Gold News

Dow 20,000

The Fed speaks! And Wall Street jumps...

THE CREDIT ADDICTS on CNBC and Wall Street have got to be flying as high as they've ever flown before.

   The minutes from the latest Federal Reserve meeting were made public on Tuesday, and US stock investors reveled in its implied monetary largesse like a pig in first-class gravy.

   The Fed didn't actually promise more rate cuts. But it did say that inflation is not as big a worry and that, "Further actions would depend on how economic prospects were affected by evolving market developments and by other factors."

   Allow us to translate the Fedspeak:

   "Blah, blah, blah, blah...We'll keep cutting rates until the Dow reaches 20,000...Blah, blah, blah, blah....Do you feel rich now that your stocks have gone up? Good! Maybe you won't notice the US Dollar has become a third world currency and the housing market is a shambles...Blah, blah, blah. Thank you, you credulous moron. Blah."

   Here Down Under, meantime, Aussie John is getting into the personal loan market.

   "Yesterday, [John] Symond announced Aussie's entry into the AU$2.5 billion-a-month personal loan and car finance market, a move that some many consider down-market but others may see as a necessary step towards being a serious financial services house," reports Anna French in The Australian.

   Great. Just what people need. More debt. What's next – throwing bricks at a drowning man?

   Most of the big lenders in the United States are also in the auto and personal loan businesses. Because who says feudalism needs castles and serfs to work? What you really need are lenders, borrowers, and a central bank willing to underwrite the enslavement of the people.

   Welcome to your credit servitude.

   "Federal Reserve data released on Friday showed US consumer borrowing rising by $12.18 billion in August, more than 20 per cent more than economists had forecast," reports Reuters. Borrowing on high-interest revolving credit lines increased by over eight percent. It was the sharpest increase since 2002.

   The downside to this news is obvious. Americans are borrowing on credit to pay for living expenses and assorted junk they could live without. Whether the borrowing is out of necessity or is instead some kind of compulsion to accumulate crap in order to feel more secure, we can't say.

   But it is not a healthy trend. More credit is not the solution to the credit bubble. Not unless you're looking to create Dow 20,000 at any cost.

Best-selling author of The Bull Hunter (Wiley & Sons) and formerly analyzing equities and publishing investment ideas from Baltimore, Paris, London and then Melbourne, Dan Denning is now co-author of The Bill Bonner Letter from Bonner & Partners.

See our full archive of Dan Denning articles

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