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The Fed’s Radical QE Policy is on the Chopping BlockGary Dorsch Politicians running for the US Presidency, and their surrogates, are fond of saying “that this election is the most important of our lifetime.” They invoke this cliché so reflexively and so often that it no longer has any meaning. The reason they say this election is so important is because they want listeners to believe, for whatever reason, that it pits two deeply contrasting visions for America against one another, with only one vision capable of winning. At their core, US-elections are simply fought over the competing interests of just two political parties, - the Democrats and Republicans that control the political system, with a seemingly unbreakable monopoly. Each side wants to tinker with regulations, spending, and taxes to influence the economy; and pay rewards to their constituents. But the truth is, politicians of both parties are corrupted by financial contributions to their election campaigns. It leads to an unfair playing field, in which big Business gets even bigger, through mergers and acquisitions, and overseas operations, and leaves US-consumers at their mercy. Today, only half of US-households are paying taxes, and the other half is receiving entitlements. The US-economy is at the tipping point of collapse, similar to bankrupted states such as Greece and Spain. The Federal Reserve has stepped into the breach, trying to bridge the divide between a deeply polarized US-government that’s paralyzed on fiscal policy and a fragile US-economy, that’s teetering on the brink of a “double-dip” recession. In doing so, the Fed has essentially become the fourth branch of the US-government, and its interfering with the natural workings of the financial markets. Under the guise of the President’s Working Group on the Financial Markets, (aka the “Plunge Protection Team”), the Fed has adopted the most intrusive and interventionist stance in the US-capital markets in its history. Over the course of the past 3-½-years, the Fed has ruled over the US-capital markets with an iron fist, and is erasing the mantra of “Free Markets for Free Men.” Sadly, the US’s long-held tradition of “laissez-faire” (leave it alone) has been dumped into the trash bin of history. Today, traders must operate under new rules of engagement, and the first question of the day is, what intervention tactics does the Fed have up its sleeve, and when is it planning to unveil its next move? “Quantitative Easing,” “Operation Twist,” and the “Zero Interest Rate Policy” (ZIRP), has become the “New Normal” on Wall Street. Furthermore, the invisible hand of the Fed is controlling the behavior of the capital markets and at the same time, increasing the US-government’s control over the US-economy. With the polls showing a dead even race, the Republican challenger Mitt Romney, in unusually blunt terms, has warned the Fed to stay politically neutral ahead of the Nov 6th election, and avoid any radical actions that could influence its outcome. “I don't think QE-2 was terribly effective. I think a QE-3 and other Fed stimulus is not going to help this economy,” Romney told Fox News on August 23rd. “I think that is the wrong way to go. I think it also seeds the kind of potential for inflation down the road that would be harmful to the value of the dollar and harmful to the stability of our nation's needs,” Romney said. The Global Money Trends newsletter holds the opinion, that the Fed would pay heed to Romney’s public warning, and seek delay the launching of QE-3 until after Nov 6th.
At the upcoming Nov 6th election, there’s a last chance opportunity for US-voters to reverse the tide towards greater government control over the financial markets. Instead, voters can overthrow the Fed’s ruthless dictatorship and restore the tradition of “Free Markets for Free Men and Women.” The Republican ticket of Mitt Romney & Paul Ryan ticket, has publicly declared its support for a House bill, championed by Texas Congressman, Ron Paul that would authorize a forensic audit of the Fed’s balance sheet, and reveal its clandestine intervention tactics. For the first time, traders could learn about what’s goes on behind closed doors at the secretive Fed. “Doing an accounting of the Federal Reserve, finding out where the money’s coming and where it’s going is not a bad thing for our country,” said Reince Priebus, GOP chief, on August 26th. If true, traders could celebrate the return of free markets. On August 23rd, in very blunt terms, Romney indicated that the first step towards restoring the rules of free markets would include some house cleaning at the Fed. Romney said he would fire Fed chief Bernanke. “I would want to select someone new and someone who shared my economic views” to the top spot at the US-central bank. “I want someone to provide monetary stability that leads to a strong dollar and confidence that America is not going to go down the road that other nations have gone down, to their peril,” Romney added. His sidekick, Paul Ryan doubled down on the idea of dumping Bernanke, and his radical QE policies, summarizing his viewpoint in just two words: “Sound Money.” “We want to pursue a sound-money strategy so that we can get back the King Dollar,” Ryan said. Nowadays, the Fed has been stacked with hard core, addicted money printers, whose first knee jerk reaction to any sign of a rough patch in the economy, or a -5% pullback in the stock market, is to issue threats to the media, that another round of nuclear QE could soon be on its way. While the Republicans want to strip the Fed of its dual mandate, and simply have it focus on fighting inflation, the Bernanke Fed and the Obama White House have quietly adopted a third mandate -- to artificially inflate the value of the stock market, through the power of the printing press, and the rigging of long-term bond yields. Overhauling the Fed, For advocates of free markets, and less government intervention - auditing the Fed’s activities would be a huge step in the right direction. Sacking Fed chief Ben Bernanke and installing a new Fed chief that pursues a sound US-dollar policy, would have a profound impact on the outlook for the US-capital markets, and by extension, would ripple across the world markets, including commodities and precious metals. Last week, Mr Ryan spoke with CNBC’s Larry Kudlow, and said he wants to eliminate crony capitalism and corporate welfare in the tax code. Auditing the Fed would break-up the nexus of crony capitalism that exists between the Fed and its partners, - the Wall Street Oligarchs. A Romney – Ryan victory on Nov 6th is expected to trigger an audit of the Fed’s clandestine activities. It would also bring a halt to the Fed’s secretive intervention forays in the stock index futures markets that are designed to prevent natural market corrections from morphing into grizzly Bear market slides. It’s called the “Bernanke Put,” and risk takers in the stock market rely on the Fed’s timely purchases of stock index futures, that provide a safety net for speculators, when risky bets go sour, due to unexpected negative news.
However, the Fed’s worst fears would only materialize, if the Romney – Ryan ticket prevails on Nov 6th. On August 27th – a poll published by Gallup showed Romney holding a slim 1-point lead, but Obama’s approval rating sinking to a dangerously low 43%. Yet the online bettors at Intrade.com have a different view, and give Obama a 56% chance of winning re-election, with Romney’s odds at winning at 44%. Still, since Romney picked Ryan as his VP on June 11th, Obama’s lead over Romney has almost shrunk in half, from +22-points to +12-points today. An August 27th USA Today/Gallup poll of about 1,000 adults found that 58% expect Obama to be re-elected while just 36% think he will lose to Romney. The new poll also showed that 86% of Obama’s supporters expect him to win compared to 9% who expect him to lose, while just 65% of Romney’s supporters think he will win and 28% think he will lose. Pollsters say voter expectations are often skewed toward incumbents because they typically win reelection. Still, Romney has better odds of winning in the gambling parlors, since the same polls show that 2/3’s of voters say the US-economy is heading in the wrong direction, and that a clear majority of independents, say Romney is more capable to fix the economy. Yet polling data should be measured against a grain of salt, since it’s often used by media outlets that seek to form public opinion rather than to properly gauge it. To read the rest of this article, please click on the hyperlink located below: http://sirchartsalot.com/article.php?id=168 ### Aug 30, 2012 321gold Ltd |
