Financial Advisor Looks at the End of Money Printing in the U.S.

Tubbergen's radio shows are also available as podcasts on his website.

Grand Rapids, MI -- (SBWire) -- 08/21/2013 --In today's world it is difficult to stay abreast of everything that is happening financially. Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC can be counted on to give a hand when it comes to understanding the latest events in U.S. and world economics.

Whether people enjoy his monthly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On August 19, 2013 his blog was titled Fed Ready to Quit Printing?

"An article published recently in The Telegraph discussed the likelihood of the Federal Reserve beginning to cut back on the easing, or money printing in which its been engaging in an attempt to stimulate the economy," began Tubbergen. Below he quotes from the August 5, 2013 article.

The Federal Reserve is closer to reducing its massive bond-buying programme after the unemployment rate dropped last month, a top Fed official has said, adding that he wants reductions to start this autumn.

The US central bank is buying $85bn (£55bn) in long-term securities each month in order to keep interest rates low and boost hiring and investment. Fed chairman Ben Bernanke said in June that the Fed would probably make cuts to the programme later this year, with an eye to ending it by mid-2014, when unemployment will likely be around 7pc.

"Having stated this quite clearly, and with the unemployment rate having come down to 7.4pc, I would say that the [Fed's policy-setting] committee is now closer to execution mode, pondering the right time to begin reducing its purchases, assuming there is no intervening reversal in economic momentum in coming months," Dallas Federal Reserve Bank President Richard Fisher said in remarks prepared for delivery to the National Association of State Retirement Administrators.

The article continues:

The Fed now owns about 20pc of US Treasuries and 25pc of all mortgage-backed securities, a "significant slice of these critical markets", he said. "This is, indeed, something of a Gordian Knot." Releasing that knot is a delicate task. When Mr Bernanke laid out the central bank's likely timeline for ending the bond-buying programme, bond yields soared and stocks tanked.

About half of US primary dealers - Wall Street banks that deal directly with the Fed - believe the Fed will start reducing its bond purchases in September, with the other half expecting reductions later.

"Interesting that Mr. Fisher used the term Gordian Knot to describe the Fed’s policies, especially since he is the President of the Federal Reserve Bank of Dallas," notes Tubbergen. "A Gordian Knot, according to Merriam Webster, is a 'problem that is insoluble in its own terms.' The term insoluble, further defined, means 'having or admitting of no solution or explanation.' So here we have the Federal Reserve Bank of Dallas’ President saying, indirectly, that this situation has no solution."

Tubbergen has been saying that for a long time. According to him, if the Fed stops easing, interest rates spike as seen recently in the municipal bond market in the wake of the recent Detroit bankruptcy. If the Fed continues to print, inflation and, possibly longer term, the integrity of the US Dollar are at risk.

"The Fed can’t win here," concludes Tubbergen. "As I’ve stated time and time again, until the debt is dealt with, there will be no significant economic improvement. If the Fed stops easing, the economy feels it. If the Fed continues to ease, the economy also feels it, just differently."

A Gordian Knot indeed.

About Dennis Tubbergen
To read the blog in its entirety go to http://www.dennistubbergen.com and select his August 19, 2013 entry. Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.

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