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Friday, November 19, 2010

Fed Incompetence on Full Display (Michael Pento)

Thursday, November 18, 2010
By: Michael Pento

This week’s Initial Jobless Claims report once again contained an upward revision to the previous week’s data. Therefore, jobless claims actually rose 4k to 439k for the week ending November 13th. The number of people continuing to receive jobless benefits fell by 48,000 in the week ended Nov. 6 to 4.3 million. The continuing claims figure does not include the number of Americans receiving extended and emergency benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 121,000 to 4.93 million in the week ended Oct. 30.

Fed Caught in the Act
On a different note, the Federal Reserve and some U.S. Senators have now unequivocally proven their mendacious nature and/or incompetence. Bernanke and NY Fed president William Dudley are on record saying the Fed’s massive increase in dollar printing is not meant to affect the value of the currency. In addition, Senator Judd Gregg (R-NH) also defended the Fed’s actions last night by saying, and I quote, “We are not trying to weaken the dollar, I don’t believe that’s the Fed’s purpose, I believe the Fed’s purpose…is to get us back to about a 2% [rate of] inflation.”

There you have it! Our government and central bank either doesn’t understand what inflation is or are lying about the Fed’s purpose. So listen up Bernanke, Dudley and Gregg; the very definition of inflation is: the reduction in a currency’s purchasing power due to an increase in its supply. How can anyone, especially members of our Senate and central bank claim they want higher inflation but also claim at the same time that they do not want to affect the value of the dollar? The only way to get inflation higher is to lower the value of the dollar. Are they being mendacious or are they incompetent. Maybe it’s both.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

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