Recently by Bill Bonner: Consumer Price Inflation on a Diet of Gold and Wheaties
Yes, he held a press conference. Why would the world want a press conference from a central banker? Ah good question. Because hes a celebrity Hes powerful. He moves and he shakes. Hes as popular as William and Kate put together.
In the past, a central banker was meant to be anonymous quiet hidden away somewhere so far in the background that the ordinary man wouldnt know his name or recognize his face.
A good central banker was one you never heard of. He did his job. He made sure that the country had enough gold to cover its foreign debts and domestic currency issuance. He did not worry about full employment. Nor did he concern himself with growth. His job was to make sure the money was good. Thats all. If he did it well, he was practically a nobody.
If he did it badly, on the other hand, he might be castrated. Or, at least he would be disgraced.
Times have changed. Alan Greenspan turned central bankers into celebrities. He stood with Hillary Clinton at her husbands State of the Union address thus signifying the union of money and power, much like the Pope and the Holy Roman Emperor standing together on the balcony of the Vatican.
And now, who wouldnt recognize Ben Bernankes mug?
In fact, he is widely thought to be responsible for saving Christendom, Jewry and all of western civilization. Yes, he stepped in where fools feared to tread and rescued the whole shebang.
And now what?
Well, the rescue effort has proven to be a big failure. TARP, TALF, QE1, QE2 The US feds put at risk more than $10 trillion to turn the situation around. Federal deficits alone add up to $4.5 trillion over the last 3 years.
And for what? Housing is still falling. The unemployment rate is still over 10% unless you stop counting people who havent been able to find work. More than 40 million people are on food stamps. And every increase in gasoline or food pinches household budgets like a tax increase.
But now, not only does the central banker play a much bigger role in the life of a modern economy, so does the government. A report earlier this week told us that more than half of income growth in the last 10 years comes from the feds!
Wait a minute. Where does government get any money? How can the feds give more than half US households more than half their income gains? Who pays for it?
Doesnt that money really belong to someone else? Arent they just robbing Peter to pay Paul?
Yes, Of course they are. But Peter isnt old enough to vote. So who cares?
And now The Fiscal Times reports that US voters as a whole receive more in payments from the government than they pay in taxes.
The feds have turned half the population into incipient zombies feeding off the other half of the population and their children and their childrens children.
But lets get back to Bernanke. What did he have to say yesterday? Well nothing!
Heres the AP report:
WASHINGTON (AP) The US economy and job creation have strengthened enough for the Federal Reserve to end on schedule a program of buying Treasury bonds to help the economy, the Fed said Wednesday.
Fed Chairman Ben Bernanke spoke at a news conference after the meeting. It was the first time in the Feds 98-year history that a chairman has begun holding regular sessions with reporters.
Bernanke said that as long as the Fed continues to say rates will remain at historic lows for an extended period, rates wont rise until the Fed has met at least twice more. The Fed board meets about every six weeks.
Bernanke said he expects the economy to continue growing through next year and 2013.
He acknowledged that higher gasoline prices are creating a financial hardship for many Americans. But he said the Fed doesnt think gas prices will continue to rise at their recent pace.
With Bernankes dulcet assurances still echoing in their ears, investors went back to their errors. They bought more stocks pushing the Dow up 93 points. They bought more gold too. The yellow metal rose $13.
One thing they didnt buy was the dollar. The greenback is at an all-time low against the Swiss franc. Against the euro, it seems to be returning to its all-time low. And against gold, of course, it passed its all time low many months ago.
And now that the economy is slowly but surely recovering Bernanke said so! many investors are beginning to wonder if gold may have passed its all time high too.
Lets hope people believe it.
The more who think so, the better. Yes sell gold please! Sell it in a panic. Sell it cheap. Sell it to the rag and bone man! Sell it to the pawnshop! Sell it at parties organized by newspaper ads! Sell it to people who put notices on eBay! Sell sell sell
And then, you know what to do, dont you, dear reader?
Reprinted with permission from The Daily Reckoning.
Bill Bonner is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and The New Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007). His latest book is Dice Have No Memory. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning.