08/24/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/082418.mp3
JUST LETTING YOU KNOW
The market this week was icky and the Fed shows up today. What else? Not only does our Fed show up, but the Central Bank of Europe shows up and they are about to go on a money printing festival to buy out the bonds in Europe. It’s worked here.
But I wonder. Here’s what I wonder about. For whatever reason, the people running the show here believe that they have never-ending suitcase of money. Did you ever see the movie, “The Blob”? It just keeps getting bigger and bigger and bigger. And they can just increase it any time they want and print more money to buy more bonds and increase our deficit.
I don’t know if they have that in Europe. And the other problem you have in Europe is that while we’re only trying to do one country here – they’re trying to fix 17 countries. So we’ll see.
But if there’s anything we do know, the Fed knows what they’re doing when it comes to the market. You see it seems that with every little correction, they’re opening their mouths. But you what I think happened?
I think yesterday, Ben Bernanke bought S&P futures in a secret account stashed somewhere in Switzerland…and watched the market go down. And he realized, “I better release a letter with answers to questions from Darrell Issa, basically stating, we’re heading for more money printing.”
And that’s what happened today.
The market was up a little bit. Nothing special. But as soon as this was released, the market lifted.
And then, just so happens – within 5 minutes, something else released. Noise out of Europe about their money printing.
So I consider today to be another manipulation day to keep things going.
They keep saying the Fed is not political, but they’re completely political. And Bernanke wants to keep his job so he’s going to do EVERYTHING in his power in the next couple months to keep markets up no matter what.
Here is a question to Bernanke from Darrell Issa is the Chair of Oversight and Government Reform:
It appears that at the first sign of bad economic data, many market participants immediately begin calling for further easing. Does this reflect a learned behavior resulting from the Federal Reserve’s prior apparent willingness to yield to market demands?
Bernanke:
Monetary policy must necessarily be set in light of forecasts of future performance of the economy. Market participants understand that basic fact as a result of new information that becomes available regarding the future state of the economy. They draw their own inferences regarding the likely future course of policy. The Federal Reserve engages its own independent analysis of incoming information and sets its stance in policy in a way that will best promote in its judgment the dual mandate given by the Congress to promote price stability and maximum sustainable employment.
He’s a liar. This is a bold faced lie. Bernanke is targeting the market and knows he can’t affect the economy. And Darrell Issa’s asking a good question.
If the market is only conditioned to be buying when they’re printing money, what happens when that stops? It’s a damn good question. And Bernanke didn’t answer it.
And then, one last question from Darrell Issa (You would think I asked this):
Does reduced interest income to savers resulting from quantitative easing act as a tax on savers? Is it a transfer payment to debtors, including the U.S. Government? Note that…in last year’s letter, you responded that the Federal Reserve’s action are intended to benefit everyone.
Bernanke:
It is in everyone’s interests – savers and borrowers alike – to have an economy that is performing at the highest level of its capacity. The returns to long-term investment depend on depend critically on vitality of economic, the pace of inflation, and the stability of the financial system. The Federal Reserve is striving to promote these factors that bear so critically on economic well-being.
He’s a liar again. Just so you know, if he left the markets alone, the Fed funds rate would be about 2%. That means your money market rates at your bank…instead of getting zero, would be about 2%. Who’s getting that 2%? The banks. Ben Bernanke is keeping the banks from paying you money you should be getting.
And to sit here and believe that savers make out because he can better the economy – is a lie.
This is what we are dealing with and I am in hopes that if President Obama is elected again, he joins with Mitt Romney in what he said in the last couple of days – This man (Bernanke) needs to be fired…immediately…for interfering an manipulating the markets, at his convenience.
Markets should be left alone to do their own thing, up or down. Because if you do, you end with with freak’in bubbles just like we had in 1999 and just like we had in house and lending in 2007.
Utter destruction came from them and it is no accident that they came from under Alan Greenspan and Ben Bernanke…the two Fed Chairman’s who have eased monetary policy down to the bone.
Of course, Bernanke’s taking it to the 50th power. Nobody would ever think of printing money to buy bonds. That is insanity run amuck.
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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.