The Fed’s printing press, Wall Street and other streets

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PrintingPress-thumb-468x280Given the symbiotic connection between Federal Reserve pronouncements and the Dow Jones Industrial average, one could conclude that the Fed is a manufacturing concern, the success of which makes investors optimistic about the future of the United States. One would be justified in bidding up equity prices  and investing in new such manufacturers. But of course, Fed Chairman Ben Bernanke and his fellow governors of the System hold a monopoly on the creation of money from thin air. There are no shovel-ready jobs for more greenback money makers.

Financial markets in healthy economies respond to increases in demand that leads to more and better compensated employment for citizens that in turn increase demand for products and services as a direct result. But in the Age of Obama and a five-year and running jobs depression (the unemployed still line up longer than a football field for jobs even on streets other than Wall Street in NYC – see picture caption at JFA), the markets bear little connection to the demand for goods and only connect with financial services that pass around money the Fed makes available. Over five years after the federal government bailed out Wall Street, the American people have still not been allowed to bail themselves out, while still paying the taxes and enduring the inflation of necessities like food and energy caused by the continued bailing out of banks.

Who knew, at Christmas 2013, that needy Tiny Tim lived on Wall Street:

The Dow Jones industrial average jumped more than 290 points after the Federal Reserve surprised some experts Wednesday by announcing a modest reduction, ortapering, in its bond buying program. The S&P 500 and the Nasdaq also moved substantially higher. The Dow and S&P both ended at new closing highs.

The bullish response is somewhat curious, since investors were rattled when Fed chair Ben Bernanke first talked about tapering back in May. In recent months, stocks would often fall on good economic news because the market worried that it might mean the tapering was one step closer.

Some market watchers had still been holding out hope that the Fed would announce tapering after Bernanke’s tenure ends in January. But the job market has been improving and Bernanke told reporters that he and other Fed officials — including current vice chair and Bernanke successor Janet Yellen — believe the economy will continue to create jobs.

But at the end of the day, investors have had plenty of time to get used to the idea of a slight reduction in the Fed’s bond buying. And that word — slight — is key.

Bernanke’s announcement:

The above was released under the banner headline: Thanks Ben! Dow and S&P hit record highs.

The problem is that the so-called job creation occurs in an economy that still employs less total workers today that on the day President Barack Obama was first inaugurated in January 2009. Such a circumstance had never obtained for this long since the United States declared its independence in 1776, until President Obama became Chief Executive.

We don’t begrudge anyone making a dollar, but when the money being made is being borrowed, or worse, printed out of whole cloth, and made available to those that don’t need it; while those that pay the bills are regulated out of employment and wealth creation, we can’t celebrate.

It amounts to reverse income and wealth distribution from the needy to the Fat Cats, pure and simple.

The Obama Administration makes what the Fed does almost responsible given its irresponsible spending, debt and economic policies. The only relief in sight appears to be after Obama leaves office in January of 2017. Late January.

Mike DeVine

“One man with courage makes a majority.” – Andrew Jackson

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