On Wednesday, July 18, 2012 10:00 AM in front of Full Committee, that is the Committee On Financial Services chaired by banker lobbyist paid Spencer Bachus (See Here and Here). In this meeting Chairman Bernanke gave an update in the form of testimony in what I would call a kangaroo court when politicians try to out do each other with rhetoric that is completely meaningless and was a waste of time. Ron Paul was present to provide context to the economic situation our country is facing and pointed out the flows of fiat inflationary monetary policy (his testimony starts at 1:45 into the video clip).
While Dr. Paul’s efforts are beyond greatly appreciated it is what Chairman Bernanke says that is critically important. During this meeting at approximate 40 minutes in Bernanke warns that the fiscal cliff will crash the economy if enacted and will cost the US economy 1,250,000 jobs. This has lead both parties to resort to back room meetings to try and get a deal done with little press as possible (nobody wants to be foreseen as weak by their voting constituents). At 02:04:33 the hearing gets interesting with Rep. Scott Garrett (R-N.J.) openly commenting on how the FED is a major market manipulator losing control of the economy and pointed out policy failures to the chairman of the FED himself. Then at 02:25:38 it got really interesting when Rep. Patrick McHenry (R-N.C) asked about limits of Q.E and the response from the chairman implied they can buy what ever the US government has for sale, but at some point the markets will break and it would be game over at that point.
Then there was another meeting with the Senate Banking Committee on Tuesday, July 17, 2012 at 2:27pm (ET). At 49 minutes into the meeting Chairman Bernanke lets the cat out of the bag when he testified that they can use communication or what would call propaganda to talk about what the FED can do.
That statement is important because what happen in the days following this meeting is why we have a rally in the markets despite the ongoing recession in Europe and a stalling economy here in the US. Just days later on Thursday July 26, 2012 Mario Draghi kicked off the central planning communication strategy by making false promises knowing all along that no help was coming (See Here). Then Jon Hilsenrath a FED mouth piece who writes for the Wall Street Journal followed suit by making statements and creating a market perception that turned out to be false (See Here and Here). Action by Jon further motivated markets to move higher until the big let down by Chairman Bernanke, which I commented on at my channel on Youtube (See Here).
The act of no action by the FED and the ECB caused the markets to slip and now we going through another round of propaganda to push up marks.
Boston Fed’s Eric Rosengren was just on CNBC talking crazy talk about open ended QE among other things all in an effort to push up markets. The FED is even using repo operations to provide banks with cash on a short term basis as bank reserves at the FED continue to decline. This cash us being used to pump stocks to make a quick profit before being returned to the FED (See Here).
Now is a time to be very cautious because Spain is backing itself in a corner. If the bail out for Spain becomes complicated and shows signs of failing the markets will react in a very negative way. Don’t be fooled by false promises as you should only pay attention to what get’s implemented to determine what the future of the market will look like.