From the very beginning of QE2, it was no secret the Federal Reserve
wanted the stock market to rise. The Fed got its wish. Many people see
the stock market increase of nearly 20% in a few short months as a sign
things are turning around. The turnaround is really a mirage of the
printing press. Even so, some pundits think the economy is on the mend. Maritime News reported last week, “It
has been successful,” Peter Hooper, chief economist at Deutsche Bank
Securities Inc. in New York, said of Bernanke’s policy of pumping money
into the financial system, dubbed QE2. “It’s contributed to the rally in
the stock market” and has “been important in reducing substantially the
downside risk of deflation.” (Click here for the complete story.) Pumping
money into the stock market to get stocks to go up is not the same as
hiring people and making products so share prices grow. With the
stubbornly high unemployment rate of 9.8% (or more than 22% according to Shadowstats.com),
this is just one of the dismal facts of this economy. Other gloomy
indicators are the million plus foreclosures this year and next. The
auto industry just had its fourth month of decline in new orders. The
FDIC has shut down 157 banks so far this year, and all the banks look
solvent only because of rule changes that amount to government
sanctioned accounting fraud. You cannot have the banks, housing and
auto sales all tanking at the same time and expect the party to last.
For the life of me, I cannot see how share prices going up are going
to get businesses hiring again. This stock market rally is good for one
group of people—insiders. They are selling at a rate of more than 80
to 1 over buyers. It is obvious this market is not growing organically
but is simply being pumped. Now, people should look out for the dump. Will the market continue to rise? Will there be QE 3, 4, 5, 6, 7 or to
infinity? Is printing money the true road to wealth and prosperity? I
think you know where I’m going.