For the Federal Reserve that well known substance is about to hit the fan. If they make good on their promise to end QE2 on June 30th, then stock and bond markets may implode, leading us into an out-and-out depression. Should they surreptitiously continue to buy the country's debt (they won't admit doing it in order to retain some vestige of credibility), then the bailouts to bankers and countries will continue. "Extend and pretend" will last a while longer until it no longer works.
We are past the point of no return. The Federal Reserve can only pick its poison: destroy the stock and bond markets or annihilate the U.S. dollar. If they temporarily choose the former for reasons stated above, then they will quickly panic and change course 180 degrees, returning to what they do best: print paper dollars.
But monetary stimulus is like a drug. Each time the addict requires a larger and larger dose in order to achieve the same result. It will be more difficult to "kick the can down the road." Lying to the American people will become less effective. When the public finally understands that they've been "had," the Fed will lose control. Enriching the bankers while taxing the middle class with stagnant wages and high inflation will be their undoing. You can fool most of the people most of the time, but eventually they catch on.
The noose is tightening around Bernanke's neck. When push comes to shove, all he can do is print. It is his only tool. With it he will vaporize what's left of the savings of the middle class. There is no recovery, and over-the-counter derivatives are greater than ever and waiting only for a trigger. Protect yourselves while you still can.
June 11, 2011
Saturday, June 11, 2011
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