Who Is 'Helicopter Ben' Really?

Millionaire Moms

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 U.S. may be toast as the world's leading superpower. No wonder oil-rich Putin is licking his chops in anticipation of overtaking the U.S. as the lone superpower. With little left to sell that the world wants or needs, and with the cost of living beginning to soar for Americans, to defend the dollar, U.S. policy makers may be forced to tighten credit at exactly the wrong time, simply to keep the U.S. dollar as a viable international currency and to enable the U.S. to remain a global superpower. I think Wall Street may be failing to see the big picture now, just as it did in 1980 when Paul Volcker became Fed chairman and put into effect a 180-degree policy change. That knocked inflation dead and saved the dollar, but it also caused the deepest recession since the Great Depression. Now with so much more debt and a huge and growing trade deficit, the stage is set in my view for the deflationary depression that Ian Gordon predicts in his Kondratieff cycle work.

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 Jekyll Island or have seen Russo's film, America: Freedom to Fascism, would understand that avoiding a depression is of very little importance compared to losing global economic dominance which is truly what policy is all about and why common folks keep getting the shaft from both the Democrats and Republicans. Both parties are in power while the Fed has continued endless printing of money as a means of reallocating wealth from those who produce it to the bankers and politicians. But from the perspective of the Anglo-Saxon ruling elite, their position as controllers of global institutions such as the U.N., World Bank, IMF, and BIS, and to fund the war machinery of the U.K. and U.S. is far more important than the welfare of average citizens. Perhaps we have more inflation to come, but ultimately I do not see the powers that be relinquishing control through the demise of the dollar without putting up one hell of a fight.

August 8, 2006

Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
www.miningstocks.com

More shocking facts about the Fed:

The Fourth Branch: The Federal Reserve's Unlikely Rise to Power and Influence