11/08/10 Baltimore, Maryland – Do you believe like I believe,
Do you believe in magic
– The Lovin’ Spoonful
Whew! What fun we had last week! It’s the Magic Kingdom for sure.
The Fed pulled a white rabbit out of its hat on Wednesday – a $600 billion mad hare. Stocks soared on Thursday. Commodities soared. Everything soared. Except the dollar. People dropped the buck.
Then, on Friday there wasn’t much follow through. The Dow rose only a few points. Gold continued going up – $14.
What’s ahead for this week? Heck, anything could happen. This is the Magic Kingdom.
What do we mean? Of course, counterfeiting is against the law.
The counterfeiter creates money that looks just like the real stuff, but it has no gold or other backing behind it.
The Fed creates money that looks just like the real stuff. It has no gold or other backing behind it either.
What’s the difference? You go to jail for counterfeiting. But by some magic, it’s okay when the Fed does it.
We have a suggestion. The Fed could save some money by giving up its monopoly on counterfeiting. Allow the private sector to create new money. There are probably plenty of people in jail today who could make useful contributions to our economy. These guys know how to print money. Let them out! They would create money – lots of it. At no cost to the taxpayer.
But wait, the feds want to control the counterfeiting process. They don’t want too much or too little. But just the right amount of new money.
How much is the right amount? Who knows? Between now and June ’11, the Fed will add another $600 billion to the $1.7 trillion it already put into the system. Is that enough?
Darned if we know.
We got a message from debt-tracker prof. Laurence Kotlikoff at Boston University. He told us that the money supply would be multiplied 4 times since 2007. Is that enough?
The whole thing would boggle our mind. But our mind was already boggled by the Fed’s last trick.
The Fed increased the world’s wealth by $1.7 trillion last year. That’s a lot of money. What did it mean? Presto, the world was richer. Right? If the world wasn’t richer, the extra money was a hoax, a fraud, and a scam, right?
But if it really did create $1.7 trillion worth of money…representing real wealth…well, it was…like magic!
We live in the Magic Kingdom. What a wonderful place to live in. We have a leader who is almost magical himself – Barack Obama. And we have a Congress that is expert at creating smoke and mirrors.
And the public? A bunch of yokels and rubes who will believe anything.
We can’t wait to see what happens today. Anything is possible!
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
“And the public? A bunch of yokels and rubes who will believe anything.”
I take exception to that there last statement of yorn. I got a 46″ big screen and watch Nascar and ESPN, I drink diet Pepsi by the gallon, live on a diet of fast food and shop at WalMart…I’m a real Murican.
Goes to show you that you can print money, but you can’t print value. Ergo gold +$1400. and silver +$27. an oz.