Welcome to Money Morning - Only the News You Can Profit From.
Private Briefingwith WILLIAM PATALON III, Executive Editor
Not a member yet? Right now you can get immediate access to Money Morning’s Private Briefing for only $7.99. Click here to get started now.
Click here to get immediate access - for only $7.99.
Members log in:
Not a member yet? Sign up here or learn more.
Chief Investment Strategist
20-year seasoned market analyst and professional trader with highly accurate track record. Specialty in Asian markets.
Global Energy Strategist
35-year expert in oil and gas policy, risk assessment, and emerging market economic development.
Global Investing Specialist
30-year merchant banker, math- ematician, and author. Has a knack for being bearish at exactly the right time.
Capital Wave Strategist
30-year CBOE trader, market maker, and retired hedge fund honcho. Helped launch the Volatility Index in 1993.
20-year commodity guru and portfolio advisor. Top authority on metals + mining stocks. Head- quartered in Canada.
Defense + Tech Specialist
30-year veteran of tech markets with a Rolodex of Silicon Valley CEOs. Pulitzer nominee. Uncovered rare earths crisis.
30-year veteran analyst of business, economics, and financial markets. Award-winning author of "Contrarian Investing."
At last Thursday's Fed meeting, Ben Bernanke finally played his last card.
With an open-ended promise to buy $40 billion a month in agency-guaranteed mortgage bonds, the Fed Chief turned QE3 into a much larger gift called "QE Infinity."
But the truth is he would have been better off if he had tried the helicopter.
For those who forget the reference, Ben's first foray into national fame came in November 2002, when he delivered his famous "helicopter speech" at the National Economists Club in a Washington, DC Chinese restaurant.
Little did I know that day that I was about to witness history as Bernanke said the risk of deflation was so great that the Fed should drop interest rates to zero and consider using further measures -- such as dropping $100 bills from helicopters -- to "stimulate" the economy.
Of course, I blotted my Fed copybook for the next decade by asking a snotty question since I objected to his central premise that the risk of deflation was either imminent or would be disastrous when it happened.
The idea that deflation was imminent at the time was simply ridiculous. Consumer price inflation, on official BLS statistics which consistently understate it by about 1%, was 2.5% in 2002, 2.0% in 2003 and 3.3% in 2004.
Even then, Bernanke's economics weren't that well connected with reality.
The reality today is that it just doesn't work.
Bernanke's various "quantitative easing" policies have benefited primarily Wall Street; the mechanism by which they have fed through to the real economy is at best very indirect.
Currently for example, the Fed is now set to buy a total of $85 billion a month in long-term bonds, through the new mortgage bond purchases as well as the remains of his "Operation Twist" strategy.
The remaining content is exclusively for Money Morning subscribers. To gain access, enter your email address: