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Wednesday, July 13, 2011
Fed Inflates The Dollar and The Stock Market
Two headlines in today’s Wall Street Journal website summarize the destructive effectiveness of the Federal Reserve’s monetary inflation policies:
Bernanke: Fed Ready to Act if Needed
Stocks Surge on Fed Hopes
U.S. stocks jumped as investors saw hope for further economic stimulus in the form of “QE3” from the Federal Reserve.
Note that it’s the securities brokerage community who now applaud the Fed’s QE2 program to raise the rate of inflation (i.e., devalue the dollar). Corporations are reporting higher earnings, compared to last year’s depressed levels. At the same time, they are cautioning that sales growth is anemic and cost-cutting opportunities have been exhausted, which means that the outlook for continued higher earnings is unclear. The stock market rise is essentially floating on a rising tide of the Fed’s fiat money.
It also means that the Fed, by pumping up the stock market, is well along the path to creating the next speculative boom and recession.
The stock market is doing well, but where are the millions of jobs that were supposed to have been created by the Fed’s Keynesian monetary policies?
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