“The U.S. stock market has been experiencing something akin to a controlled crash,” says John Williams of shadowstats.com. “What the Fed and Treasury are unlikely to accomplish in saving the system includes any long-term artificial prop for the U.S. equity markets, as well as any long-term artificial support for the U.S. dollar.
“The Fed also cannot prevent an already ongoing and deepening recession or a continued, significant upturn in inflation. From Mr. Bernanke’s standpoint, concerns as to containing inflation or stimulating the economy are but secondary or tertiary to concerns as to preventing systemic collapse. “The Fed and administration will do anything to prevent a systemic collapse, the risk of which is as great a threat to national security as any the United States has faced in recent times. Accordingly, the Fed and Treasury will continue to create and spend any money necessary, to bail out any entities threatening stability, to twist any arm and to manipulate any market, medium, statistic or commodity price… The cost of this systemic salvation, however, remains higher inflation in terms of prices for goods and services. “If the underlying system does not start to stabilize soon, almost any government action might be placed on the table. Such action could include anything from a banking holiday, and/or an all-inclusive FDIC guaranty, to some form of nationalization of the banking system.”
“The Fed also cannot prevent an already ongoing and deepening recession or a continued, significant upturn in inflation. From Mr. Bernanke’s standpoint, concerns as to containing inflation or stimulating the economy are but secondary or tertiary to concerns as to preventing systemic collapse. “The Fed and administration will do anything to prevent a systemic collapse, the risk of which is as great a threat to national security as any the United States has faced in recent times. Accordingly, the Fed and Treasury will continue to create and spend any money necessary, to bail out any entities threatening stability, to twist any arm and to manipulate any market, medium, statistic or commodity price… The cost of this systemic salvation, however, remains higher inflation in terms of prices for goods and services. “If the underlying system does not start to stabilize soon, almost any government action might be placed on the table. Such action could include anything from a banking holiday, and/or an all-inclusive FDIC guaranty, to some form of nationalization of the banking system.”
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