The Bank of Goldman and Morgan Stanley

By Chuck Butler

So, Goldman Sachs and Morgan Stanley are now bank holding companies. They will both report to the Fed so the Fed will make loans to them more easily. Add Merrill Lynch to that list of brokers that now have a bank as a holding company, and they can get loans from the Fed too.

Money, money, and more money... Dollars, dollars, and more dollars... We're printing them like there's no tomorrow... And that's because we only "live for today, and don't worry about tomorrow."

Of course I worry about tomorrow, because I see my beautiful little granddaughter laughing and not having a care in the world, and wonder what kind of tax burden she will have hanging around her neck when she grows up.

And, it looks like currency traders are beginning to worry about tomorrow too. As I said, they’re starting to sell dollars once again. You see, eventually, the underlying fundamentals do come to the top, just like I said they would.

It's not just the US$700 billion bailout...remember Uncle Sam passed out US$150 billion in stimulus checks. Plus, we were already paying for mortgage bill costs, and the ongoing costs of the wars in Iraq, Afghanistan, and on terror. Now, just for good measure, we have an additional US$400 billion to guarantee money-market funds and last week that "broke the buck."

Let me explain…money market funds are different from money market accounts at a bank. Money market funds are like a mutual fund, and they can go up and down in price, whereas a money market account at a bank is FDIC-insured. Therefore it’s not subject to market fluctuations.

So, when I said that money market funds "broke the buck" last week, it means that their market valuation fell below US$1, for the first time, ever!

Just last week, the U.S. Treasury and Fed spent over US$1 trillion dollars to keep things running. That's US$1 trillion dollars that they will have to print. That means more supply of dollars, and once again, the dollar should be punished for that indiscretion!

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