May 1, 2011 – Following the Fed’s report and Bernanke’s press conference the price of gold bullion soared to new highs while the dollar plummeting to new depths – the worst since the summer of 2008. Nice try, Mr. Bernanke, but it seems that nobody is buying your spiel.

Take a look at the global picture of the recovery. Everyone, except us, is tightening their monetary policies. And our growth since the crisis began of only 2.8% annually lags far behind all of the others. Furthermore, what growth we have experienced has been at the expense of our global partners, a temporary advantage we gained from cheap dollars – something the world has been warning us will lead to trade wars.

On one hand Bernanke says “the Federal Reserve believes that a strong and stable dollar is both in American interests and in the interests of the global economy.” “But there is little indication of a change in policy from either the Fed or Treasury—or in underlying economic conditions—that would alter the currency's downward course,” says the Wall Street Journal.

The few signs we have of any significant recovery only reflect the inflationary pressure of the Fed policy – strong exports and climbing stock prices – and not improvement in the fundamental structure of the economy. That is why even third world currencies are realizing unprecedented growth against the once-almighty dollar.

Bernanke’s words are usually so diametrically opposed to his actions that when something pops out that isn’t so, you can’t help but notice. That was the case when he stated that the deficit was the single most important issue the country faces today. A no-brainer, to be sure, but perfectly aligned with his policies.

The Fed policy is not about growth. It’s not even about kick starting the economy. It is aimed, pure and simple, at inflating our way out of debt. Bernanke is absolutely correct that the economy has no chance of recovery under the current debt load. But taking the con man’s way out can send the dollar only lower.

If the Fed keeps it up the dollar will become virtually worthless sooner than you may care to think. And Bernanke let us know that he has no intention of changing policy for at least three months.

A “strong and stable dollar” cannot exist under current policy. That makes a strong position in gold bullion an absolute necessity.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org