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Dear Mr. Bernanke, What Are You Thankful for This Season?


The losing war against inflation? The Dubai nightmare? The anemic recovery?

Editor's Note: See Ron Coby's first "letter" to Ben Bernanke here. See his "thank you note" to Ben here. See his third "letter" and a fictional response from "Dr. Ben Bernanke, global savior" here.

Dear Mr. Bernanke,

I'm sure you were extra thankful this Thanksgiving for being able to create the mother of all short-squeeze rallies since the March low; and even more grateful for the ability to both publicly and secretly monetize all weak markets and assets without collapsing the US dollar. My guess is you were grateful to President Obama for the opportunity to continue your helicopter droppings of dollar bills across the globe for several more years. (I hope any bad dreams you've been having about your losing war against deflation don't turn into real-life nightmares.)

Speaking of nightmares, how about the global market reaction to the Dubai news on the Friday after Thanksgiving? Seeing gold explode to new highs must have you wondering what that market is so worried about. According to your recent Fed minutes, there will be no inflation concerns for many years. You must have concluded that gold investors are worrying about future sovereign defaults.

The global debt load is getting very heavy... .

And while I'm on the subject of sovereign defaults, the possibility of the Dubai nightmare spreading globally must have made it a tough weekend to sleep. The Dubai debt crisis might just be the first financial domino to fall. To make matters worse, it appears that Japan is another falling domino with the Nikkei stock exchange being down 15% and getting closer to becoming an official crash. The real nightmare is having these dominoes crashing into emerging markets with enough momentum to smash the biggest domino of them all: the United States. If the dominoes do fall, it will surely look like the helicopter droppings were no match for the deflation that's engulfing multiple nations. In my new book, Discover the Upside of Down, I call this the New Great Global Depression of the twenty-first century.

Talking about depressions reminds me: Can you believe how anemic the recovery has been, given your multiple helicopter maneuvers combined with the massive amounts of government stimulus? How does it feel to be monetizing this reckless behavior in Washington? As you know, this growing debt burden is out of control now and the debt clock on America is a ticking time bomb ready to explode.

I guess we should all be extremely thankful for the mass public buying of US public debt that goes on right along with the Fed. At least we don't have to worry about the bond bomb going off anytime soon. Unless of course China decides to stop buying -- or worse yet, starts selling bonds. Who could blame them with the dollar falling precipitously and with you begging on inflation?

Ahh, China. They sure have played this giant Ponzi scheme well. As the US has built up a massive amount of debt buying China's cheap goods and speculating wildly, China has built up an immense amount of currency reserves. Wisely, China has been taking their dollar holdings and buying stuff like gold, copper, silver, zinc, and also using our dollars to build up military power. The US government, on the other hand, has kept the Ponzi scheme alive with help from the Fed. With the US dollar hitting new yearly lows and gold hitting new all-time highs, maybe this is a first sign that the game is just about over.

Speaking of game over, it appears that the bear market rally since March is coming to its end. I suspect you'll lend a helping hand to keep that from happening; but the bear is starting to again shake the financial tree. When Alan Greenspan was at the top of the tree, the bear shook hard in 2000 and eventually knocked him down. Now, after a brief hibernation from the October 2007 to March 2009 mauling, this mighty bear looks ready to feast upon the Fed again.


Ron Coby

P.S. I hope AIG's (AIG) 15% drop doesn't turn into a collapse!

For more from Ron Coby, check out Minyanvill'es newly launched Grail ETF & Equity Investor newsletter written by Ron Coby and Denny Lamson using their proprietary Lamson Grail Timing Indicator. Sign up today for a FREE 14-day trial. Learn more.
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