No. of Recommendations: 4

Props to MISH and his board for the link:

There is a battle being fought to try and keep spending in the economy as high as possible. The Federal Reserve, under Greenspan, believes (for the long-term, wrongly so) that every trick in the book for a central bank must be used to get Americans to spend now, rather than wait and spend later.

The first step they have taken is to drop the rate on Fed Funds and hold it down. The Fed has now lowered the best possible rate of return that can be earned on cash to 1% or less - clearly below the rate of inflation. So, anyone holding cash is a guaranteed loser! The Fed has stated a clear policy to keep the "real rate" of interest negative until a clear economic recovery is in place.

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