First Record Dow High, Then Record Gas And Grocery Prices
Ben Bernanke must have been smirking and nodding smugly all day yesterday. The Dow hit an all-time high at 14,286 and closed at 14,253.77. What’s even more impressive is that this is double where the Dow stood just four years ago. And it only took five and a half years and previously unmatched amounts of new money creation to do it.
The mainstream media would like you to believe the rising Dow is somehow tied to an improving economy. ”Look,” they say, “Housing and auto sales are rising…home prices are recovering…companies are hiring more…Even you skeptical radicals with your free market obsession have to admit that the central bank is doing the good it’s supposed to do!”
In the same breath, however, the mainstream media is suprisingly candid about the real reason the stock market is at record highs. From the Associated Press:
“Stocks are also benefiting from the economic stimulus from the Federal Reserve and other global central banks.
“Under a program called ‘quantitative easing,’ the Fed has bought trillions of dollars of bonds, pushing up their prices and sending their yields lower. That makes stocks more attractive to investors than bonds and keeps interest rates low throughout the economy, encouraging investment and spending.
“The U.S. central bank began buying bonds in January 2009 and is still purchasing $85 billion each month in Treasury bonds and mortgage-backed securities.”
In other words, stocks are being pushed higher because the Federal Reserve is stealing purchasing power from the private sector in order to fuel the growth of government debt.
In February the federal government borrowed $253 billion from the private market directly. That’s nearly $1,000 for every man, woman and child in the US! The money the federal government borrowed last month alone is six times the amount the much maligned sequester will shave off the budget in a year. The media has been whipped into a frenzy over the notion of cutting just a few day’s worth of government borrowing and spending for the year.
We shudder to think of how much better employed that money would have been in the private sector. Instead it was mostly eaten by bureaucracy and used to fund the violent deaths of occupied peoples. And, of course, that borrowed money also sells unborn generations into debt slavery since they’re the ones who will be paying it off along with the interest.
Also, we think the elation of higher stock prices will wear off when the newly created money inevitably works its way into the price of food and gasoline. As much as the government, central bank and their Keynesian enablers would like you to believe otherwise, newly created money won’t just push up stock prices. It will work its way throughout the economy and drive up food, commodity and energy prices without driving up wages.
Those who invest wisely, however, won’t be bothered as QE makes everyone else poorer. Gold and silver are no-brainers as far as protecting purchasing power.