12/12/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
https://archives.warpradio.com/btr/InvestorsEdge/121218.mp3
JUST LETTING YOU KNOW
I Hope I Am Wrong
Today was a Fed Day. At 12:30 PM, the Federal Reserve announced what they were going to do with monetary policy and afterwards from 2:30 to 3:30 there was a question and answer session. Now I must tell you. I wouldn’t spend a second watching Ben Bernanke and the questions that were asked of him because I would gather that not one person would ask the right question and he would just give B.S. answers anyhow.
But today, for a change, I want to take not a sound bite, but a few minutes to talk about the Fed and what they are doing.
First off, you need to know they are printing $85 billion a month to buy up mortgage backed securities and Treasury securities. Now, the way they throw around the word “billion” these days I don’t know if it seems like a lot to you, but it’s unbelievably a lot.
What has this done? What has been the outcome of all this money printing? Well, the markets have gone up. That’s good, right? The stock market has gone up. In fact, since March 2009 – except for this year in September – every announcement was met with buying of stock markets.
What else has it done? Has it helped the economy? I think it has. Why? Because they’ve been able to control interest rates on the long-end. So loans to the consumer are much cheaper…almost free money.
So that’s helped.
What else? I can’t think of another thing.
Ladies and gentlemen, for some reason Ben Bernanke got a pass on the Housing Bubble. Throughout 2007, he was telling all of us (I was quoting him on my radio show) that subprime lending is not a problem, Housing is contained, the economy is sound.
And we fell off a cliff…because of Ben Bernanke and Alan Greenspan creating bubbles.
So what did they do to answer the collapsed bubble in Housing? The same thing he did before: Easy Money. But he didn’t just do Easy Money this time. They’re printing trillions of dollars of money that’s not there.
So what’s been the negatives?
- The Savers? You’re screwed. Try buying a CD. How’s that Money Market paying you? Good?
- Who’s getting that money? The banks. If interest rates were normalized you be getting about 2% – 2.5% on your Money Market funds. But instead, the banks are keeping that money.
- Who else gets affected by this? Well commodity prices tend to rise. That means that the cost of goods, cost of goods sold, and cost to be buy go up.
But for me, it’s for what 2015 is going to be about.
In 2015, everybody’s going to be talking about one thing and one thing only:
Why didn’t we stop this maniac and his maniacal policies of printing money…and printing money.
…because here is the outcome: We have the Mother of the Mother of Mother of all Bond Market Bubbles. They are sticking a cork into the Bond Market by printing money hand over first. $85 billion a month!
I don’t think even I can fathom that number.
Investors are forced into things they may not want to do. Bond market yield and price are complete dislocated, completely ripped, and completely manipulated. But if we do know one thing about bubbles, they pop.
Every bubble in history has popped.
And the drop was earning shaking.
You see, the Fed with this printing of money is enabling the deficits, which leads to the next problem.
Since rates are low – deficits okay. But what if rates start skyrocketing? The cost to fund those deficits skyrockets. And that’s when vicious cycles happen, my friends.
As I have told you, we do not act and we will not act until we see things happening. In the first inning of things, so far they have been successful in putting a cement cork on interest rates. They did it for a few years on Housing.
They were successful in creating a Housing Bubble and wealth. And that wealth turned to dust once the House Market took a certain finger and stuck it in the air right at Ben Bernanke, Alan Greenspan and Angelo Mozilo of Countrywide and the rest of these crooks.
Write this down: In 2015, the masses will be cursing out Ben Bernanke – maybe earlier than that. And it’s a shame. I don’t know how we got to the point where one person can control trillions of dollars that are not even in circulation and nobody says a word and Wall Street is hush hush.
There’s just a select few on Wall Street that have the grapefruits to blast this guy.
I’m one of them.
I hope am wrong.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.