Saturday, February 23, 2008

Bernanke's Surprise (Gary North)

Surprisingly, Gary North says the Fed is not inflating, but deflating the money supply:

You have read about the turmoil in international capital markets. It began on August 11. Highly rated packages of mortgages suddenly became unsalable. Their value went into free fall. Banks and brokerage firms have lost well over $150 billion since August. Northern Rock, Great Britain's fifth-largest bank, was nationalized on Sunday, February 17. Otherwise, it would have gone bankrupt on Monday. UBS, the huge Swiss bank, has lost about $10 billion. "Round and round it goes. Where it stops, nobody knows."

The Federal Reserved in mid-August immediately intervened in a series of actions to liquify the American banking system. You have probably read about this, too. The FED's discount window started taking subprime mortgages as collateral for loans to the banks applying for loans.

You have read the headlines about the Federal Reserve's new policy of inflation to solve the credit crisis.

I ask you bluntly: "Have you reallocated your investments so as to hedge against the FED's wave of fiat money?" Be honest. Have you?

I hope not. Why? Because the reports are all wrong. I don't mean a teeny-weeny bit wrong. I mean completely wrong.

The FED has not been inflating. The FED has been deflating.

Read the rest

No comments: