Pinnacle Activity Ticker
Alan Greenspan’s policies have been kept in place by Bernanke
Pinnacle Digest writes: In his latest article Gary Tanashian compares his first ever market report, released in 2004 title FrankenMarket Lives, to the current times. Interestingly enough, had he released that report written in 2004 today, it would make perfect sense and appear rather timely. This is because Alan Greenspan’s policies have been, for the large part, kept in place by Bernanke. Tanashian refers to Greenspan/Bernanke’s strategy as ‘Inflation on Demand’.
Tanashian quotes a line from his report in 2004 and simply replaces the dates, to make a point. It reads ““As we enter the summer of 2004 [fall of 2012], our markets appear to be moving with all the grace of Dr. Frankenstein’s creation, staggering forward, arms outstretched and seeking sanctuary [i.e. inflation].”
From the ending segment: “This market was stitched together with debt, and it will require more of the same to keep it going.”
Tanashain explains that no matter if you are a bull or a bear, that last quote sums it all up. The stock market is running on fear and lust (just as it was in 2004). These emotions are created by the Fed. Investors are worried that their savings and low risk assets will be depleted because of coming inflation. Essentially the Fed has, whether intentional or not, forced investors to take on a considerable amount of risk or watch their savings deplete due to inflation.
Tanashain explains “The stock market is running on lust for easy monetary policy, which these days does not simply mean that authorities seek to maintain accommodative interest rates but rather, that they seek to destroy prudent savers and risk managers, forcing everyone into the pool – a cesspool of putrid, rotting things that died on the vine long ago – of speculation. The nation’s seed corn is in that sewage as well. It is ‘all or nothing’ and there is ample risk to go around for everybody.”
Looking back on his 2004 report, Tanashian admits that he never thought it would take this long for the inflationary forces, initiated by Greenspan, to wear off. Although temporarily subdued in the 2008 financial crash, inflation has been reignited since - thanks to Bernanke’s aggressive monetary policy.
Tanashian considers Bernanke’s strategy as an ‘all or nothing’ approach which has increased the risk of the end of the system. Despite stock markets recovering back to post 2008 highs and a jobs market which has stopped degrading, Bernanke still implemented QE3. Why?
Tanashain explains: “We can drop any pretense that our economy is about anything other than the ability of policy makers to leverage the world’s reserve paper currency toward asset propping ends. The investor class is favored and the working and lower middle classes – along with Granny and her Treasury bond income – are collateral damage. In fact Granny may be in junk bonds by now at the advice of her smart, young financial adviser who found her some really nice return.”
The common man is forced to become a speculator now. High risk is going to be a normal part of building wealth. There is no more slow and steady investing if you want to stay ahead of future inflation rates. You can thank the Fed.
Click here to read Tanashian’s full article.