Bernanke: I Can Stop Inflation

In an interview with 60 Minutes this weekend, Ben Bernanke said that he feels that the fear of inflation is overstated. “One myth that’s out there is that what we’re doing is printing money. We’re not printing money…What we’re doing is lowering interest rates by buying Treasury securities.” The Fed is buying treasury securities by debiting bank reserves at the Federal Reserve with electronic funds. Bernanke tries to reassure Americans that everything is O.K. because no currency is actually being printed. Think about that for a second, other than for your morning coffee or a haircut, how often do you use paper money or coins today? Are the very technologically aware citizens of America going to fall for the idea that because no actual hard currency is being printed, that the money supply isn’t expanding? I doubt it. Bernanke draws a distinction between printing hard currency and electronically debiting bank reserve accounts at the Federal Reserve. In reality, there is very little distinction.

Bernanke’s pledge that he will absolutely keep inflation down is a bit late. The cat seems to be out of the bag. A perusal of commodity markets gives one the feeling that inflation is underway for sure, though it may not have hit the Federal Reserve’s favored “core CPI” measure. Core CPI strips the traditional CPI inflation measure of food or energy prices, essentially assuming Americans aren’t eating or driving, two things Americans take very seriously indeed.

While commodity markets for agricultural and energy products are scorching hot, the real estate market (where Bernanke is actively trying to cause inflation) is a dead horse. Naples, Florida, is one of the best places in the country to gauge the real estate market for successful Americans. It is being whispered, though, that the realtor who may be the best in Naples has stopped taking new listings, as they have swamped the demand for new homes from buyers. I have followed this bellwether market for over a decade and have never heard of such an occurrence. The core CPI measure I mentioned above is disproportionately over weighted in housing, thus allowing the depressed real estate markets in places like Naples to drive Ben Bernanke’s decision-making process, in the wrong direction.

As has been made clear on Youngresearch.com, the prices of gold and silver are on a tear. But commodities across the board are surging thanks to the Fed’s easy money. Take a look at cotton! Commodity prices are the best look at supply and demand in the world marketplace. Therefore a look at commodities markets are your best bet for a view into the Great Money Flood coming out of Ben Bernanke’s Fed.

Now take a look at yields on treasuries. This pitiful yield is what retirees are being subjected to in an effort to save the banks that lent money to borrowers that couldn’t afford their mortgages. Today, record profits are being made by the crooked money managers on Wall Street, while retired, and soon to be retired, investors are looking down the barrel of a gun, with no yield in sight.

As if hammering America’s savers with near-zero interest rates weren’t enough, Congress now wants to reinstate the Death Tax. Republicans are at their very worst today, arguing for less of a bad thing, rather than a complete denial of this unjust, immoral wealth confiscation. News from the Wall Street Journal this morning says that the GOP is arguing for a 35% tax on estates over $5 million, which is surely better than the Democrats 45% on estates over $3.5 million, but unfortunately gets the morality of the issue entirely wrong. The death tax taxes wealth that has already been taxed before, sometimes twice if it was made through corporate dividends. Now Americans are paying taxes three times!

All that taxation allows the government to pay out fat paychecks to bureaucrats, who earn much more than their private sector counterparts. Take a look at this USA Today chart of a Department of Labor study that compared federal wages to private sector wages for the same jobs. Absolutely gut wrenching.

The Tea Party is the only thing holding Republicans’ feet to the fire. Word came this weekend that John Boehner, GOP leader, may be attempting to keep Ron Paul from the chairmanship of the Monetary Policy subcommittee. Apparently Boehner hasn’t been listening. I urge you to take a look at FreedomWorks and the tools they make available to Americans to hold politicians accountable.

If you’re wondering what needs fighting, take a look at today’s featured video of Ben Bernanke’s interview with 60 Minutes.