Hot Air Deemed Energy Alternative

All Bow to Bernanke's New "Strong Dollar" Policy
Late on Monday, Ben Bernanke put the cart before the horse when he told a Fed conference in Boston that "rapidly rising prices for globally traded commodities have been the major source of the relatively high rates of inflation we have experienced in recent years."

Mistaking the Fed's Own Monetary Inflation for its effect on prices, the chairman then stated that the central bank "will strongly resist an erosion of longer-term inflation expectations."
http://news.goldseek.com/GoldSeek/1213103095.php


U.S. – World’s Largest Debtor Nation Ever
Contrary to some misguided commentary - rising interest rates are positive for gold as was seen in the 1970s under the prudent monetary stewardship of Paul Volcker, the ex Federal Reserve Chairman. As interest rates went up so did the gold price and it was only at the end of the interest rate tightening cycle with rates nearly at 20% that inflation was contained and investors began to sell gold and return to the safety of very high yielding U.S. government bonds.

Also, it is worth remembering that the U.S. was the world’s largest creditor nation in 1980. Today the U.S. is the world’s largest debtor nation with a national debt of some $9.4 trillion (http://www.treasurydirect.gov/NP/BPDLogin?application=np). Up massively (65% in 8 years) since President Bush took power in 2000 when the national debt was only some $5.7 trillion. Meanwhile, since 2001, long-term unfunded liabilities to Medicare, Social Security Trust Fund and other long term commitments have ballooned from about $20 trillion to an unaffordable more than $50 trillion.

The fiscal problems facing the U.S. today are gargantuan compared to those in the 1970s and this is why gold will at least surpass its adjusted for inflation high in 1980 of $2,200 per ounce in the coming years.
http://news.goldseek.com/GoldSeek/1213103328.php


The U.S. dollar index rose and treasuries fell again on seemingly endless jawboning from government and fed officials about inflation, yet there still have not been any real steps taken towards an actual change in policy that would do anything to actually combat inflation or help the dollar. I continue to watch what they do and not what they say. What they say is mostly worthless while what they did is release the highest trade deficit in 13 months today. How that can be construed as dollar positive is beyond this observer.
-Chris Mullen, Gold-Seeker.com


Perhaps the country's alternative energy search could be resolved by capturing all the hot air spewing from Bumbling Ben, Hanky Panky Paulson, and all of their cronies at the Fed and Treasury regarding a "strong dollar". They can talk all they want. In the end, "actions speak louder than words", and they are both powerless to take any action. Their desperate attempt at jawboning the Dollar higher exposes the fact that time is no longer on their side. They have become delusional...

Unemployment has biggest one month jump in decades
Addressing a Fed conference in Chatham, Mass., on Monday night, Bernanke said a government report last week showing the unemployment rate rising from 5% in April to 5.5% in May — the biggest one-month jump in two decades — was "unwelcome." However, the Fed chief said other forces should "provide some offset to the headwinds that still face the economy."

The Fed's powerful doses of interest rate cuts, the government's $168 billion stimulus package, further progress in the repair of problems in financial and credit markets, a gradual ebbing of the drag from the deep housing slump and still solid demand from abroad for U.S. exports should help the economy over the remainder of this year, he said.
http://www.usatoday.com/news/washington/2008-06-09-unemployment_N.htm?csp=34

Let's see now... Shooting these forces down one at a time:

1. Your "powerful doses of interest rate cuts" created the inflation. The full effects of which remains to be seen.

2. The $168 BILLION stimulus package will at best offset the rising costs of food and energy your "powerful doses of interest rate cuts" created.

3. You have made little if any progress "in the repair of problems in financial and credit markets". Bank losses continue to mount, and credit remains locked down.

4. There is no bottom in sight for the housing market, and rising interest rates WILL NOT make it better, but could make it a lot worse.

5. US exports have been championed by a falling Dollar. Raising interest rates will leave export demand anything but "solid".

Ben, you talk out of both sides of your mouth. You're a flim-flam man. A liar. Your credibility is lower than President Bush's approval rating. You can fool some of the people, some of the time, but you can't fool all of the people all of the time. You wanted a more transparent Fed, Ben. And absent the weak Dollar shorts, the whole world can see right through you now.

Readers, stop for a moment and think about the Big Picture. Turn down the "noise" and listen to the Truth. As of 10PM this evening, in the past 30 days, Gold is down ONLY $13.50. Over the past year, Gold is UP $224.90. These are facts Bumbling Ben wishes would go away because they are the Truth. Despite everything he has said and done to derail Gold, he has ultimately failed and will continue to do so despite his claims to continue the fight against the Truth.

Bernanke Says Fed to Resist Price Expectations Surge
June 10 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said policy makers will ``strongly resist'' any surge in inflation expectations, delivering his clearest message yet the central bank is done lowering interest rates.

Bernanke played down the biggest jump in the unemployment rate in 22 years in May and said the risk of a ``substantial downturn'' receded in the past month. Policy makers will need to pay ``close attention'' to make sure the increase in commodity costs doesn't pass through to broader consumer prices, he said in a speech to a Boston Fed conference late yesterday.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQEC9X34EQX0&refer=home

In case you were wondering, "inflation expectations" are measured 1. by Treasury yields, and 2. by the price of Gold. Presently, yields are low and Gold is cheap. They won't be for long. The clock is ticking for Bumbling Ben, and time is running out. Stick to your convictions, ignore the noise. NOTHING HAS CHANGED.


MUST READ:

The Real Speculators
By: Theodore Butler

...before the index funds are tarred and feathered and run out of town on a rail, let’s clear up a common misperception that it has been a sudden influx of index fund buying that has caused the recent dramatic increase in the price of crude oil. That is simply not true. The index funds are holding the same size, or smaller, long position in crude oil than they held 10 months ago, when crude oil was $70/barrel. Ditto for the large long speculators and smaller (unreported) traders on the NYMEX, according to CFTC data in the Commitment of Traders Report (COT). The data clearly shows that long traders on the NYMEX have not been buying aggressively and running up the price of crude. Well, if speculators are behind the recent sharp run-up in oil prices and the long-side traders haven‘t been buying, then who has been buying oil?

The answer is painfully obvious - the speculative shorts have been doing the buying. Public COT data proves this. The buying back of previously sold short futures contracts, primarily in the commercial category, account for the bulk of the buying over the past eight months or so, when oil was trading at $70.
http://news.silverseek.com/TedButler/1213126384.php

It's called a short squeeze, and that's what was witnessed in Oil last Thursday and Friday when prices rose more in two days than the price of ONE barrel of Oil in 1998. An intermediate top in Oil may be near, but no bubble has been burst.