In news this morning that most of the gold community was completely expecting I might add , Chairman 'Easy Money Ben' Bernanke announced this morning that he was concerned whether economic recovery was strong enough to sustain itself without supportive and accomodative monetary policy. Translation - near zero interest rates will remain as far as the eye can see.
Talk about messing with the heads of the Fed Funds Futures traders - they are getting beat to death by this Fed. Every single time they start anticipating a rise in the short term interest rates based on economic data releases, some one or more of the Fed governors comes down from his or her ivory tower and squashes the idea that the economy is sufficiently on the mend. Out through the front door goes the notion that these insanely low interest rates are finally going to be begin lifting.
I have said it before and will say it again - the FED IS TERRIFIED OF RISING INTEREST RATES. Do not forget these two reasons:
1.) the entire "recovery" has been fueled by an ultra low interest rate environment in which short term money is basically free for those who want to borrow it and then leverage it up for speculative trading purposes. (Think a rising stock market which has all the feel of another speculative bubble).
2.) the US federal debt is at banana republic levels and any, I repeat, any rise in interest rates, will suck more of the incoming federal revenue into servicing the cost of this debt (paying the interest on it), leaving less for the spendthrift class to buy votes with.
Bernanke and company cannot afford to have a stock market that stops moving higher because if and when it did, the entire facade of an economy on the mend would come crashing down with it.
The monetary masters have reversed the entire reason for a rising stock market from one driven higher by solid underlying fundamentals to one being rammed higher by lots of JUICE. I am reminded of that scene for the original version of the hit movie, "The Matrix", where Neo and Trinity go to resuce Morpheus from the clutches of agent Smith where they are asked what they are going to need to pull off the stunt. "Guns, lots of Guns", comes the answer.
"Juice, lots of Juice" -
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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Monday, March 26, 2012
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