Bernanke’s dovish vision has spread. If you’re a saver, that’s bad news. As governments churn out new currency to rescue the irresponsible, your dough is in serious peril. Even precious metals pose cause for concern.
Having a safe haven for your cash in an era when easy money is becoming more and more popular is the most important step you can take.