Dear Chairman Bernanke... - Seeking Alpha

Dear Chairman Bernanke... - Seeking Alpha:

This article is a bombshell. Even those who seek to measure the state of the economy have fewer and fewer tools with which to do so, since the Fed and central banks have distorted the markets to such a large degree. I urge everyone to read the article. Lawrence Fuller writes:

"From my perspective, at a time when there is tremendous risk in the global economy and financial markets, we have an unprecedented suppression of the market's ability to measure or reflect that risk, because you have thwarted the pricing mechanism that rules free markets-supply and demand. You are attempting to engineer an economic outcome by manipulating the value of financial assets that should be reflections of that outcome, and not the catalysts to achieving it. The illusion of prosperity that you are helping to create is just that -- an illusion. Should real-world fundamentals continue to deteriorate, the illusion will lose its luster, volatility will soar, and financial markets will return to fair value. It is completely nonsensical to think that the solution to our economic plight is the same combination of low interest rates and abundant liquidity that led to the last crisis, especially when the primary benefactors are the same too-big-to-fail banks that built the last house of cards. It is naive to believe that they will be responsible the second time around. In fact, after the scandals at MF Global and JP Morgan, we know that they continue to be irresponsible."

Eventually, people will refuse to trust the illusion and fear will replace complacency. And it will come quick, like a financial sword, leaving the weak hands holding the bag as usual. One wonders just how long the charade will continue. The new housing bubble is being formed, and yet, it is pretty much a bubble created by and for the wealthy speculators, with most Americans opting out. The warning is, don't buy houses or stocks at the top, with the caveat that only the business insiders really know what that top is.

The warning Mr Fuller states is clear, in times of volatility, hold cash, the one thing Bernanke does not want you to be invested in. 


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