Friday, February 4, 2011


Comments and statistics from Larry Levin

I Didn't Do It

free money

Does anyone take Ben Bernanke seriously?  Chairman Bernanke gave a speech today to the National Press Club in which he crowed how great and successful his QE program has been.  He was happy to take credit for the massive increase of speculation of the markets, which he called a virtuous circle, but simultaneously denied having ANY culpability of ramping the commodity markets.  Convenient, isn’t it?

The US stock indices began the latest rocket shot in November when QE2 was indicated by the Fed.  Chairman Bernanke is very pleased by this but I have a question: when was the Fed granted a 3rdmandate, which is apparently to rig the stock market?  The S&P500 is up 30% in just 7-months, which is roughly SIX YEARS of gains packed into a scant seven months.

In that exact same period, sugar has exploded nearly 200%.

Coffee futures have doubled since QE2.  Lumber has nearly doubled since QE2.  Gold and silver have skyrocketed since QE1, but got added fuel from QE2. Soybeans exploded, while corn prices have doubled!  

Wheat has also skyrocketed and oats…OATS…have blasted 123% higher; just a “slight” increase, right?

 The purpose of QE2 was supposed to lower interest rates.  Bond prices initially rallied when the first hints of QE2 were floated, but dropped like a rock when the program became official.  By the way, falling bond prices, like now, result in HIGHER interest rates.  Isn’t that the exact opposite of what was supposed to happen?

Are you wondering what happened to the value of your currency with all of the mad money printing?  Naturally, it plummeted.

When confronted with all of this, The Ben Bernank did his best Bart Simpson impersonation and said “I didn’t do it.”  He said that his free money out of thin air policies have done NOTHING to food prices even though we all have access to commodity charts.  

In general, Bernanke said that higher food costs are due to developing nation’s rampant demand for resources.  Sadly there was no follow up question, which should have been “Are you suggesting that developing countries demand for raw materials and commodities began with QE2?”  Of course the answer is no.  China, India, Brazil, etc have all been growing for many years.  To suggest the massive food inflation has nothing to do with US monetary policy is a joke.  It is a lie.

Specifically, the political upheaval of Egypt was brought up and how the match that lit the tinder was skyrocketing food prices.  Once again, The Ben Bernank did his best Bart Simpson impersonation and said “I didn’t do it.”  The Ben Bernank claims that it’s Egypt’s fault, not his.  He says the falling US dollar does not affect food prices, even though all major commodities are priced in US dollars and the commodity prices are much, much higher.  

Here’s what Helicopter-Ben left out of his statement: Egypt’s currency, like China’s, is pegged to the US dollar.  Therefore, when Egypt imports these foodstuffs it is paying the extremely high costs, with LOWER Egyptian currency because of the peg.  It is getting screwed twice.  

Sure, Egypt doesn’t have to peg its currency to the US dollar but it does for now.  The point is, FOMC policy (money printing) is to purposefully drive down the US dollar to purposefully drive up inflation.  It is working exactly as he planned.  However, when this leads to bad things, Zimbabwe-Ben says “I didn’t do it.”  

After you take away all of the BS, one could reasonably say that the higher price of food in Egypt is DIRECTLY tied to US monetary policy and Ben Bernanke.  And when one makes that connection, it isn’t too far of a stretch to say his policies are also linked to the riots, revolution, and now death in the streets of Cairo.

But hey, who gives a damn as long as the banking Kleptocracy gets the money?  Savers?  Who cares! 

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