Happy-Talking Ben
UrbanSurvival

The markets genuinely liked what Fed Chair Ben Bernanke had to say yesterday in his press comments following the Fed rate meeting.  A glance at that shows the Fed still thinks it has more ammo to throw into the fight against global economic collapse:

"Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate. "

While it's taken as an article of faith that the "dual mandate" is important - maintaining high employment and providing for price stability.  I continue to be bothered by the concept, however.  The reason is simple:  The Fed does not state anywhere in its missions (at least that I've seen) that it had any responsibility for maintenance of the soundness of money.

In a detailed discussion for Peoplenomics subscribers Wednesday, I reviewed some of the past performance of gold relative to major downturns in the economy and came to an interesting conclusion:  It's not time to sell gold now.

The watering down of the nation's money has averaged 3.24 percent per year since 1913, and I see no end of the watering down in sight.  Until the Chairman replaces the political agenda with monetary soundness first and foremost, I'm afraid gold and land with agricultural production value will continue to hold value as well as paper.  Bonds are fine, at least for now, but in the end, paper is paper and I'm not a complete idiot.  (Close only counts in horseshoes and hand grenades.)

The predictions that Bernanke made are pretty impressive...namely that the economy will grow between 2.4 and 2.9 percent in 2012.  But, in one of our reality check moments, we have to wonder if that is simply due to pumping up the money supply massively, and what would the growth figure be on a constant dollar basis? 

Notice the hot dog financial press isn't delving into that one? 

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