Wal-Mart CEO expects inflation

Wal-Mart executive Bill Simon in a interview said he expects “serious” inflation. Finally the main stream media is talking inflation seriously. So sad our Federal Reserve Chairman Ben Bernanke did not take inflation seriously last fall when he approved Quantitative Easing II. Or the fact that China no longer is purchasing our bonds. Or the fact that our monetary base has gone up 23% in the last THREE months!

The Fed is scrambling to pick up the slack now that China has abandoned purchasing bonds. We are monetizing our debt at a phenomenal rate. It is simple. Look at the graph of the monetary base. China went from a bond purchaser to seller in December. In steps Ben Bernanke to save the day. Instead of being a real banker and telling the children in Washington to balance the budget and quit borrowing he just kept the cash flowing without missing a beat.

Bernanke is a student of history. He studied banking during the Great Depression but apparently he was reading the wrong book because he has made many of the same blunders as Benjamin Strong made leading up to the Great depression by inflating the money supply. Even after the crash the Federal Reserve and Washington tried desperately to re-inflate the bubble to appease wealthy industrialist worried about asset depreciation. Instead of allowing the markets to self correct we got inflationary policies before, during and after the 1929 crash and it did not work.

So here we are on the cusp of another “double dip” recession doing the same crap as we did in the 1920′s and 30′s. As we all pretended the artificial borrowing and spending was real economic growth. This is just a continuation of the 2008 crash interrupted by massive borrowing and spending.

The one thing I hope comes out of this, we can all agree to trash the Keynesian play book for one and for all.

Holy Crap Batman! Looks like the Federal Reserve is hard at work creating another bubble.