Saturday, June 25, 2011

The Fed ‘Doesn’t Have a Clue’… Really?

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What is the Federal Reserve Planning?

As the month of June nears its end, the Federal Reserve is wrapping up its $600 billion round of asset purchases, or QE2. A Reuters news story published yesterday said that although there is some hope that the Fed will conduct another round of asset buying, most economists feel that it is unlikely at this time. This is exactly what the Fed wants the population to believe: that "QE3" is unlikely. An article we published here at FTMDaily entitled "The Fed is Going to Make You Beg" explains why the Fed wants you to believe that QE2 is the end of the Fed stimulus.

We believe that the Fed is ultimately planning to print more money in the form of another round of quantitative easing. However, the Fed wants the population to feel like they desperately need it. Therefore, as a prerequisite to "QE3", stocks must be decreasing and retirement accounts must be plunging. If the majority of America's 401(k)'s are going down in value, then the Fed would be applauded for its money printing. On the other hand, if the financial markets are healthy, then the Fed would be demonized for its massive influx of new cash into the system and subsequently blamed for inflation.

More Proof that the Fed Wants to Drive Down Financial Markets

With this view in mind, let's take a look at yesterday's announcement by Fed chairman Ben Bernanke. Bernanke admitted that the recovery was weaker than expected and that, aside from disturbances in Japan and high energy prices, he was at a loss as to what was causing the "soft patch". The Fed also lowered its economic growth outlook for 2011 from 3.1 percent to 2.7 percent growth. Add to that an increase in the unemployment forecast of about 2.3%, and you can understand why the financial markets were shaken after the announcement.
The Dow has fallen 2 percent since the beginning of trading yesterday, down 233 points.The NASDAQ is down 1 percent from yesterday's high, and the S&P 500 took a dive of about 1.7 percent after the Fed announcement yesterday. The Fed knows that when Bernanke speaks, markets move, and so the Fed is putting fuel on its own fire so to speak. Bernanke announced worse than expected news in economic growth and recovery conveniently as QE2 is in its final stages.
A final note on the Fed's announcement concerns inflation. Bernanke changed his tune on this topic, admitting that inflation has moved up recently, However, he went on the say that this was no surprise and should not be alarming, as he expects prices to fall in line with the Fed's forecasts for inflation. As you can see, the Fed elaborates on what it wants the public to focus on, and the focus is clearly supposed to be on the weakening economy and the subsequent fall in stock prices.
As we have said in the past, the Federal Reserve is a privately owned, central bank who, like central banks in history, will eventually bring this economy to its knees with its massive over printing of the currency. We urge you to continue educating yourself so that you can withstand the actions of the Federal Reserve and the Federal Government.

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