by Michael Snyder
from TheEconomicCollapseBlog Website
You can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market that we have seen in recent months.
When the Federal Reserve does more "quantitative easing", it is the financial markets that benefit the most. The Dow and the S&P 500 have both hit levels not seen since 2007 this month, and many analysts are projecting that 2013 will be a banner year for stocks.
But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting? Of course not.
Just because the Federal Reserve has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape.
In fact, the truth is that things just keep getting worse for average Americans.
So quantitative easing has definitely not made things better for the middle class.
But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street. Profits are soaring at Goldman Sachs and luxury estates in the Hamptons are selling briskly.
Unfortunately, this is how things work in America these days.
Our "leaders" seem far more concerned with the welfare of Wall Street than they do about the welfare of the American people. When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.
When QE3 was announced, it was heralded as the grand solution to all of our economic problems. But the truth is that those running things knew exactly what it would do. Quantitative easing always pumps up the financial markets, and that overwhelmingly benefits those that are wealthy.
In fact, a while back a CNBC article discussed a very interesting study from the Bank of England which showed a clear correlation between quantitative easing and rising stock prices...
So should we be surprised that stocks are now the highest that they have been in more than 5 years? Of course not.
And who benefits from this? The wealthy do.
In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.
Unfortunately, all of this reckless money printing has a very negative impact on all the rest of us. When the Fed floods the financial system with money, that causes inflation. That means that the cost of living has gone up even though your paycheck may not have.
If you go to the supermarket frequently, you know exactly what I am talking about. The new "sale prices" are what the old "regular prices" used to be. They keep shrinking many of the package sizes in order to try to hide the inflation, but I don't think many people are fooled. Our food dollars are not stretching nearly as far as they used to, and we can blame the Federal Reserve for that.
For much more on rising prices in America, see the article "Somebody Should Start The ‘Stuff Costs Too Much’ Party".
Sadly, this is what the Federal Reserve does. The system was designed to create inflation. Before the Federal Reserve came into existence, the United States never had an ongoing problem with inflation. But since the Fed was created, the United States has endured constant inflation. In fact, we have come to accept it as "normal".
Just check out the amazing chart in the video posted below...
The chart in that video kind of reminds me of a chart that I shared in a previous article...
Not that I expect the United States to enter a period of hyperinflation in the near future.
Actually, despite all of the reckless money printing that the Fed has been doing, I expect that at some point we are going to see another wave of panic hit the financial markets like we saw back in 2008. The false stock market bubble will burst, major banks will fail and the financial system will implode.
It could unfold something like this...
I write about derivatives a lot, because they are one of the greatest threats that the global financial system is facing.
In fact, right now a derivatives scandal is threatening to take down the oldest bank in the world...
So when you hear the word "derivatives" in the news, pay close attention.
The bankers have turned our financial system into a giant casino, and at some point the entire house of cards is going to come crashing down.
In response to the coming financial crisis, I believe that our "leaders" will eventually resort to money printing unlike anything we have ever seen before in a desperate attempt to resuscitate the system.
When that happens, I believe that we will see the kind of rampant inflation that so many people have been warning about.