BEWARE OF GREEKS...

Some Greek once said that those the Gods would destroy, first they make mad. I feel I'm going crazy so there may not be much future in this.

I think I finally figured out whatsup with the Fed, albeit with a little help from some well-placed friends in D.C. They're nuts which is another way of saying the joint is now run entirely by economists who actually believe that their theories work in the real world. You know, show an economist a swamp and tell him to build a skyscraper and the first thing that comes out of his mouth is, "Assume a foundation." So this latest attempt of restarting the economy by the simple act of quantitative easing is certainly going to work because we all say it will. Oooooooookay! That explains it all. The fact that they haven't a clue has already been discussed but let's assume that's what happens and try to figure out the real result in the real world of their actions.

A caveat: those of you who have been with us since I started this thing might think back a couple of years and remember that I predicted that at some point some politician was going to do what all politicians do in cases such as this and try to inflate their way out of the problem. I'm not sure that any pol is driving this Fed stance but certainly, The Leader and his mob (if there are any left) cannot be disappointed in it. Inflation solves a lot of things; it's a great debt reduction mechanism, it raises the price on "things" (think the family homestead), stocks tend to rise especially those with a high beta (look it up), the currency goes right into the gurgle tube which will make the pledge to quintuple exports in five years look less insane, the Yuan may be forced to revalue even though it's pegged to the buck and there is a real possibility that investment picks up because in this kind of environment "cash is trash" and you don't want none of that stuff on your balance sheet. Not bad, eh?

Well, there are a couple of problems. Wages tend not to rise as fast as prices so if you have a salaried job (and 10% do not) every day in every way, you're screwed. The price of commodities goes up because they are all denominated in dollars and for those of you who might have forgotten, oil is a commodity and from oil we get gasoline and that means...well, you can figure it out. Cash tends to be trash for everybody else around the world who holds dollars so what happens is good folks like the Chinese and the Japanese tend to but anything they can get their hands on (t"things" and commodities) so if you think that the Chinese appetite for these sorts of things plus oil is voracious today, just you wait. Everybody else is paying more for "things" that more and more tend to have an increasingly declining ownership base exacerbating the problem and after a while five gets you ten somebody pops his head un and says,"hey, what's with this dollar as the reserve currency crap," and then boys and girls we lose control of the whole shooting match.

Now there's some guys like my friend, Denny, down in Texas who are smart enough to make a crap load of money out of all of this, but most of us are not. We just sort of sit around and try to figure out what in the hell is going through the heads of those people in the Fed to even consider a solution unsuited for the problem. In so doing, we go nuts. Maybe we're all Greeks and just never realized it. Now there's a scary thought.