Cruxellaneous

Porter Stansberry: What you really need to know about Ben Bernanke and the next Fed chair

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From Porter Stansberry in Stansberry's Investment Advisory:
 
Last month, we lost a great friend – Ben Bernanke.
 
No other Federal Reserve chairman in history did so much to improve the fortunes of this newsletter or its founder.
 
What could have inspired more Americans to turn to a hard-money, alternative source of financial insight, than a Fed chairman dedicated to destroying the purchasing power and savings of his fellow citizens?
 
And who, besides that priceless naïf with his printing press, could have done more to provide easier, safer, and more obvious ways of increasing my personal wealth?
 
Bernanke permitted and encouraged the largest housing bubble in history. Its inevitable collapse allowed me to buy rental real estate paying yields in excess of 20% and trophy properties in Miami Beach for prices last seen 15 years ago.
 
In his first major policy speech after joining the Federal Reserve Board of Governors in 2002, Bernanke spelled out that an enormous inflation was on the horizon, as it was the only sensible solution to our country's massive debt load:
 

If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets... essentially equivalent to Milton Freidman's famous "helicopter drop" of money.

 

Bernanke's speeches allowed anyone with ears and gray matter between them to lever up into hard assets, like gold, silver, oil, and farmland – trades that have been unbelievably profitable.
 
And for the very, very rich... Bernanke did even more, God bless him.
 
Bernanke dropped real interest rates well into negative territory. That allowed the world's wealthiest capitalists – like renowned investor Warren Buffett and Stephen Schwartzman, head of the private-equity firm Blackstone Group – access to unprecedented amounts of capital at rates of interest that literally paid them to borrow.
 
They did the only logical thing... they responded with a wave of leveraged buyouts that dwarfed every other private-capital cycle in history. Immediately following Bernanke's ascension to the Fed chairman's seat in February 2006, U.S. private-equity firms bought out 654 U.S. companies, spending $375 billion (of mostly borrowed money) in just over a year.
 
To give you some idea of the scale of this Bernanke-led boom, this series of deals involved 18 times more money than all of the private-equity deals done in 2003. This was a massive aggregation of wealth. Almost none of these deals would have been possible without Ben Bernanke's policies.
 
And he was as good as his word. When the debt bubble finally burst, Ben did exactly as he promised he would. He matched the Treasury's deficit spending with newly created money and bought more than $3 trillion worth of Treasury bonds and mortgage bonds.
 
At the end, Ben's policies had grown so completely out of control, it was possible for Brazilian entrepreneurs to borrow immense sums at such low rates that they began buying out iconic American brands, literally our country's greatest businesses – like Budweiser and later Heinz. The Chinese, powered by the same wave of Bernanke dollars, opted to begin buying out our oilfields. Soon, we believe, they will begin buying private homes.
 
Yes, for rich people all around the world, Ben has been a living saint. Thank you, Ben! We couldn't have done it without you! None of us ever thought we'd be quite this rich... or end up owning all of those incredible assets.
 
That's why, on my plane, we say a simple prayer to Ben before every flight:
 

Dear Ben, thank you so much for providing us with nearly limitless risk-free ways of growing our capital. Please, never for a minute doubt your ability to "help the economy" by printing more money, thereby making us so, so much wealthier. Never consider whether or not it's fair or proper for the government to impoverish millions so that the very privileged few can gain so generously. And never worry that what you've done will someday lead to a massive inflation and a collapse of the whole paper money system. While gas prices are making it more expensive to fly this jet, we understand the need to do our part. You can count on us, dear Ben. Amen.

 
Meanwhile, the people whom Ben fleeced – the workers, the savers, the few Americans left with simple industry and thrift, the kind of folks who would never have believed the government would actively try to hurt them – have been wiped out. They've seen the real value of their wages, savings, and standard of living decline by huge amounts.
 
We doubt the validity of the U.S. government's various measures of inflation. They've been "adjusted" so many times over the years that they're nearly meaningless. But consider the following graphic of indicators, which are real and "unadjusted." They show in simple, stark terms exactly what Bernanke did to our economy.
 
Most of our indicators are self-explanatory. They show how much the price of some basic goods have risen since Bernanke took over as Fed chairman.
 
And for comparison... we've also included how much the U.S. government's total obligations ("Fed Debt") have swollen. And we've included the increase in the Federal Reserve's balance sheet – our economy's monetary base.
 
It's clear... as the number of dollars increased, each one bought less and less…
 
 
And our assets are worth less, too... Now look at a few other indicators.
 
The "S&P in Gold" is the change in the value of one share of the S&P 500, if you measured the stock index in gold ounces rather than dollars. We believe this is a better measure of the actual value of U.S. corporate assets because it measures their value in a sound currency (gold) rather than in paper.
 
And we included the share price of Citigroup. As head of the Federal Reserve, Bernanke's primary regulatory duty was to police the large banks and to protect their depositors. We think the near total destruction in equity value of what was the largest U.S. bank when he took over at the Fed speaks volumes about how well Bernanke did his job.
 
 
Bernanke gutted the dollar. He gutted the middle class. He gutted the savings of millions. And he greatly impoverished our country.
 
And yet... despite it all... Ben Bernanke is still being proclaimed a hero of the Republic.
 
"When faced with potential global economic meltdown, he has displayed tremendous courage and creativity," said Barack Obama at a White House news conference this week. "He took bold action that was needed to avert another Depression."
 
The USA Today newspaper added "Bernanke, a shy and self-effacing former Princeton professor, boldly led the U.S. economy through the worst financial crisis since the Great Depression."
 
And because there's nothing genuinely good to say about the guy, as is typical with worthless government officials leaving the scene... the plaudits quickly spill over into maudlin absurdity:
 
"Guiding the economy was like brain surgery, and you needed an expert to do it," claimed Michael Gertler, a New York University professor of economics.
 
We know what to expect from the Federal Reserve.
 
Its policies will continue to support and promote the incredible profligacy of our country's government. These policies will, in the end, cause unbelievable harm to millions of Americans. They will devastate the average standard of living in our country and leave a great many people in abject poverty.
 
We can only warn you about what is happening and what it really means.
 
Crux note: If you've already taken advantage of Porter's "End of America" advice... you could be ready to take the next step.
 
Soon, Porter will soon share the secrets of how to use Ben Bernanke's absurd policies to grow incredibly wealthy in a first-ever LIVE event. It's unlike anything we've ever done before in the history of S&A… and unlike any event you've ever attended.
 
Think of the very best TED talks, the Value Investor Conference, Berkshire Hathaway's Annual Shareholder Meeting, Jim Grant's Conference, and so much more... all rolled into one blow-your-mind-away "mega-event."
 
Porter and his personal advisors, S&A editors and analysts, big-name outside entertainers, master sportsmen, and other surprise guests are all converging on Miami, Florida this February. And now you have a chance to join them...
 
The exclusive event will be limited to the first 1,000 people who respond. If you'd like to learn how to to radically improve your life and increase your wealth - from Porter Stansberry himself - click here now.
 
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