Fed buys 300 Billion in US bonds, prospects darken.

Between the follies of Geithner and the Obama administration one can easily overlook the buffoonery of our federal reserve chairman, a man I tried defending earlier when he injected money into the system. Yesterday Bernanke announced during the scheduled FOMC meeting a plan for market operations that entailed the purchase of US Treasurys and since he was already in the business of destroying the US Dollar decided to throw in 750B worth mortgage backed securities for a grand total of 1 trillion dollars.

As you would expect bonds rallied hardcore while commodities got energized immediately as the dollar fell. Dollar fell hard and it’s no wonder, because in the most simple of terms our government is debasing our currency. What the purchase of these treasury indicate is a complete and utter distrust in our economy, considering we just spent hundreds of billions dollars on paper that yields us already historic lows. More importantly what does this signify for the rest of our debt holders like China for instance? They were buying up our bonds like a kid in a candy store and now our government just announced “hey! things are kind of bleak here, but please continue holding”.

The dollar reacted to this infusion of silly cash the only way it knows how and plummeted. In one move Fed Bernanke took steps to add more fuel to the bond fire, undermine our currency and significantly impair our long term financial health.

A student of the Great Depression he may be, but not a very good one. His policies appear to be centralized on one primary focus – government intervention. A real student of the Great Depression would realize that the government alone turned a 2 year recession into a depression and is now in danger of doing the same.

My long term projections have not changed in the slightest, the bond bubble will pop violently as major treasury holders will unwind their positions. This will send rates skyrocketing into the abyss and a world of major hurt will be upon us.

Keynesian mentalities and centralized control will undo hundreds of years of prosperity and they will do so very quickly.

Sad day indeed.