Ben Bernanke must have been smirking and nodding smugly all day yesterday. The Dow hit an all-time high at 14,286 and closed at 14,253.77. What’s even more impressive is that this is double where the Dow stood just four years ago. And it only took five and a half years and previously unmatched amounts of new money creation to do it.
In the same breath, however, the mainstream media is surprisingly candid about the real reason the stock market is at record highs.
Stocks are also benefiting from the economic stimulus from the Federal Reserve and other global central banks.
Under a program called ‘quantitative easing,’ the Fed has bought trillions of dollars of bonds, pushing up their prices and sending their yields lower. That makes stocks more attractive to investors than bonds and keeps interest rates low throughout the economy, encouraging investment and spending.
The U.S. central bank began buying bonds in January 2009 and is still purchasing $85 billion each month in Treasury bonds and mortgage-backed securities.
In other words, stocks are being pushed higher because the Federal Reserve is stealing purchasing power from the private sector in order to fuel the growth of government debt.
In February the federal government borrowed $253 billion from the private market directly. That’s nearly $1,000 for every man, woman and child in the US! The money the federal government borrowed last month alone is six times the amount the much maligned sequester will shave off the budget in a year. The media has been whipped into a frenzy over the notion of cutting just a few day’s worth of government borrowing and spending for the year.
We shudder to think of how much better employed that money would have been in the private sector. Instead, it was mostly eaten by bureaucracy and used to fund the violent deaths of occupied peoples. And, of course, that borrowed money also sells unborn generations into debt slavery since they’re the ones who will be paying it off along with the interest.
Also, we think the elation of higher stock prices will wear off when the newly created money inevitably works its way into the price of food and gasoline. As much as the government, central bank and their Keynesian enablers would like you to believe otherwise, newly created money won’t just push up stock prices. It will work its way throughout the economy and drive up food, commodity and energy prices without driving up wages.
Those who invest wisely, however, won’t be bothered as QE makes everyone else poorer. Gold and silver are no-brainers as far as protecting purchasing power. And the investing advice found in TDV Premium will help subscribers channel monetary debasement into life-changing wealth.
P.S. Just yesterday, senior analyst Ed Bugos sent out a special alert to TDV subscribers on which action to take immediately. And in the next TDV Dispatch, Ed will be providing subscribers with insights into the Dow’s Fed-induced surge and how best to play it. Big moves are happening and enormous opportunities are opening up for those who know where to look, and who know better than to follow the mainstream advice.
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Original blog can be found HERE
Gary Gibson cut his teeth writing for liberty and profit as the managing editor of the now-defunct Whiskey & Gunpowder financial newsletter. He now writes for and edits The Dollar Vigilante. In his capacity as managing editor of TDV’s monthly subscription letter TDV Homegrown, Gary insists on playing Russian Roulette by basing himself in the USSA heartland. He braves arctic blasts and black helicopters so he can round up content on how the TDV readers stuck in the USSA can best survive and profit in the increasingly turbulent times in the morally and financially bankrupt empire.