So much for the Fed creating price stability:
All hell has broken loose in the markets following yesterday's QE2 announcement. Bernanke''s Op-Ed in the Washington Post where he flat out admitted that he wants higher stock prices has created a feeding frenzy for stocks.
The falling dollar following the QE announcement has added more fuel to the fire. Ben's been successful with his attempt to goose stock prices but it comes at a cost.
The dollar is getting slaughtered:
Gold is soaring as investors "run to the exits" from the US dollar:
Oil is soaring as the currency weakens:
Ben's Op-Ed is flawed because the stock "wealth" he is creating is being taken away by a falling dollar.
You need to ask yourself: If equities rise 1% and the cost of goods rises 2% as the dollar weakens have you really gotten anywhere?
Also, keep in mind that input costs for corporations are going to soar. Just think what $100 oil will do to the airlines and manufacturers who use this stuff like water as they fly people all over the world and use it to manufacture goods.
This is going to kill the profitability of corporations.
Stocks love this news today but investors needs to realize there is no free lunch. What's goosing the markets higher today is going to bite us in the ass tomorrow as our currency gets flushed down the toilet.
Congrats Mr. Bernanke, you have once again pulled the wool over the eyes of the American people. When this all comes tumbling down I suggest you get on the first plane out of the USA because millions of jobless/penniless Americans will be looking for revenge.