In his parting act, Federal Reserve Chairman Ben Bernanke has decided to continue printing some $85 billion per month (6% of GDP per year) and spend those dollars on government bonds and, in the process, keep interest rates low, stimulate investment, and reduce unemployment. Trouble is, interest rates have generally been rising, investment remains very low, and unemployment remains very high. As Lawrence Kotlikoff points out, echoing our perhaps more vociferous discussions, Bernanke’s dangerous policy hasn’t worked and should be ended. Since 2007 the Fed has increased the economy's basic supply of money (the monetary base) by a factor of four! That's enough to sustain, over a relatively short period of time, a four-fold increase in prices. Having prices rise that much over even three years would spell hyperinflation.
Ben Bernanke is participating in an IMF panel with Larry Summers, Ken Rogoff, and fromer Bank of Israel chief Stan Fischer... Full speech below...
Has a second civil war been “gamed” by our government? And are Americans being swindled into fighting and killing each other while the banksters who created the mess observe at their leisure, waiting until the dust settles to return to the scene and collect their prize? Here are some examples of how both sides of the false left/right paradigm are being goaded into turning on each other.
As Mike "Hidden Secrets Of Money" Maloney has said many times before, the economic crisis of 2008 was only a speed bump on the way to the main event. He believes that before the end of this decade there will be an economic crisis so historic that it will eclipse the crash of 29 and the subsequent great depression. He also believes it is both unavoidable and inevitable, because it is merely the free market releasing the stored up energy from decades of economic manipulation. As Maolney notes, "the best investment that you will ever make in your lifetime is your own financial education," and the following provides a succinct reminder of the top reasons to buy gold and silver...
As we enter into the two final months of the year, it is also the beginning of the seasonally strong period for the stock market. It has already been a phenomenal year for asset prices as the Federal Reserve's ongoing liquidity programs have seemingly trumped every potential headwind imaginable from Washington scandals, potential invasions, government shutdowns and threats of default. This leaves us with four things to ponder this weekend revolving around a central question: "Does the Fed's Q.E. programs actually work as intended and what are the potential consequences?"
While the pile of debt keeps growing and monetary intrusion becomes more drastic by the day, there’s almost no talk of inflation. A growing number of investors ask themselves this question.
Saxo Capital Markets’ latest infographic explores the long-term value of quantitative easing (QE) and, surveying the effect on the US economy, asks whether the US Federal Reserve will ever taper QE.
A lot is riding on the answer...
European MEP Nigel Farage blasted French President Francois Hollande as leading the pack “in the modern day Pantheon of idiots who are running countries around the world…” Of course, the French president had recently introduced a ‘hate tax’ on its countries most successful people, driving out whatever few productive people remain in France. But this hate tax was just the tip of le iceberg. Just look at what they’ve done or announced just in the last month...
Alasdair explains how his "Fiat Money Quantity" (FMQ) is derived, as well as what it can tell us about the true levels of fiat money supply. In the case of the dollar, it reveals that levels are far above what is commonly appreciated – so far, in fact, that a currency crisis could arrive sooner than even many dollar bears expect... and how horribly mispriced gold remains.
People need to be aware that worsening the situation of one class of tax payers is never going to improve the situation of another. The particular wealth tax proposal mentioned by the IMF en passant is odious in the extreme, especially as the wealth to be taxed has already been taxed at what are historically stratospheric rates. It is noteworthy that the alternatives discussed by the IMF for heavily indebted states which are weighed down by the wasteful spending of yesterday appear to have been reduced to 'default' (either outright or via hyperinflation) or 'more confiscation'. How about rigorously cutting spending instead? Lastly, a popular as well as populist target of the self-appointed arbiters of 'fairness' are loopholes, but as we have previously discussed, they are to paraphrase Mises 'what allows capitalism to breathe'. Closing them will in the end only lead to higher costs for consumers, less innovation, lower growth and considerable damage to retirement savings.
There is nothing any of us can do at this point, except navigate the rapids as well as possible, and to stay out of the way of a dying empire, which is still very dangerous in its death throes. We are actually very privileged to be alive and witnessing this next transition, to what we do not know just yet. But what an honor to live at this time, not in ignorance but with an existential resolve to come out of it alive and much the wiser.
Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.
One of the biggest laughs of the conference came when Smith presented the slide, ‘Emperor … With No Clothes’ which compared how the value of the Roman denarius, silver coin and the U.S. paper dollar have fared during periods of currency debasement.
The chart shows the silver denarius since Nero and the dollar since Nixon and looked at the level of debasement during the reign of each Roman Emperor and the term of each Presidency.
There is a considerable amount of debate in alternative economic circles as to whether a federal government shutdown would be a “good thing” or a “bad thing”. Sadly, a government shutdown is sizable threat to the American financial system, and few people seem to get it. Perhaps because the expectation is that any shutdown would only be a short term concern. And, this assumption might be correct. But, if a shutdown takes place, and, if “gridlock” continues for an extended period of time, We have little doubt that the U.S economy will experience renewed crisis. Here's why...