Thursday, December 9, 2010

Da Bernank Is Betting On Deflation; Questions For the Midnight Rambler

He is not shy about his bet on deflation, and when it comes to policy he holds nothing back.  To withstand the massive deflation that is occurring in the financial system Bernanke will buy hundreds of billions of dollars of paper market monie.  This is the near term plan.  The short term has the US deficits continuing their steepening.  The debt is now astronomical.  The weight of the world is on the Bernank's shoulders.

If it is a matter of strength, how solvent is the Fed's banksheet?  How much toxic paper does it own?  In the face of calamity the Bernank has managed to absorb the deflation, will it continue?  What kind of debt issuance will need to be met in the short term?  The $600 billion dollar QE II has already halfly expierd and the Bernanke is doing another round shortly.  Is the Fed abusing the dollar's right as a single account of unit value?  What is one dollar anymore, anyway?

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