Wednesday, August 22, 2007

Bye Bye Dollar

So it looks like the decision has been made. Bernake and the FED will save the billionaires on Wall St at the expense of Joe 6 Pack.

But, but, but Bernake is doing the right thing. Cramer told me so. He is injecting liquidity so that the stock market can go up and millions of poor homeowners can be saved from foreclosure.

Well OK so your 401k will go up in value by 10% thanks to Ben B. Yipee!! But oops, the dollar has lost 30% of its value over the past few years. While Democrats complain about the high cost of gas, they advocate a policy of cheap money that devalues the dollar. When the dollar loses 30% of its value everything imported goes up 30%. And what do we import? Oh not much, just pretty much everything we buy.

Ben B is listening to the Cramer and Kudlows of the world. I don't buy into some deep conspiracy or anything like that. It is just old boys club at its finest.

But it won't work. The credit markets are simply too f**ked up for the FED to help. Which is why we will see a short term jump for the next month or so followed by a drop in the fall.

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