Mutually Assured Destruction (MAD).
That was the actual military policy of the United States of America and the rest of the World for about 30 years. We had Presidents and Kings and thousands of bureaucrats – the top minds of 2 generations – all getting together on a regular basis and coming up with or buying into insanity like the system on the right. We look back at it now and say "Gee, what were we thinking" but the whole World went down this path for a while.
There is a scene from Doctor Strangelove where Major Kong, the bomb commander, is so focused on completing his mission that he loses sight of the bigger picture but he doesn’t regret his actions – he goes down in a blaze of glory that ultimately dooms the World but his sense of personal triumph at achieving his wrong-headed goal is the punctuation for the film. Watch this scene and think of Bernanke, tinkering with this or that but so focused on "fixing" the economy with the one tool at his disposal that he ends up destroying it instead.
After putting over $2Tn into our Dead Parrot Economy since the crash and getting no response, Bernanke is upping the ante with another $600Bn round of Quantitative Easing ON TOP OF the ongoing $250-$300Bn round of POMO commitments for a total of about $110Bn per month dumped into the economy between now and the end of Q2. This represents a 10% increase in the money supply over 8 months and, therefore, a planned 10% decrease in the purchasing power of your dollar-denominated assets or, to put it bluntly – a 10% tax on everything you own.
That is the joke of this country. People sit there arguing about whether or not to extend a tax cut that will cost 3% of a year’s salary while the Fed, with no electoral oversight, is simply taking 10% of your LIFETIME savings – AGAIN! They did it last year, they did it this year and now they promise to do it next year too. That’s 30% folks!
You don’t have to worry about the commodity pushers missing a signal – Oil, gold and copper jumped 2% yesterday and wheat, cotton and corn are on a similar path in the futures. Of course the speculators think this is just great…