Who Is 'Helicopter Ben' Really?
As I have been saying for the past several weeks, I believe Bernanke may ironically turn out to be much more of a monetary hawk than his "helicopter" image suggests, because, to allow the dollar to collapse would mean an end to the current global status of the powers behind the U.K. and U.S. "thrones." He may allow things to go still further first. Roger Wiegand thinks the money spigots will be turned wide open as we approach elections. I think Roger may well be right about that. But if that results in a flight of foreign capital from our shores, look out! A Volckeresque policy might not be far away and if so, that is when I think we get Ian Gordon's version of the next Great Depression.
If you think the dollar's strength doesn't now depend on high interest rates, take a look at the two charts on your left. They record daily market price action for both the 30-year bond market (further left) and the U.S. dollar index (to its right). Note the strong correlation of dollar weakness to lower interest rates. Do you see how the dollar plunged as rates on the 30-Year Bond fell from 5.2% to 4.975%?
As we have said all along, the key point on the dollar index chart and as such virtually all the markets in the world is the 0.80 level. You can see from the chart below that the dollar index over the past 15 years has touched 0.80 four times but has never fallen below for any significant length of time or very far below 0.80. If this level breaks, it could lead to a freefall for the dollar. In that event, the
That could still be a way off. It could very well be that Bernanke will mimic G. Edwin Miller and Arthur Burns, the Fed chairmen who threw monetary gasoline onto the inflationary fires of that period, thus paving the way for the ruling elite to insert its servant, Paul Volcker, to save the currency and the bankers from a hell of their own making. But I wouldn't bet on that. Those of you who have read Creature from
August 8, 2006
Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
More shocking facts about the Fed: