Federal Reserve Chairman Ben Bernanke departed from his usual “everything’s-going-to-be-okay” mantra at last Wednesday’s news conference. This time he looked straight into the camera and said some scary things.
Doesn’t he know the Fed never says scary things? Doesn’t he know it’s the Fed’s job to tell us everything’s going to be okay no matter what is really going on?
· The Fed tells us unemployment is going down.
FACT: The number of working age Americans remained at exactly the same percentage for the last 2 years-58.5%.
· The Fed tells us inflation is not a problem at only 2%, and it isn’t, as long as you count it their way: excluding food and gas.
FACT: If inflation were measured the same way it was back in the ‘80’s—it would be over 10%.
· The Fed claims to have a stellar track record when it comes to a stable dollar.
FACT: The value of the U.S. dollar has declined by 95% since the creation of the Fed.
So Bernanke’s warning that the country was about to fall off a looming “fiscal cliff” and that the Federal Reserve would be powerless to keep the economy from disaster—makes us a little…well, nervous.
What are others saying?
Christine Lagarde, head of the IMF: “There are dark clouds on the horizon for the global economy.”
Oliver Blanchard, top economist for the IMF: “One has the feeling that at any moment, things could get very bad again.”
CNN: “The level of selling by insiders at corporations listed on the S&P 500 is the highest that it has been in almost a decade. Do those insiders know something the rest of us do not?”
And last, but not least:
Nigel Farage, member of the European Parliament: “It is inevitable that some major banks in Europe will collapse and the impact on some sovereign states will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point. When I talk about the threats and the risk that this thing could wind up in some kind of rebellion, some sort of awful social cataclysm, they (world leaders) are now very worried indeed. They will talk to you in private, but in public, nobody dares utter a word. I think the deterioration in the last two or three weeks, in the Eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s the fact that youth unemployment is now over 50% in some of these Mediterranean countries. It’s riot and disorder on the streets. And yet a month ago I was here, and there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is solved. There are no more problems with the Eurozone!’ What a pack of jokers they look like.”
Is Benny-Boy Bernanke trying to avoid looking like a joker? Perhaps. He knows something most people don’t: A series of tax increases and spending cuts built into current federal law is scheduled to take effect on January 1, 2013. The average American family will have a tax hike of $3900! Bernanke believes this will be a “significant risk to the economy.” No duh, Sherlock!
Most likely, the next economic shoe to drop will be in the Eurozone, but don’t let that fool you. What happens in Europe won’t stay in Europe. We all need to get our financial house in order.
"Only simpletons believe everything they are told!
The prudent carefully consider their steps.
The wise are cautious and avoid danger;
fools plunge ahead with great confidence."
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