Joel Bowman

Stocks are on the rise. Gold is on the rise. Bitcoin is on the rise. Everything is up…up…and, away!

The Dow has been on a tear this week, up 300+ points since Tuesday’s low. What’s causing the rally? Is the economy fixed? Have Bernanke’s magic money elixirs finally done their job? Or is collective delusion on the march once again?

Hmm…it’s hard for us mere mortals to tell. Of course, that’s a qualification that doesn’t apply to the world’s most powerful central banker. Ben Shalom Bernanke has been in the press all week, telling the world that the “benefits” of his policies outweigh the “costs and risks”…at least as they are “measured” at this exact moment.

Of course, we’ll never know the real costs or risks of the Fed Head’s ceaseless Bernaniggans. On the face of it, however, Reckoners are well aware that the Fed has been anything but shy when it comes to intervening in the markets. And what an intervention story it has been! Along the way, we’ve learned terms like “quantitative easing,” “ZIRP” and “Operation Twist,” all parts of the Fed’s open-ended, try-anything-once effort to “support the capital markets.”

Boy oh boy. It must really be something to be that smart. Mr. Bernanke says he knows exactly how much “additional liquidity” the market needs, and exactly how and when to deliver it. He knew last September, for example, that the market needed to be relieved of precisely $40 billion worth of mortgage debt per month. And in December, he knew that the asset purchasing program needed to be expanded to $85 billion per month. Exactly $85 billion.

Most of us don’t have the time, nor inclination, to even count to 85 billion, much less realize that’s the precise number of dollars’ worth of “assets” the Fed ought to buy every month. But Mr. Bernanke has it all figured out. It’s not $79 billion…nor is it $85 billion and ten cents.

Amazingly, Bernanke also knows exactly when to begin unwinding his various programs: when the unemployment rate falls below 6.5% (not 6.6% or 6.4%) and inflation projections remain no more than half a percentage point above 2% two years out.

Really, what could possible go wrong?

If Bernanke is right — and he’s pretty sure he is — he has outwitted the greatest minds of history. He has understood, in some kind of zen-like moment of clarity, no doubt, what no other man has ever been able to comprehend. Was it an epiphany, we wonder? Did he have some line of communication with the gods? Was he visited late one night, perhaps while toiling studiously over his modern economics theory books, by an archangel?

Whence came The Bernank’s omnipotence? When did this one man become, by way of some heavenly transfer of knowledge, Mr. Market incarnate?

Never mind all that. It’s not important how it all came about, only that, at least according to the generally accepted narrative of our time, it did come about. So you see, Fellow Reckoners. There’s no need to worry. Command Central will take it from here. As to exactly where they’ll take it…well, the world will find out soon enough.

Joel Bowman
for The Daily Reckoning

Joel Bowman

Joel Bowman is a contributor to The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

  • Capn_Mike

    As Tom Woods would say: “Just trust in your overlords”.

  • Wags

    He’s a confident fool alright. He did manage to get congratulations for his reaction to the housing bubble that he contributed to and didn’t see coming. Damn, people are stupid.

  • grizzledoldman

    Got Gold? ..
    … not a good idea in a hegemonic US dollar denominated Global Asset- Debt Deflationary Collapse …. as will soon be empirically evident…

    As far as dollar printing?

    Who owns the currency?

    How should the US currency be valued, if not in US citizen trade-able work, manufactured goods, and services?

    Ah yes …. those who own the dollar bonds are entitled by the republican representative democracy to the absolute supremacy which they have so acquired (their bought and paid for politicians and laws.)

  • waffenss

    reminds me of the 60′s. “The Fifth Dimension” sang “Up, up and away my beautiful balloon”. Remember that one? The song was about heroin, LMFAO. Heroin used to be sold in a penny balloon. LOL

Recent Articles

How the American Dream Can Make You 14-Times Your Money

Chris Mayer

Most U.S. citizens subscribe to an idea called the American dream - working hard on a level playing field so you can "get ahead" in life. But that's not what the original "American dream" was all about. As Chris Mayer explains, that term originally referred to a completely different, yet equally important goal. Read on...


Why Too Much Data Might Actually Protect Your Privacy

Sam Volkering

The world is awash with data. All these data will shape the future, helping people make smarter decisions and act faster. But to realize this vision, there has to be a way to crunch the data. And with such a huge amount of it, that could be a problem. Luckily, there's a unique solution on the horizon. Sam Volkering explains...


Laissez Faire
Why the Fed Has Declared War on Your Money

Peter Ferrara

The value of the US dollar has been steadily declining for nearly a century. Thanks to Nixon, Greenspan and a slew of other "leaders" the poor greenback is a sad shell of its former self. But there is a way to reverse this trend, and restore it to its former glory... if only those in power were willing to do it. Peter Ferrara explains...


How to Trade the Return of Social Media Stocks

Greg Guenthner

The word of the day is "growth." With GDP screaming higher in the second quarter it appears social media stocks have taken this as a sign and have started showing their own outsized growth. Today, Greg Guenthner shows you how to play this trend for huge gains as the second half of the year gets in full swing...


Maestro
6 Major Flaws in the Fed’s Economic Model

James Rickards

Use what analogy you will: a car, a clock, a chemistry experiment... the point remains that the Fed believes it can control the economy. Indeed the Fed will stop at nothing to realize the goals of its dual mandate" to maximize job growth and maintain price stability. But, as Jim Rickards expalins, that conceit always ends in disaster. Read on...