“Quote the chairman: “This fear of inflation is way overstated. We’ve looked at it very, very carefully. We’ve analyzed it every which way… We will not allow inflation to rise above 2% or less… I am 100% certain i can control inflation.” Presenting the Jefferies global commodity index (CRB) which just hit a 27 month high.” Tyler Durden – Zero Hedge
The downside to printing money for the purposes of stimulating the economy is that commodities rise, which makes things more expensive, which leaves people less money to stimulate the economy. Nonetheless, Ben Bernanke and The US Fed continue to claim inflation is under control. The data below clearly shows otherwise.
American disposable income is getting chiseled away at the gas pump and grocery store. Their pocket books don’t lie and they certainly won’t stimulate the economy by purchasing real estate and “stuff”. The ironic thing is that Bernanke will use the lack of consumer spending as a reason to keep printing money, which will lead to further inflation, which will lead to decreasing discretionary spending, which will lead to further deferral of “the recovery”, which will lead to more money being printed.
The answer to staying out of the vicious circle? Gold, Silver, Junior Resource Stocks.
Chart below courtesy of the good people at ZeroHedge.com