The markets went from hanging by a thread on Tuesday to another huge reversal as the dollar stopped strengthening. Currencies are now trading completely backwards -- the tail is firmly wagging the dog.  The Dollar rallied against the Euro as the situation in Europe further deteriorated, and then the ECB dramatically increased its pace of monetization.  In a remotely normal world, this would have further killed the Euro, but instead it immediately caused the Dollar to start selling back off.  Why?  Because of increased pressure on the Fed to step up their pace of monetization.  Bizarre, but that's the world in which we're living.

Current status of our fund battle:

The Wealth Fund completely took off vs. the Investment Fund and is now ahead by slightly over 5%.  There's every reason to believe that this trend will continue as long as the governments of the world continue to monetize all the bad debt.  Bank and Government debt will be defaulted on, one way or another.  A hard default is unacceptable to most, so we're starting to get a soft default -- inflating the debt away.  As I've stated many times previously, one does not want to be invested in the markets in this environment.  They'll most likely go up, but at a pace well below the rate of inflation.  I'll stick with a wealth preservation strategy, thank you.

No changes to the Ben Bernanke betting game, even though the recent data dump by the Fed indicates that Bernanke both made illegal trades and perjured himself in various testimonies.  In a sane world, the man would already be swinging from a lamp post or at least wearing an orange jumpsuit -- in this world, nobody cares with the exception of a handful of financial bloggers.  The Fed and the banks are holding the American people at fiscal gunpoint and nobody has the courage or political will do to anything about it.  So be it.

Current odds for Bernanke's fate as of the end of next year:

• Strangled by Ron Paul -- 1000 to 1
• Hung for Treason -- 100 to 1
• Commits Suicide -- 75 to 1
• Killed by bankrupt lunatic -- 50 to 1
• Dead by other means / natural causes -- 35 to 1
• Fled the country -- 25 to 1
• Under indictment (or already jailed) -- 10 to 1
• Forced out of the Fed but free -- 3 to 2
• Still selling America down the river -- 3 to 2

Have a good weekend.  Got silver?

Posted by: Hermit Dave at 02:56 PM | No Comments | Add Comment
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