SGM Metals: DOW 14,000 Bubble is Why Consumer Inflation Hasn't Skyrocketed, YET!

Feb. 4, 2013 - PRLog -- The Economic Collapse blog reports: [ You can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market in stocks that we have seen in recent months. When the Fed does more “quantitative easing”, it is the financial markets that benefit the most. The Dow & the S&P 500 have both hit levels not seen since 2007 this month, & many analysts are projecting that 2013 will be a banner year for stocks. But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting? Of course not. Just because the Fed has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape. In fact, the truth is that things just keep getting worse for average Americans. The percentage of working age Americans with a job has fallen from 60.6% to 58.6% while Obama has been president, 40% of all American workers are making $20,000 a year or less, median household income has declined for 4 years in a row, & poverty in the US is absolutely exploding.

So QE has definitely not made things better for the middle class. But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street. Profits are soaring at Goldman Sachs & luxury estates in the Hamptons are selling briskly. Unfortunately, this is how things work in America these days. Our “leaders” seem far more concerned with the welfare of Wall Street than they do about the American people. When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.

When QE3 was announced, it was heralded as the grand solution to all of our economic problems. But the truth is that those running things knew exactly what it would do. QE the financial markets, & that overwhelmingly benefits those that are wealthy. In fact, a while back a CNBC article discussed a very interesting study from the BOE which showed a clear correlation between quantitative easing and rising stock prices…

   It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.

   Specifically, it said that its QE program had boosted the value of stocks & bonds by 26%, or about $970 billion. It said that about 40% of those gains went to the richest 5% of British households.

   Many said the BOE’s easing added to social anger & unrest. Dhaval Joshi, of BCA Research wrote that  “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality & the consequent social tensions that arise from it.”

So should we be surprised that stocks are now the highest that they have been in more than 5 years . . . . . . . Of course not.

And who benefits from this . . . . . The wealthy do. In fact, 82% of all individually held stocks are owned by the wealthiest 5% of all Americans.

Unfortunately, all of this reckless money printing has a very negative impact on all the rest of us. When the Fed floods the financial system with money, that causes inflation. That means that the cost of living has gone up even though your paycheck may not have.

If you go to the supermarket frequently, you know exactly what I am talking about. The new “sale prices” are what the old “regular prices” used to be. They keep shrinking many of the package sizes in order to try to hide the inflation, but I don’t think many people are fooled. Our food dollars are not stretching nearly as far as they used to & we can blame the Federal Reserve for that.]

Does anyone stop to ask how “DOW @ 14,000 pts.” which we haven’t seen since the peak of the housing bubble in 2007 has suddenly re-emerged on the very same day that the horrendous –1% GDP was announced for Q/4 2012? Especially since the only things going up are food stamps, unemployment numbers & food prices? How does an economy that went backwards end up producing record highs in the stock market which is supposedly the barometer for the economy itself? Answer, the fed has created such a farcical alternate reality to distract us from noticing the bankers are funneling trillions of future tax dollars out the back door for free & turning around & lending our money back to the govt. & demanding interest payments be made to them for the money they got for free!

The best question I get, & I get it daily, is that if the FED’s endless money printing was truly damaging to the dollar, why havent we seen much higher inflation? The answer simply is that the bankers know that as long as these dollars stay in the upper echelon of the banking system & not end up at WalMart, the rate of inflation can be softened & hidden to a point with that creative number crunching. When the original ‘banker bailout’ was approved the FED gave very specific marching orders to the banks NOT TO LEND THE MONEY TO THE PUBLIC, BUT INSTEAD THE FED WOULD “HOLD IT FOR THEM IN ACCOUNTS AT THE FED”. The banks asked how they would make money since their bread & butter has always been the additional interest they attach above the rate at which they borrow money from the fed (example: if the FED lends at 2% the banks then offer prime rates at 7%, the 5% differential is their profit margin) to which the fed replied  they had a sweet heart deal & not to worry. The fed would “give the banks the BILLIONS in bailouts EVERY MONTH in exchange for BILLIONS of worthless & imploding (MBS) mortgage backed securities so their balance sheets would show BILLIONS in cash & remove the BILLIONS in CRAP securities, the fed would take back the money & redistribute to the US Govt. on behalf of the banks to purchase the US Treasuries [that must be sold every month to serve as collateral for the money the fed lends every month to the govt. at interest] & the banks would be able to collect the 5% interest on the Treasuries EVERY MONTH in lieu of the 5% interest markup they would ordinarily collect through normal lending”! The banks don’t have to take on any risk by lending to the public, the govt. Treasuries are magically bought every month (which gives the ILLUSION of faith in the dollar), the govt. can go farther into debt, while businesses are forced to downsize & outsource to China to stay in business, leaving Americans without  work & unable to borrow money from the banks who aren’t lending & all the banks want in return for “saving the economy” is higher taxes to repay all the money that was given to the banks to protect them from collapsing under their own weight.

So now that they have created a stock bubble to keep the baby boomers happy because their retirement accounts have stopped plummeting, what do we really have to show for it? An economy where citizens cant find work, rising healthcare costs since the passage of Obamacare, food costs rising more & more each month, food stamp dependency has doubled (& is poised to double again), banks are sandbagging millions of foreclosed properties to give the illusion that the collapse has stalled while hedge funds are buying thousands of homes as they have chosen to become slum lords over stock traders & a stock bubble that is waiting to pop. Do you think now may be a good time to stop buying the B.S. & begin to secure some real tangible assets that have intrinsic value like gold & silver bullion so that you can brace for the impact of all this illusion coming crumbling down? Do you think now that the word is out that we are in a nasty global currency war where central banks are admittedly & intentionally working to decimate their currencies value in hopes of protecting what exports they have to maintain some economic activity in this contracting global economy? At some point soon these facts will lurch into panic fueled frenzies, wouldn’t you prefer to be the guy who made the move a couple months too early rather than a couple minutes too late? Do you really want to be part of the frenzy herd of sheep who didn’t see it coming?