Day Of Reckoning Postponed Again
The following is an excerpt from Doug Casey's commentary on the recent Bernanke 60 Minutes interview:

Quesion: "Let's look at some of the things he said. The first and foremost thing that jumps out at me is that he says the Fed is "not printing money" and that the Fed's actions have no significant impact on money supply. How can he imagine they can inject liquidity into the economy, and that it won't have any impact on money supply?

Doug: I think he knows better than that. Look, what the Fed has been doing is buying securities. And the way they do that is to credit the account of the seller with dollars. So, of course it creates money. That's why they call it "quantitative easing" – because they're increasing the number of Federal Reserve units in circulation. I really love that term, QE, because it's so cynically dishonest, like the whole monetary system itself. And it's amazing that nobody even challenges it. They just accept it instead of calling it what it is – printing money. It's Orwellian.

In any event, creating more currency units by buying government bonds serves several purposes, from their point of view. It raises the prices of bonds, and therefore pushes interest rates down – and they want lower rates because it makes it easier to finance the staggering amount of debt out there that threatens to collapse the system. And they want more currency units out there because that makes people feel richer, consume more, and that props up pre-existing economic conditions – which are actually unsustainable. The crash prompted them to buy toxic paper from banks for a while, to keep them from going under. Now they're buying U.S. treasuries again, with the latest $600 billion.

Bernanke is taking desperate measures to solve an acute problem. But their consequences will be disastrous – much, much more damaging than if he'd done nothing. Of course if he did nothing, the system would collapse through a deflation: bonds would default, banks would close. What will now happen is the currency itself is going to be destroyed, which is much worse. But since it's put off a bit further in the future, that's the course he's taking.