-- Posted Thursday, 26 February 2009 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Thursday, February 26, 2009
“Phenomenally accurate forecasts”
So, Helicopter Ben believes he’s got inflation under control. That’s like Nagasaki’s public health director saying two days after the bomb that he’s got strep throat under control. The Fed chairman also said he didn’t see a need to nationalize the banks. That would the mayor of Nagasaki speaking, saying he saw no reason for Japan to surrender. Duly noted – and stay calm, folks. But in either case, the events of the day have pre-empted anything the Fed might have been planning. There was never a possibility of “controlling” inflation because deflation has gone rampant around the world, laying waste to nearly all asset classes except bullion, and, for the moment, Treasury paper and dollars.
Concerning the nationalization of the banks, some would say that we have not avoided it, we have only avoided calling it by its correct name. Whatever we decide to call it, the de facto nationalization of the U.S. financial system, including insurers, has left bank assets in a state of limbo, there to remain until The Government decides what it really wants to do. In the meantime, presumably until Congress establishes a Civil Service pay grade for sitting on the board of Citicorp et al., we’ll have to go along with the pretense of our political leaders that the banks are still independent.
Markets Will Prevail
In his second day of testimony yesterday before the House Financial Service Committee, Mr. Bernanke asserted that the Fed has tools it can use to prevent the huge increase in the money supply from eventually spawning inflation. One such tool is the Fed’s ability to pay interest on reserves. But if bringing those rates down to the vanishing point has not succeeded in getting banks to expand their lending so far, how can the Fed expect to exert any more control over credit by tightening if and when the demand for money finally re-emerges? Market forces alone will determine the value of money from this point forward, and we shouldn’t delude ourselves about the Fed’s ability to manage the demand for dollars, particularly when trillions of them will be required to redeem the promises that our government has already made.
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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 26 February 2009 | Digg This Article | Source: GoldSeek.com
