Fed Panics – Unprecedented Dangerous Inflation Coming

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Ben Bernanke is so anxious to keep his position as Fed chairman and re-elect President Obama that he is willing to risk the Fed’s long-standing political independence and, even worse, a runaway inflation.

Today, in an unprecedented and controversial move, the Federal Reserve announced an unending round of “Quantitative Easing” of $40 billion a month in mortgage purchases and to maintain ZIRP (zero interest rate policy) until at least mid-2015.

I’m not the only one concerned. As an analyst for Yahoo Finance reported, “This is a monster, huge, gargantuan change from prior operations.” QE1 “cost” $1.7 trillion. QE2 was half a trillion, but QE3 does not have exit plan. It could go on indefinitely. “It is an entirely different, frightening animal.”

No wonder gold and silver are moving sharply higher. Bernanke and the Fed are pulling out all the stops to engineer a new round of inflation in a vain effort to stimulate job creation.

The problem is that job creation is more a function of fiscal policy, not monetary policy. The reason unemployment has stayed so high, and new jobs have been scarce, is because of new government regulations like ObamaCare, Dodd-Frank, the minimum wage law, stringent EPA rules, and the threat of new taxes.

The Fed’s ZIRP has also hurt job creation. By keeping interest rates low, it pays banks and other financial institutions to play the yield curve, to buy safe Treasuries and government-back mortgages with cheap loans from the Fed (0%-.14%), NOT by making risky loans to small business (the engine of job creation).

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The Fed is also bailing out us investors, with every asset imaginable moving higher due to the never-ending easy money policies. I have a whole list of high-income stocks and funds that are beating the market this year (see www.markskousen.com) — all are up by double digits and headed higher. Now is the time to get on board, although at some point the artificial boom must end in an ugly bust. It’s hard to say how long it will take, but it is inevitable, mark my words.

As long as the Obama administration is in office, job creation, unemployment, and economic growth are going to be sluggish.

But, in the short term, the Fed’s aggressive move has increased Obama’s chances of getting re-elected. I am skeptical of conspiracy theory, but I can see one developing behind closed doors at the Federal Reserve. Maybe there’s a secret underground tunnel to the White House.

Between the inflationary policies of the Fed, and the massive deficit spending by Obama and the Democrats (which the Republicans started), we are in for another big financial hurricane headed our way. And we only have ourselves to blame; we voted for these clowns.

You Blew It: Bloomin’ Mayor: Big Brother is Alive and Well in America

Bad news for personal and economic liberty today. By an incredible vote of 8-0, the New York City Board of Health passed fascist Mayor Bloomberg’s ban on soda drinks of 16 oz. or more.

It opens Pandora’s Box with untold regulations on what we consumer and spend our money on by a paternalistic statist government. A dangerous precedence.

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Maybe it’s time to send to every legislator in the country my pamphlet, “Persuasion vs. Force:” To quote the relevant passage:

“Let me suggest, therefore, a new political creed: The triumph of persuasion over force is the sign of a civilized society. Too often lawmakers resort to the force of law rather than the power of persuasion to solve a problem in society. They are too quick to pass another statute or regulation in an effort to suppress the effects of a deep-rooted problem in society rather than seeking to recognize and deal with the real cause of the problem, which may require parents, teachers, pastors, and community leaders to convince people to change their ways.”

Mayor Bloomberg’s action today suggests that we are becoming less and less a civilized state by forcing people to do what he thinks is right. I think it’s called fascism.

Yours for peace, prosperity, and liberty, AEIOU,

Mark Skousen

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Fed Undertakes QE3 With $40 Billion Monthly MBS Purchases (Bloomberg) The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month as part of a third round of quantitative easing intended to boost growth and reduce unemployment. The Fed's policymaking committee said it probably would hold t

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