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Bernanke QE Infinity Bubble & US Budget Issues

The printing presses of the US Federal Reserve are continuing at full speed with yesterdays FOMC meeting announcement from Ben Bernanake and the central bankers. It seems regardless of any economic conditions the central bank is willing to create an economy that doesn't exist in reality, and only inflate it forever.

The Federal Reserves reasoning is that the economy isn't sound enough to stop printing. With that notion they could effectively just keep on printing forever as it seems they'll never see the economy as looking okay. Which the economy is far from perfect, but the idea of a repeat of the global Wiemar republic is still forming storm clouds on the horizon. If the Federal Reserve team has actually gotten it wrong and inflation gets away from them later on (either by design, or mistake), there could be another financial disaster coming again.

Near Term Horizon Thoughts

Although if the printing doesn't stop sooner rather than later we could have larger problems down the road. From reading the FOMC statement I can almost understand why they didn't taper the QE program this time around though. With the looming fiscal budget problems in Oct. the US could have a financial shock to the system if Congress and the White House administration doesn't get their act together. A lot of our current problems come from many sources, but the end of 2013 none is more of a problem of the US government finally figuring out a sustainable path forward.

Nothing is perfect Congress, and the Federal Reserves QE program both get a gold star for imperfection, but I do have a decent amount of confidence that the US is positioned to take care of its problems if done sooner rather than do what they do best, kick the can down the road. Thats if our elected leaders can get a handle on the budget, as well as the Fed getting a handle on their corrupting QE program.

My Positioning

I'll also admit I went with the crowd yesterday with the whole Fed Taper talk and was bullish on the USD, and bearish equities. I do hold a longer term view that this market is due for a correction and have been paring back my equity while I continue to add to my USD long position, as well as purchase physical bullion whatever the price as a hedge. However I did have to readjust since yesterdays announcement in my USD position that got a quick back-slap to the face. Investors and traders out there keep a clear head and minimize your risk whenever possible in your investing.

Last modified onThursday, 19 September 2013 11:06

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