At the last Federal Reserve meeting, Chairman Ben Bernanke reiterated his commitment to QE2. Over the past few weeks I've been warning about a decline in bonds and a rise in interest rates. Bernanke has decided to leave rates unchanged and remained committed to the plan to buy $600 billion of long-term debt.
China and the U.S. are making a sacrifice for global growth to make conditions easier for the near term. The long-term outcome may be disastrous as U.S. debt is reaching new lows very rapidly. This precipitous drop should be sending a signal to central bankers that the policies of keeping interest rates low in order to spur borrowing and spending is backfiring. Although Bernanke maintains there is no inflation, gold is up close to 25% this year and silver is up more than 50 percent.
For more: Could the U.S. Lose Its AAA Rating Sooner Than Expected? - Seeking Alpha
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