Lets say you are a car mechanic. You are driving a car and hear the brakes squeaking. Is the time to deal with the brakes right then and there or to wait until the brakes go out?
In the world of government and politics, the time to deal with such matters is after the brakes give out and the car hits a tree. The government will never deal with obvious matters until there is some type of devastation. Its the sad truth and nature of the game.
For example, previously I wrote about a few indicators which were closely associated with recessions and market crashes like the Hindenburg Omen, the Car Sales Indicator and the Inverted Yield Curve. The federal reserve follows all of these indicators closely, but they will not act until the system is about ready to collapse or has collapsed.
Does it not make sense to do everything in your power to keep the economy from going into recession once you see the yield curve inverted or the car sales indicator flashing recession? In Bernanke’s world, it is perfectly OK to watch it happen and do nothing until the collapse of society is at hand. In this situation, Bernanke watched and looked on for several months knowing of the different indicators, but did nothing.
You see, this is what causes the markets to go up and down. It is because of do-nothing government leaders letting the system grow so out of control that it threatens our way of life.
In the current situation, the Federal reserve sees what is happening, but does not care. If the markets bubble up once more, its not their concern until a crash takes place. Bubbles can last for many years and go to lengths that you cannot fathom. There are so many examples of bubbles in history from tulips to the railroads to technology to energy to housing.
The Federal reserve is now seeing the markets starting to bubble and acknowledges it, but they are still a long way off from doing anything. Even if they did start raising rates and stopped printing money, then it would still be too late. Remember, Greenspan had the same observations about the bubbling markets in 1996 and he did not do anything about the bubbles accept to encourage them.
We are now at a period of time similar to 1996. Bernanke is acknowledging the “irrational exuberance” just like Greenspan did in 1996. However, the Fed’s job is to encourage bubbles not deflate them.
Politicians and government leaders have never done anything right and I can go back to many events pointing to different catastrophes throughout history. All we can do is sit back, watch and observe much like those who sat watching the Civil War battlefields mystified and mouths open.
Figures such as Hitler and Stalin are the most extreme examples of leaders who believed they were not doing any wrong. Oftentimes, no one ever believes they are wrong in their actions or approaches. Obama and Bernanke is going down that same trail of dysfunctional leadership with money printing and government spending not scene since World War II or the Cold War.
The $XAU is starting to look like the $NDX of the 90s. Wild government spending and money printing does not just suddenly end, but usually continues on for years to come until it gets to such obnoxious levels that threaten the welfare of society.
It is a shame it has come to this. All we can do is sit from afar watching it happen. All we can do is voice our thoughts and opinions over the internet, write letters and cast our 1 vote. Madmen come in all forms. These madmen are attacking the dollar and will wildly spend money like drunken sailors at a bar during liberty call. In that regard, the markets will keep bubbling up wildly and unexpectedly…
The US government is the same government that let the issues of slavery grow out of control, let Pearl Harbor happen despite obvious warning signs and let guys like Osama Bin Laden and Hitler grow out of control. You cannot trust the United States to do the right thing. However, it is knowing they will not do the right thing which will make for some sweet trades in which millionaires are born.
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