Bernanke considering QE3? Impeachable offense.
While Congress performs yet another kabuki dance over the debt ceiling, a stealthy Ben Bernanke is sneaking up behind the US Dollar ready to slit the jugular. This is the kind of stuff that you can only learn from Bernanke's latest book - Mastering Jew-Jiutsu: The Art of Economic Destruction. Order now and you will get Master Greenspan's pamphlet - Basic Jew-Jitsu: Bubble Bubble Toil & Trouble for free!
Yesterday's announcement sent several key markets into their respective corners.
"Fed Chairman Ben Bernanke has made it plain to the world that the Fed is not ready to put the U.S. economy's crutches back in the closet," Douglas Borthwick, managing director with Faros Trading, said. "Saying the economy still requires a good deal of support, the chairman is making it plain that QE3 is still on the Fed's mind and is on the table."
Good news that Ben's mind is still operational, could have fooled us. Predictably the following happened.
Gold printed new highs, stocks rallied and the dollar plunged. Speaking of the dollar, let's discuss.
After the collapse of the global credit economy in 2008, housing and other nonsense our bubble economy was poised for a massive contraction. This contraction would have meant severe short term pain, but it would have also boosted the value of the US Dollar. Why? Because in a contracting economy as bad debt vanishes via default and money becomes hard to obtain the value of the existing supply rises. Yet in Bernanke's infinite Keynesian wisdom, a contraction (read: deflation) is the enemy of mankind and must be eradicated at all costs. To counteract this contraction our stealthy assassin employed a combination of shockingly low interest rates and liquidity injections. Observe:
As you can see the dollar sharply rallied from the 2008 collapse only to be smacked down like a red-headed stepchild by the mighty Chairman. Despite purchasing well over a Trillion dollar worth of useless and rotting MBSs from the too-big-too-fail banks the dollar continued to rally as the contraction persisted. You can find my previous articled on the matter, but essentially QE1 failed to inject money into the system directly and instead the banks hung on to the freshly printed money via reserves. This annoyed the great Chairman and QE2 was implemented which physically moved the reserve money out of the banks and injected them into the economy through the US Treasury. This part should be obvious to even the most casual observers, but in America the one reliable spender of last resort will always be our stupid Government. Even when the banks were yelling loudly and clearly that this economy does not want and cannot absorb any additional debt, our Government moved forward with steely resolve. Bravo, applause please.
As you can also see by this chart, our poor dollar is hanging somewhere around multi-year lows. It is amazing what powerful central planning can do to a 'free market'.
So why do you care? Simple, our standard of living rises and falls with the dollar. That is, your purchasing power of common goods. Below is a chart of the MIT Prices Project, their own dynamic and interesting take on a CPI alternative.
Prices are now well above where they were in 2008. This is extremely dangerous because unemployment is higher, GDP is lower and a record number of people are on welfare. The only reason prices have gone up is because the purchasing power of the dollar went down. The MIT project is perfect to look at, because unlike the CPI they use multiple data points and have no political interest in trying to suppress the official numbers.
Think about the prices that affect you on a daily basis. How about filling up your car?
Look at the drop during the 2008 decline. Without delving into the ramp up that occurred by the very same policies we are experiencing now, look at the "rebound" in gas prices. This is not a rebound that was fueled (intended) by a thriving economy or supply considerations, it was a rebound by a declining dollar and the respective rise in oil prices. When you see hundreds of your dollars go down the drain, you can thank Bernanke because his actions are directly related to virtually every price you see in this country.
I can go on and on, but it is as clear as daylight that the policies of printing money, never ending liquidity, worthless interest rates and central planning of money only positively affects stocks and commodities. The rest of us poor suckers watch our savings melt away and our purchasing power diminish.
Fixed income recipients like senior citizens get the worst treatment of all because their payments are manipulated by faulty Government CPI numbers *and* they have to pay higher prices for everything. Double whammy and it is an injustice of the highest magnitude. Working poor and less affluent are also affected in a disproportional manner because they have to spend their paychecks on necessities, the same necessities that are constantly going up in price.
If Ben Bernanke is serious about ruining our lives further with a third installation of stupidity then he should be removed from office. Not only is attempting the same approach incredibly dumb given that it failed twice before, but wide sweeping centrally planned approaches cause a lot of unjust pain to every facet of our population. We desperately need a contraction, removal of bad debt and the termination of ALL non-essential Government spending. Without these rapid changes the pain will continue and I hope you pass this article along so that everyone can understand what is happening, who to hold responsible and to demand change.
Yesterday's announcement sent several key markets into their respective corners.
"Fed Chairman Ben Bernanke has made it plain to the world that the Fed is not ready to put the U.S. economy's crutches back in the closet," Douglas Borthwick, managing director with Faros Trading, said. "Saying the economy still requires a good deal of support, the chairman is making it plain that QE3 is still on the Fed's mind and is on the table."
Good news that Ben's mind is still operational, could have fooled us. Predictably the following happened.
Gold printed new highs, stocks rallied and the dollar plunged. Speaking of the dollar, let's discuss.
After the collapse of the global credit economy in 2008, housing and other nonsense our bubble economy was poised for a massive contraction. This contraction would have meant severe short term pain, but it would have also boosted the value of the US Dollar. Why? Because in a contracting economy as bad debt vanishes via default and money becomes hard to obtain the value of the existing supply rises. Yet in Bernanke's infinite Keynesian wisdom, a contraction (read: deflation) is the enemy of mankind and must be eradicated at all costs. To counteract this contraction our stealthy assassin employed a combination of shockingly low interest rates and liquidity injections. Observe:
As you can see the dollar sharply rallied from the 2008 collapse only to be smacked down like a red-headed stepchild by the mighty Chairman. Despite purchasing well over a Trillion dollar worth of useless and rotting MBSs from the too-big-too-fail banks the dollar continued to rally as the contraction persisted. You can find my previous articled on the matter, but essentially QE1 failed to inject money into the system directly and instead the banks hung on to the freshly printed money via reserves. This annoyed the great Chairman and QE2 was implemented which physically moved the reserve money out of the banks and injected them into the economy through the US Treasury. This part should be obvious to even the most casual observers, but in America the one reliable spender of last resort will always be our stupid Government. Even when the banks were yelling loudly and clearly that this economy does not want and cannot absorb any additional debt, our Government moved forward with steely resolve. Bravo, applause please.
As you can also see by this chart, our poor dollar is hanging somewhere around multi-year lows. It is amazing what powerful central planning can do to a 'free market'.
So why do you care? Simple, our standard of living rises and falls with the dollar. That is, your purchasing power of common goods. Below is a chart of the MIT Prices Project, their own dynamic and interesting take on a CPI alternative.
Prices are now well above where they were in 2008. This is extremely dangerous because unemployment is higher, GDP is lower and a record number of people are on welfare. The only reason prices have gone up is because the purchasing power of the dollar went down. The MIT project is perfect to look at, because unlike the CPI they use multiple data points and have no political interest in trying to suppress the official numbers.
Think about the prices that affect you on a daily basis. How about filling up your car?
Look at the drop during the 2008 decline. Without delving into the ramp up that occurred by the very same policies we are experiencing now, look at the "rebound" in gas prices. This is not a rebound that was fueled (intended) by a thriving economy or supply considerations, it was a rebound by a declining dollar and the respective rise in oil prices. When you see hundreds of your dollars go down the drain, you can thank Bernanke because his actions are directly related to virtually every price you see in this country.
I can go on and on, but it is as clear as daylight that the policies of printing money, never ending liquidity, worthless interest rates and central planning of money only positively affects stocks and commodities. The rest of us poor suckers watch our savings melt away and our purchasing power diminish.
Fixed income recipients like senior citizens get the worst treatment of all because their payments are manipulated by faulty Government CPI numbers *and* they have to pay higher prices for everything. Double whammy and it is an injustice of the highest magnitude. Working poor and less affluent are also affected in a disproportional manner because they have to spend their paychecks on necessities, the same necessities that are constantly going up in price.
If Ben Bernanke is serious about ruining our lives further with a third installation of stupidity then he should be removed from office. Not only is attempting the same approach incredibly dumb given that it failed twice before, but wide sweeping centrally planned approaches cause a lot of unjust pain to every facet of our population. We desperately need a contraction, removal of bad debt and the termination of ALL non-essential Government spending. Without these rapid changes the pain will continue and I hope you pass this article along so that everyone can understand what is happening, who to hold responsible and to demand change.
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