Bernanke: An Evil Superhero
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- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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The Federal Reserve has changed the fate of the American economy and made it harder than ever to find investing success. But at least the banks are making money.
The first full day of our Natural Resources Investing Summit is in the history books. Success.
Rick Rule... Brent Cook... Sara... a couple of mining CEOs... a gold expert...the stage was filled with the industry's top minds. Oh, and I took the stage for 40 minutes to kick things off.
But the real value -- the stuff we don't advertise -- happens on the margins. It's those 10-minute back-of-the-room conversations that can't be found outside of a conference like this that make these events the highlight of my year.
Today, for instance, I had a very contrarian conversation.
The consensus around here -- and around the planet -- is that Ben Bernanke is a failure. Even a fraud.
He's got our economy so addicted to debt, there is no way out. It's debt or death... probably both.
Bernanke made it happen.
But like I said, I had a chat with a subscriber who begs to differ. He says Big Ben is a rip-roaring success -- maybe the best businessman on the planet.
As much as I hate to admit it, he has a point.
Here's the angle...
Too many folks think Bernanke works for you and me... the dolts at the mercy of the American economy. But they're wrong.
Bernanke doesn't work for you. He doesn't even work for Uncle Sam.
He works for the banks. Bernanke's the CEO of the American banking industry. And guess what... the industry's booming.
How could the banking industry not be thriving? Bernanke gives his cronies essentially free money and then pays them to not to spend it. They're making billions... without an inkling of risk.
And let's not forget the idea the banking sector would have curled up and died in 2008 without Bernanke's maneuvers.
Like I said, my new friend has a point.
You and I are forced to deal with a devalued currency and a country exploding with debt. But Ben and his banks? No worries... they're healthier now than ever.
Thoughts? Do you agree with our conference attendee that Bernanke is a real American hero?
Or do you follow the consensus... that Bernanke has done far more harm that good?
Drop me a line with your opinion: andy@Insideinvestingdaily.com
My take is simple. Bernanke knows what he's doing. He's not stupid. He sleeps well at night knowing the banking sector is strong. He brought it back from the brink.
And he knows that without a shadow of a doubt, ordinary investors face a lifetime of headwinds because of his decisions.
Does he care... absolutely not.
I've got to keep it short this morning. It's another day in the conference hall.
I'm sure it will be good for a few good conversations. I will share what I can.
From the Inside,
Aaron
P.S. Keep an eye on your inbox for a full review of our conference from our roving reporter. He will fill you in on the details I don't have time to cover.
Chart of the Day: The Perception of Precision
by Adam English, Associate Edito, Inside Investing Daily
Consumer spending figures are out for April and an interesting thing happened. While spending was a tepid 0.3% higher than last month -- and only .01% after removing inflation -- consumer confidence reached a four-year high in the first quarter. Wages are up a bit higher than expected as well.
On the surface, this scenario makes little sense. Consumer confidence is considered extremely important because it is an indicator of consumer spending. About 70% of the U.S. economy is driven by consumer spending alone. Reports like these are probably the leading cause of hair loss for economists.
Are we actually seeing a breakdown in correlation between these two measurements?
Odds are nothing is out of the ordinary. The problem is the perception of precision. That brings us to our chart of the day...
If you asked an expert how consumer demand and spending would look in a year and a half, I'd bet my bottom dollar he'd give you an exact figure like $11 trillion, $13.5 trillion or $17 trillion.
I have no doubt there are many skilled economists and statisticians working for individual industry sectors and more holistic organizations like the Fed and large investment firms.
The problem is the entire picture is not easily grasped. By approaching from a single angle, it guarantees that there are biases and assumptions that skew data by the time you build it up and put it all together.
If our economic gauges were nearly as precise as many think they are, there is no reason for a 32% range in 2014 spending estimates between methods. Even the 15% difference at the bottom of the range would be enough to push the U.S. back into a deep recession.
Economists are hounded for hard numbers and exact predictions by politicians or upper management and take these indicators with a grain of salt. Unfortunately, virtually everyone else does not.
If you remember that many indicators are based on expectations, opinions and the averages of various scenarios you won't be tricked by the false sense of precision.