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-- Posted Thursday, 12 August 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Thursday, August 12, 2010 “Phenomenally accurate forecasts” We suspected years ago that the day would come when the Fed would have no more room to move. Administered interest rates were bound for zero, and once they got there easing would cease to be an option. Except that we were wrong. Now it turns out the Fed can, and will, ratchet up the desperation meter, already well into the red zone, to new and untold heights, stepping up purchases of long-term Treasury debt with proceeds from the sale of mortgage-backed securities from the central bank’s fatally swollen dumping-ground-of-a-portfolio. Bernanke’s cheering section always said he would do whatever it takes, but perhaps it’s time for them to acknowledge that, in actuality, he is doing not what it takes, but only what he can do, short of triggering a hyperinflation. Surely the Fed chairman’s minions must be disappointed that his latest, unprecedented attempt at stimulus has a cash value estimated at only $300 billion – a mere pittance in a global Ponzi game valued nominally at perhaps three thousand times that. Paul Krugman, the New York Times’ hairy-knuckled Keynesian, must be asking himself whether Helicopter Ben is ever going to get serious. Sorry he has let you down yet again, Mr. Krugman.
Although earlier predictions we’d made here may have overlooked this latest, hopeless step the Fed has taken, let us hazard another prediction by which you can judge for yourself our foresight, or lack thereof. To wit: The Fed’s suicidal, capital-destroying bond-buying ploy may suffice to jolt the mountebanks, imbeciles, pedophiliacs, thimble-riggers, thieves and suppurating grey matter on Wall Street into pretending that “something” has happened, but the likelihood that this “something” will have a positive, long-term impact on the economy is about as close to zero as a Martian assault force landing this weekend on Coney Island. Brave New World What it will accomplish, however, is lowering the yields on Treasury debt and other “safe” paper so that savers will be cheated out of a fair return on their capital even more egregiously than before. You ask, who needs savers when The Guvvamint can gin up however much money it needs to pay for things (almost none of which contribute to sustainable economic growth)? That question does indeed capture the cynical essence of the Fed’s monetary calculations at the moment, and those calculations are at least technically defensible. But when the inevitable day comes that the central bank’s reckless policies have reduced the financial landscape to smoking rubble, in the process destroying whatever horribly misplaced trust may have attached to fiat dollars, it is predictable that savers will be courted by the banks as though they were royalty. Savers of what, you might ask? Not of dollars, since they will be worthless, but of whatever medium has survived as a store of wealth when the ashes have settled: Gold, almost surely — but also any other medium of exchange with which a prudent lender could advance a sum against his own immediate wants. Is any of us so wise as to be guaranteed a constructive role in that brave new world?
*** 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. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. 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 © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 12 August 2010 | Digg This Article | Source: GoldSeek.com
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