Bernanke’s 24-hour methadone clinic

Q... E...

Waitin' for ya.

Prayin' for ya.

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Not much follow through in the stock market yesterday. The Dow was up but only 46 points.

Meanwhile, gold fell $46.

We long for clarity. For a day of reckoning. But it seems far in the future. Yesterday, the world waited for Mr Bernanke to reveal his intentions. Instead, he said he was keeping his options open.

That was good enough to keep some steam in the stock market. But not enough to keep gold going up.

Both gold bugs and stock market bulls are counting on the Fed to come through. And it probably will.

We saw yesterday how the 1% got to be so rich. The feds aided and abetted by consumers and the financial industry bubbled up the amount of cash and credit in the US by 50 times in the last 50 years.

"That explosion of credit changed the world," writes Richard Duncan in his new book, The New Depression.

Yep... for one thing it made the rich richer. That money didn't go to wage earners. It went into stocks and bonds the assets owned by the 1%.

The stock market began its epic march up the mountain in 1982. Since then, it's gone up 13 times (as measured by the Dow).

US GDP is up about 13 times too.

But much of the 'growth' in stocks and GDP in this period was phoney. The tape measure, used to track growth, was calibrated in dollars. And the dollars stretched by the feds lied.

Just look at what has happened in the last ten years. From their low in the early 2000s, stocks are up about 50%. Investors might think they are ahead of the game.

But measure that increase in terms of gold and the gains disappear. Instead, stocks are DOWN 16%. In terms of oil, stocks are down even more 43%.

And now the feds tell us the economy is in recovery'. Yes, they admit, it's not a great recovery. But the economy is growing. And if we wait long enough everything will be put right.

Oh yeah? At this rate the US will never reach full employment. Because, each month, more people are looking for work than finding it. Why? Because little of this growth' is real. It's just what you get when you put an extra $2 trillion of cash and credit into the system.

But investors don't seem to care whether the growth is real or not. Instead, they're waitin', prayin', hopin' for another round of MONEY! They want that old elixir, more cash and credit, that Miracle Gro that the feds use to turn the economy green.

Oh yes, dear reader, we are five years into the Great Correction crisis and once again, the world (and especially Barack Obama) turns its weary eyes to Dr Bernanke.

"Touch us... heal us... Take away our pains. Lift us up to paradise."

Or, at least put us back in the White House!

And word on the street is that Ben Bernanke is getting ready.

"Fed considers more action... " says the Wall Street Journal.

"Stocks rise on hopes of more stimulus" reports the Financial Times.

But not all the Fed team is on the same page. Richard Fisher, of the Fed bank of Dallas, is clearly not: "I believe that were we to go down the path to further accommodation at this juncture, we would not simply be pushing on a string but would be viewed as accomplice to the mischief that has become synonymous with Washington."

Our guess is that Mr Fisher will be left behind. If not now, later.

Matthew O'Brien, writing in The Atlantic, explains why:

Save Us, Ben Bernanke, You're Our Only Hope

By Matthew O'Brien

This may not be our darkest hour, but the disappointing May jobs report showed the U.S. economy once again slowing towards stall speed. It's not just the anemic 69,000 jobs the economy added last month. More disconcerting were the sharp downward revisions to previous months. It looks like we could be in for an unwelcome rerun of the summer doldrums we have gotten to know all too well in 2010 and 2011.

Markets have a bad feeling about this. It isn't just about the deteriorating U.S. outlook. Europe and China are turning to the dark side of growth too. The euro is continuing its game of Schrdinger's currency: At any moment it is both saved and doomed. Right now, it's looking more and more doomed. Then there's the slowdown in China -- along with India and Brazil. These economies powered global growth during the dark days of 2008 and 2009, but seem certifiably wobbly now.

The Fed is our last hope -- and there isn't another. Republicans in Congress continue to block further fiscal stimulus, despite historically low borrowing costs and a clear need for better infrastructure. So that leaves Ben Bernanke & Co. as the last and only line of defense.

Will the Fed be an accomplice to Washington's mischief? You bet. Because this is an economy that has depended on more cash and credit for at least 30 years. It can't stop now.

Here's another Fed governor, more in sync with the times. The Wall Street Journal has the report:

The Federal Reserve must stand ready to do more if the U.S. growth outlook worsens, a top central banker said Wednesday.

If the outlook deteriorates such that the unemployment rate doesn't fall to levels consistent with the central bank's mandate and if the medium-term outlook for inflation falls significantly below the Fed's 2% target, "then additional monetary accommodation would be warranted," John Williams, president of the Federal Reserve Bank of San Francisco, said in prepared remarks to Seattle-area community leaders in Bellevue, Wash.

Mr. Williams is a voting member of the policy-setting Federal Open Market Committee.

You heard it here first, dear reader: There's no reverse gear in this car. It won't back up to correct its mistakes. Instead, it races along until it hits a brick wall.

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