The Fed had several options, none of them good. Hereâ€™s a surprise: They chose the one that will contribute to inflation, financially enrich the wealthy, and impoverish the poor.
Even if the Fed doesnâ€™t know about peak oil — and itâ€™s clear they do — $80 oil is the very definition of inflation. The price of oil is breaking records nearly every week, and the real rate of inflation is already in double digits (but donâ€™t tell the citizens â€¦ er, consumers â€¦ or they might stop buying the cheap plastic crap they donâ€™t need). Want to cause the free falling U.S. dollar to accelerate its plunge to the bottom of the world currency market? Quick, cut the interest rate.
Seems Ben â€œHelicopterâ€ Bernanke is living up to his nickname. But instead of kicking green leafy material out of helicopters, heâ€™s rewarding big banks that packaged bundles of hallucinations into financial â€œproducts.â€ Bernanke is taking a page from Alan Greenspanâ€™s cheap-money strategy, the one that got us into the financial debacle that turned every house into an ATM for its owner, while turning the U.S. dollar into an international joke.
The stock market surges on, propped up by the phantasm of cheap money. But the Fedâ€™s day of reckoning is coming. Look for rapid increases in the interest rate next year as the Fed tries to keep up with an unbridgeable gap between oil supply and oil demand. With Chindia on the rise, even a recession in the homeland wonâ€™t ward off $400 dollar oil and consequent runaway inflation within the decade.
If all this sounds eerily familiar, you’re probably remembering the Weimer Republic. But there’s a big difference: In Germany, the fascists took power after the economy collapsed.
You can bet Big (Money) Ben and Easy (Money) Al have their (golden) parachutes close at hand. They have the collective empathy of a pissed-off scorpion, so youâ€™ll have to make you own arrangements when the economy-class seats begin to shudder on the planes of Empire, further signs of a turbulent plunge to the terrifying reality of terra firma.