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Fed’s QE Ponzi Scheme begins to BackfireGary Dorsch In a taped interview with CBS’ “60 Minutes” that aired on December 5th, Federal Reserve chief Ben “Bubbles” Bernanke tried to brainwash the American public, into believing that “Quantitative Easing” (QE), is absolutely necessary in order to prevent further losses of jobs, and tried to assure his listeners that he has the skills to keep inflation under control. The US-jobless rate would have risen far higher, “something like it was in the Depression, at 25%,” -- had the Fed not provided tens of trillions in loans to Wall Street banks and other financial companies, he said. Two-years ago, the Wall Street Oligarchs played the central role in the greatest financial scandal in the history of the world, - one which wiped out tens of trillions of dollars in wealth, nearly bankrupted giant corporations and entire countries, and plunged the world into the deepest slide in global trade since the Great Depression. Huge profits were made in sub-prime mortgages, based on a Ponzi scheme of exotic financial derivatives and sliced packages. When it came crashing down, the public treasury was looted to cover the financial aristocracy’s losses. Since then, the Fed has carried out QE-1 between March 2009 and March 2010, in which it bought $1.45-trillion in mortgage-backed securities and $300-billion in Treasuries. Together with pegging interest rates at zero-percent, weakening the US-dollar, and flooding the stock markets with cheap credit, - the Fed enabled US banks and S&P-500 companies to record bumper profits, even as they slashed jobs and capital spending, and suffered revenue declines. With QE-1, the Fed channeled interest free money into the coffers of the Wall Street Oligarchs, which in turn, was used to buy higher yielding Treasury bonds. In a single stroke, the Fed monetized the US-government’s debt, and at the same time, bankers earned double or triple the interest rate at which it was borrowed. They pocketed billions under the scheme. Wall Street banks also bought high-grade corporate and junk bonds, and emerging market bonds, to fatten their profit margins. At the end of the day, QE-1 was utilized to recoup the gambling losses of the financial aristocracy, and created fertile conditions for driving-up equity markets.
Mr Bernanke is an addicted money printer. He’s the most idolized Fed chief among a growing number of gold and silver worshippers. Beyond his epoch history making with QE, the Fed chief is also famous for the “Bernanke Put”, which is deeply ingrained in traders’ minds. Traders need not worry about market declines, since the Fed will always bail them out with rate cuts. If interest rates are already slashed to zero, then the Fed would open the floodgates with massive injections of QE. In this regard, Bernanke is widely admired by the high stakes rollers on Wall Street, for his ability to jig the stock market higher, regardless of signs of a weak economy. Following a sharp correction in the US-stock market last May and June, and steep job losses, Fed chief Bernanke rode to the rescue with promises of QE-2. Within months, the S&P-500 recouped its earlier losses, and stock market bulls praised Bernanke and his merry band of money printers, to the high heavens. Bernanke has gone several steps further. He’s assured Wall Street that the federal funds rate will be pegged near zero-percent interest rates through 2012, and that he’s not bothered by a weaker US-dollar. Asked on “60-Minutes” if the Fed could cross the Rubicon again, and unleash QE-3, Bernanke replied, “It’s certainly possible. It depends on the efficacy of the program. It depends, on inflation. And finally it depends on how the economy looks,” he said. So far, the Fed has injected $1.85-trillion into the money markets, under its QE-1 and QE-2 experiments, which in turn, have fueled huge parabolic rallies in key industrial commodities, such as cotton, copper, rubber, and crude oil, and jettisoned precious metals into the stratosphere. Soybeans have increased 30% under the influence of QE-2, and live cattle prices are at all-time highs. “If the Fed did not act, then given how much inflation has come down since the beginning of the recession, I think it would be a more serious concern,” Bernanke explained.
The Fed argues that QE is not inflationary, because the electronic money is sitting in the coffers of the banking Oligarchs, and isn’t circulating in the general economy. “One myth that’s out there, - is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way,” Bernanke said on Dec 5th. Is the majority of the American public gullible enough to believe the Fed’s gimmicks? Unfortunately, the answer is yes. Most Americans haven’t even heard of QE. However, they are aware that the cost of gasoline is 50-cents /gallon higher at the pump, than it was a few months ago. But do they realize that the increase is linked to the Fed’s QE-2 scheme? Do most Americans realize that higher gasoline prices are paid, to fund the Fed’s insurance policy to prevent further job losses? Not everyone is buying into the Fed’s propaganda. Sarah Palin, the former vice-presidential candidate, wrote in a Nov 18th letter, “It’s time for us to refudiate the notion that this dangerous experiment in printing $600-billion out of thin air, with nothing to back it up, will magically fix economic problems. All this pump priming will come at a serious price. And I mean that literally. Everyone who goes out shopping for groceries knows that prices have risen significantly over the past year. Pump priming would push them even higher,” Palin argues. As the late astronomer, Carl Sagan, and advocate of skeptical inquiry used to say, “One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the Bamboozle. We’re no longer interested in finding out the truth. The Bamboozle has captured us. It is simply too painful to acknowledge - even to ourselves - that we’ve been so credulous.” The facts do not jive with Mr Bernanke’s defense of QE. The fact is, the MZM Money supply has mushroomed in size by $450-billion over the past six-months, - the equivalent of 3% of GDP. That’s even before the Fed’s QE-2 injections begin to take effect. The MZM supply could easily top $10-trillion in the months ahead. MZM measures the most liquid components of the money supply, available for spending. MZM can be immediately redeemed without suffering a penalty or a capital loss. Traders in the gold and silver markets, have enjoyed the magic carpet ride of the expanding MZM money supply, (M2, plus all money market funds, less small time deposits), - and are guided by the following words of wisdom, “Paper money eventually returns to its intrinsic value – Zero,” - Voltaire 1729. To read the rest of this article, please click on the hyperlink below: http://sirchartsalot.com/article.php?id=149 ### Dec 8, 2010 321gold Ltd |
