"the possibility of another injection of freshly printed money to reverse the downward trend"
We have a worldwide financial crisis/meltdown, the Middle East and North Africa are in turmoil, the U.S. has a debt ceiling/budget crisis and teeters on default, and now Rupert Murdoch brings us a worldwide media crisis. Can it get any worse? The answer is yes, because there is so much instability around the globe causing market volatility and countries are jockeying to take advantage of this instability and volatility. Fear, greed, and scarcity are running rampant. In this environment anything can happen and volatility is guaranteed. Behind the scenes we have Bernanke and the world’s central banks trying to stabilize the world markets and ready to come to the rescue to keep the U.S. and world economies afloat.
In the U.S. this means another round of fuel (QE3 - freshly printed money) is most likely just around the corner. The FED made it clear this week that if weakness in the U.S. economy persists, he will step in and lend a helping hand. Nobody could have seen this coming, right? Please! . . . when the end of QE2 was approaching Bernanke indicated that there would be no QE3. When the end of QE2 came, commodity and stock markets predictably reacted with downward movement. That caused Bernanke to immediately start talking about the possibility of another injection of freshly printed money to reverse the downward trend, and it did. All the markets had to hear is Bernanke’s words that he is not going to let markets deflate at any cost . . . and we witnessed a “bounce” in the markets. This is one powerful man! His whispers can move mountains!
I did not expect Bernanke to show his “hole card” (QE3) so soon. This shows that he is really concerned with how weak the U.S. economy really is when you take away all the funny money (stimulus $’s). I thought he would keep a straight face for a couple of months and let markets downwardly adjust and see what happens. But obviously Bernanke is not that good at bluffing! He caved in too easy.
Ron Clark
CEO, Investorvu.
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