I'm starting to worry that Bernanke is going to initiate QE3 and he's going to add a currency crisis on top of the economy sliding back into recession. The combination of both of these at the same time will trigger a collapse much worse than what we went through in 2008.

If the market decides that QE3 is in the cards that would be the trigger for our bear market rally. Unfortunately it would also be the trigger for another spike in commodity prices at the very time that the consumer is least able to withstand them.

What Washington and the Fed don't seem to realize is that the problem isn't the size of the dose; it's that we are using the wrong medicine. We've already spent trillions to save the economy and it failed. Let's pray that the powers that be have enough sense to recognize that more trillions are not going to cure the problem, they are going to exacerbate it.

Unfortunately what no one wants to admit is that there is no cure for our problem. We can't stop it. It can't be "fixed". All we can do is make it worse. We desperately need to face reality and initiate the painful policies that are required to halt the car before it drives off the cliff. Failure to do that will mean that the market will force reality upon us as a major global economic collapse.

Before this is all over and done I fully expect the Keynesian economic model will get tossed into the trash heap where it belongs. If it wasn't for politicians desire to spend more than they can afford Keynesian policies would have been discarded decades ago.

For the next week I'm going to reopen the 15 month special to the Smart Money Tracker premium newsletter. For the normal yearly price I'm going to throw in three free months. The premium newsletter is published nightly along with a more detailed weekend report. I cover the stock market, dollar index, and commodity markets with special emphasis on the gold and silver market.

I've done my best over the last several months to get investors out of the stock market, and those that listened to me have avoided this market swoon. If you would like help navigating the volatile times ahead I strongly suggest you consider a subscription to the premium newsletter. Here is the link to the premium website. Click on the subscribe link on the right-hand side of the homepage to get started reading the nightly and weekend reports.

-- Posted Thursday, 4 August 2011 | Digg This Article