Thursday, February 2, 2012

Could money be any easier and could economic growth be any slower? (Video)

The answers are not really and I sure hope not!

Another question? Is the United States in a liquidity trap?

Liquidity trap is a term that's loosely defined as having had an enormous amount of cash injected into the system by the Fed to lower interest rates for the purpose of stimulating economic growth, with that desired economic growth never actually occurring.

Anecdotal evidence of a liquidity trap and tangible results of Obamanomics !

2012 GDP forecast (Congressional Budget Office): 2.0% reduced from a forecast of 2.7%.
2012 unemployment rate (CBO): 8.9% and 9.2% in 2013.
2012 federal budget deficit (CBO): $1.08 trillion up from the old forecast of $973 billion.

Treasury yield curve

(Click to enlarge)

If interest rates are virtually at zero and it is difficult to get any lower than zero!

If economic forecasts are heading in the wrong direction meaning down instead of up!

What would you call what we have?

And, what will happen to the economy and interest rates down the road as a result?

This video asks one of those million dollar questions!

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