Federal Reserve Chairman Ben Bernanke made a significant announcement last week

He said that the Fed will buy up to $300 billion in long term U.S. Treasury securities.

In addition, it will increase its level of purchases of Fannie Mae and Freddie Mac mortgage-backed securities from $500 billion to $1.25 trillion. It will also double its purchases of Fannie Mae, Freddie Mac, and Federal Home Loan Bank bonds from $100 billion to $200 billion.

Uh oh! I already see your eyes glazing over.

So let’s get right to the point. What does all this mean for you?

By the Federal Reserve’s actions, buying our own long term treasury securities, it is deliberately devaluing our country’s currency, the U.S. dollar.

The only way to get the money to purchase these securities is to print money out of thin air. We can’t borrow this money. We need to get the printing presses going. The end result is hyper-inflation starting within the next couple of years.

I’ve said all along that the huge bailouts, stimulus plans, and budget deficit spending will eventually lead to hyper-inflation. This has become even more likely with the Fed’s action last week.

In addition, we are damaging the critical relationship with our foreign creditors

This is an extremely dangerous path to be on.

The United States is a net debtor nation. We must rely on borrowing from foreign countries such as China and Japan, in order to cover the massive deficits created by the Obama administration.

Borrowing money to cover our deficits is one thing. Printing money to cover our deficits is quite another.

Because of the decline in the value of the dollar, we would be paying our foreign creditors dollars that are worth less than when they loaned us the money. How long do you think they will be willing to do that?

The Fed’s announcement makes it clear that they are willing to accept hyper-inflation in order to make the attempt of stabilizing the economy

This is saying that we are not willing to pay for our past mistakes. We refuse to make the difficult sacrifices today that will help us establish the basis for an eventual economic recovery. We are not willing to suffer in our lifestyle today in order that our children and grandchildren can have a decent financial future.

By taking the easy way out, we will allow inflation to ultimately destroy our society.

The Federal Reserve will accomplish, at least in the short term, a reduction in mortgage rates

This will lead to a wave of mortgage refinancing.

But it appears to do little to stop the decline in housing prices

It does little to work off the massive inventory of unsold houses in this country. Prospective home buyers will have little reason to buy a house as they see housing prices continue to fall. Home purchases are also being depressed by the soaring level of unemployment and the number of employees concerned about the security of their jobs.

Hyper-inflation will significantly impact our personal budgets. Rising expenses will reduce the amount of money we can save and spend.

The most detrimental effect will be on those who have retired or who are close to retirement age

Many have seen a reduction in their “next egg” – the money they have set aside for retirement.

Those living on a fixed income may have a difficult time making ends meet as their costs rise in a significant way.

Those approaching retirement may decide they must find a way to generate more income in order to maintain a decent lifestyle. Having a solid backup plan is critical to maintaining a comfortable lifestyle.

This country suffered through inflation of 12-13% in the late 1970s. Inflation in the next few years could be much higher and result in more pain.

Scott Hubbard has retired from 25 years as a Chief Financial Officer in Corporate America. He now enjoys teaching corporate professionals and network marketers how to apply attraction marketing online and how to generate free qualified MLM leads on the internet. 

He is happy to give a free consultation for those having a serious interest in being an entrepreneur.  You can reach him toll-free at 877-878-4036 or by email at Scott.Hubbard3@gmail.com.  You can learn more about Scott by going to his blog at http://www.YourGuideToRetirement.com.