Back in the dot-com boom days, there were books flying off the shelves saying that the markets would hit some high magic number.
Harry Dent said that the Dow was going to 20,000 by 2009. James Glassman wrote the infamous book Dow 35,000.
The truth of the matter is that, though they may have been a bit premature in their timetable, they were absolutely right…
12 unelected fools destroy America
Our good friend and Federal Reserve Chairman Ben Bernanke came out today and said he would destroy the dollar.
He didn’t offer any details about how he would do this… He simply said that the sluggish recovery meant that we needed more stimuli.
The calendar says that the Fed’s monetary policy committee is meeting on November 3rd. At this time, they will announce their plan to print money and buy more Treasury bills.
I say “print,” but what I really mean is that Ben or some flunky in a $2,000 suit will sit down at a laptop in a walnut-covered office and add a few zeros to the end of the $13.5 trillion dollar national debt.
(Here is something scary for Halloween.)
I know that Ben will destroy America because he is quoted as saying, “Given the committee’s objectives, there would appear — all else being equal — to be a case for further action.”
This is like an environmentalist saying that the planet would be better if there weren’t any people on it.
Heaven forefend we try to pay down our debts and increase our savings…
But then we would be approaching the economy from a position of strength — and who wants that, really?
Up is down; black is white
I think Bruce Kranzing over at ZeroHedge said it best in his recent article about the current government policy:
It is Good when the U.S. pursues a beggar my neighbor policy of trashing the dollar. It is Bad when China manipulates its currency, however.
Laisse-Faire economics is Bad, Keynesian economics is Good.
Price discovery is Bad, mark to model is Good.
Balanced budgets and paygo are Bad, deficits are Good.
ZIRP (Zero Interest Rate Policy) is Good for the economy, saving is Bad.
A no downside risk equity market is Good. Bubbles however are very Bad.
The Fed forcing inflation is Good. It would be Bad if prices were stable or went down.
It’s insane, of course. And we’ve seen it now for what — three, four bubbles?
The Fed cuts rates to nothing and starts printing money, thus reflating another bubble.
The bubble pops and the Fed cuts rates and blows up another — bigger — bubble.
Go all in
If you can’t beat ’em, join ’em.
The only way to get ahead of the game over the next 20 years is to go all in… Then try to time the peak.
We all know the result of more dollars chasing the same number of goods: it’s called inflation.
Zimbabwe is the case study in modern inflation. At one point a few years ago, prices were doubling every day.
But what you may not know is that the Zim stock market took off like a moon shot.
We already have inflation. All you have to do is look at the price of commodities — from corn to gold and everything in between.
The Fed is notorious for “not seeing” bubbles. Greenspan even said bubbles were “unknowable.”
Everyone I talked to in 2006 — from my barber to the guy scraping boats at the marina — knew that the housing market was a bubble.
And yet Busy Ben “knows” what he is doing by destroying our currency?
It’s absurd.
And by the time it’s over and the next bubble pops, the hole we’ll have to dig out of will be immense.
Alas, human nature is what it is… An untenable situation will not end until it has to.
It is the hubris of man that we must push our ideas to the bitter end.
The Dow will hit 20,000. Heck, it is likely to hit 35,000. Only you won’t be any richer because of it… But that’s ok.
There are plenty of ways you can get rich in this environment.
The truth is that with the Fed assuring us that the market can’t go down, this is the best time to be an investor.
Making money couldn’t be simpler. Buy hard assets like gold and oil in emerging markets.
In no time, you’ll be banking 750% in a year — just like my Crisis & Opportunity readers.
Sincerely,
Christian DeHaemer
Energy & Capital
