Tuesday, September 30, 2008

The Last Man Standing

I was shocked yesterday when I heard the news that the politicians decided not to issue the "inflation bailout bill." What's funny about the situation is that not issuing the bill is actually the best thing for our country in the long run. If they did not issue the bill and protect the market with printed dollars, the stock market would crash, real estate prices would fall, and many people would lose their jobs. We would have a severe recession. The dollar would start its natural decline and the Fed would have to greatly raise rates to protect it and entice investors to put their money into our currency. This would cause Americans to stop spending and start saving and it would force us to rebuild the manufacturing in our country so we can once again be a real world wide trading partner. It would be a horrible few years for many Americans and after the system had been cleansed we could start rebuilding the country as something we could be proud of.

I would be my life, however, that no politician would EVER ask an American to sacrifice for the greater good of our country. It will NEVER, EVER happen. I believe this inflation Bill will eventually get passed. But let's imagine for a second that it doesn't. What is plan B to keep our bubble economy inflated longer and keep the problem building for the future? It is located right across the street from the politicians in a building called The Federal Reserve.

If the Bill did not get passed the spotlight would now be turned fully toward the last man standing, Helicopter Benjamin Bernanke, to destroy our country once and for all. Right now there is a massive deflationary threat. Home prices are falling fast. The stock market is very close to going into its final stage of free fall. As people are starting to feel the atmosphere change, they are even thinking about doing the worst thing our leaders have told us an American can do: Save money. This would be very deflationary as well.

Bernanke knows this and he stands ready to do what I've been telling you he would do since he took his position a few years ago. He is going to print money like nothing you could possibly imagine, and he is going to dump it from helicopters. Greenspan tried a more mild version of this in the 90's and it blew up the stock market bubble. As that bubble began to burst in the early part of this decade, he did it again but accidentally created an even bigger real estate bubble. That bubble is currently trying to correct along with the still inflated real estate market. Bernanke will provide "liquidity"(inflation) to the system that will make the previous two look like a warm up. It will be the grand finale of the fireworks display, and it will be truly remarkable.

His masterpiece will be the equivalent of dropping an Atom bomb on the American economy. This money will not find it's way back into the real estate market or the stock market. It will only increase the cost of living for every American and began to inflate the final super bubble. The Grandaddy of them all: The commodities bubble. All commodities will explode upward in price, but the prize of the group will be gold and silver.

Keep your eye on the headlines for something called "liquidity injections." This means inflation. During the stock market crash on Monday, headlines streamed across the screen as people were shocked at the hard stance the government had decided to take. What everyone missed was the small headline that read, "Bernanke injects $630 Billion into market." That's right, $630 Billion on Monday ALONE. Banks were slamming the Fed's discount window this morning borrowing at a unbelievable rates. Americans will look one way at Washington fight over the bail out, while the other direction Helicopter Ben will be robbing them of their life savings.

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