You Cannot Reinflate a Burst Balloon

During the night I awoke with a start, no it wasn’t Santa, he comes in a couple of weeks, no it was the realization that Bernanke is insane.  To be nice he isn’t dumb, he was probably the type who spent his childhood in a library where balloons were not allowed.  But for the rest of us who have tried to blow air into a burst ballon you know that you can blow and blow and as soon as you stop, it collapses into pile of rubber.

QE2 has been a success in two areas, rising stock and commodity prices, but here is where some of the insanity comes to play.  Just like the supply siders in the 80’s, the magical trickle down effect has to go into effect next, higher stocks and commodities have to increase employment and raise housing values through the largess of the wealthy, they have to invest in jobs and provide cheap loans through their banking friends.  But what has happened with the wealthy, they are getting a tax break, so they can keep more of this magical wealth.

So where are we at this point.  While it is not nice to call Ben a liar about the reason for QE2, ie keep interest rates low by buying US Bonds with newly created “air” money, money out of thin air, he didn’t tell us the truth.  What he is really trying to do is hook a commercial air compressor to the burst balloon and blow like hell for a long as he can, the balloon cannot collapse unless someone cuts the power to the compressor.  Ron Paul, who is just a little guy compared to Ben might be the one to sneak in and pull that plug but we have to keep in mind he wants to cut taxes for the wealthy also, for different reasons, he visualizes America as a country with no balloons, just castles for the rich and barren land and serfs prowling around outside the gates.

There may not be a solution, the Democrats main claim to fame is that they don’t think well, at least not together, so they get nothing done.

It is time for the Holidays. Have a Merry Christmas.

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