Free Money From Helicopter Ben
The current hot topic in global financial newsrooms these days is QE2 (quantitative easing - round two) or how much money will be printed, how many more trillions in debt will be accumulated in further bailouts and stimulus, and exactly how far might Helicopter Ben Bernanke and the US FED go in their desperate act to rekindle the faltering USA economy.
Bernanke earned the moniker of "Helicopter Ben" in a 2002 speech where he cited deflation as the dark force for any economy, and implied that he would battle deflation to the end. His antics suggested that he would even throw free money out of helicopters to stop deflation.
Yet an astute financial observer would conclude to date, that after trillions in USA bailouts, government stimulus programs, and monetization; all past USA Treasury and FED attempts to stimulate the US economy have led to failure, or at best - marginal results that benefited few.
Frankly Japan too, equally found out decades ago this same harsh lesson, in that a massive expansion of money supply and a zero interest rate policy are not an effective remedy to an ailing economy. This is especially true, when that same economy had been already been overstimulated into exhaustion by Central Bankers.
Given the maxim that actions speak louder than words, and are far less deceptive, perhaps the best single piece of evidence in the multiple failed attempts by the USA FED and other central banks to date, is that interest rates globally are still locked at or near zero.
In fact, if there had been any real good news anywhere in the global economic story, interest rates (as tangible evidence) would have already been rising as visible proof. So frankly, anyone intellectual would conclude and cite that the massive FED printing-press and USA bailout agenda has already failed.
In essence, any FED Chairman or global central banker, now holding out a promise that more easing or added money printing in any form will be effective, is clearly being deceptive.
It is time for the USA and Global Central Bankers to admit defeat, and stop their deception and money-printing-debt-accumulating antics. These failed tactics have only added to higher future debt loads (and more taxes) and worse, the slow degeneration of overall USA wealth - via their obvious currency devaluation.
Expressed more harshly, when a central bank fails to protect their nation's monetary unit, which is the prime fiduciary duty of any central banker, and then embark on a planned devaluation of the USA dollar, or any currency for that matter, it ultimately represents a plan to impoverish that nation and deliver future inflation.
This could easily be regarded as a deliberate and grave act of betrayal to that sovereign nation, which frankly, is exactly a textbook definition of - Treason.
Trend Truth
Speaking in financially Natural Law and more honest language, the real financial truth is always found in the trend, as it is only the trend of the overall market, and more specifically, the trend in your personal selected investments or portfolio that really matter to future profit or loss.
As we have pointed out here before, the trend can simply and mathematically be defined several ways using technical analysis tools. Yet this same trend truth has been hidden and not taught to investors for decades.
In our update this evening, we have thus included two useful charts which focus on the bellwether SP 500 Index that both speak trend truth clearly. As usual, we have educational and important comments on those charts. You may click them to expand or download them to your computer.
In summary, although we still have the bullish green light in the short term, we believe that we are slowly building a top.
Although we may not always provide important calculated cycles or advanced market forensics in our free blog, we are now strongly suggesting to KRTT clients that by early next week, we will start to be on a heightened alert for a potential and possibly abrupt change of trend (CIT).
Our current time-price (TP) target for the SP 500 Index is approximately the 1220 price level on about October 25, 2010.
This implies we will be recommending being in a more defensive or high-alert posture by early next week,or specifically beginning on Monday October 25, 2010 - after being bullish since September 01, 2010.
James Kelly Sr.,
Editor in Chief
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