{"id":37847,"date":"2013-04-26T14:41:01","date_gmt":"2013-04-26T18:41:01","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37847"},"modified":"2013-04-26T12:41:20","modified_gmt":"2013-04-26T16:41:20","slug":"the-grandest-larceny-of-all-time","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/26\/the-grandest-larceny-of-all-time\/","title":{"rendered":"The Grandest Larceny of All Time"},"content":{"rendered":"

By Bill Bonner<\/strong><\/p>\n

Gold seems to be coming back fast. It rose $38 per ounce yesterday.<\/p>\n

Of course, the Fed’s monetary meddling doesn’t work. And it will most likely cause a financial disaster.<\/p>\n

But the biggest scandal of today’s central bank policy is that it is essentially the grandest larceny of all time.<\/p>\n

The normal ways in which wealth is distributed may not be perfect,
\nbut they are the best nature can do. People earn it. They save it. They
\nsteal it. Or they get richer by investing.<\/p>\n

Or they just get lucky…<\/p>\n

Normally, in other words, wealth ends up being distributed in an unplanned and uncontrolled way. People do their best. The chips fall where they may<\/strong><\/a>.<\/p>\n

But along come the central banks. They’re creating a new type of
\nwealth. It is not wage income. It is not the product of capital
\ninvestments. It is not the result of technology or productivity
\nincreases or hard work or self-discipline… or any of the other things
\nthat lead to wealth and prosperity.<\/p>\n

Instead, it is created by the central bank “out of thin air.”<\/p>\n

Not Your Grandfather’s Wealth<\/h3>\n

This new wealth is not like the regular kind. These chips don’t fall where they may; they get pushed around first.<\/p>\n

The Fed creates new money (not more wealth… just new money). This
\nnew money goes into the banking system, pretending to have the same
\nvalue as the money that people worked for. And people with good
\nconnections to the banks take advantage of the cheap credit this new
\nmoney creates to aid financial speculation.<\/p>\n

That’s what we’ve been watching in the financial markets for the last four years.<\/p>\n

From Chris Martenson at PeakProsperity.com<\/strong><\/a>:<\/p>\n

The central plank of Bernanke’s magic
\nrecovery plan has been to get everybody back borrowing, spending and
\n“investing” in stocks, bonds and other financial assets. But not equally
\nso, as he has been instrumental in distorting the landscape toward
\nrisky assets and away from safe harbors.<\/em><\/p>\n

That’s why a two-year loan to the US
\ngovernment will net you only 0.22%, a rate that is far below even the
\nofficial rate of inflation. In other words, loan the US government $10
\nmillion and you will receive just $22,000 per year for your efforts and
\nlose wealth in the process because inflation reduced the value of your
\n$10 million by $130,000 per year. After the two years are up, you are up
\n$44,000 but out $260,000, for a net loss of $216,000.<\/em><\/p>\n

That wealth, or purchasing power, did
\nnot just vanish: It was taken by the process of inflation and
\ntransferred to someone else. But to whom did it go?<\/em><\/p>\n

Where do the chips come to rest?<\/p>\n

While the Fed punishes honest savers, stocks and bonds rise every
\ntime a hint of more money printing is announced. And the yacht sales
\ncontinue to rise, too, as long as the Fed promises more.<\/p>\n

A Recovery for the Rich<\/h3>\n

The result? From Pew Research<\/strong><\/a>:<\/p>\n

During the first two years of the
\nnation’s economic recovery, the mean net worth of households in the
\nupper 7% of the wealth distribution rose by an estimated 28%, while the
\nmean net worth of households in the lower 93% dropped by 4%, according
\nto a Pew Research Center analysis of newly released Census Bureau data.<\/em><\/p>\n

From 2009-2011, the mean wealth of the 8
\nmillion households in the more affluent group rose to an estimated
\n$3,173,895 from an estimated $2,476,244, while the mean wealth of the
\n111 million households in the less affluent group fell to an estimated
\n$133,817 from an estimated $139,896.<\/em><\/p>\n

These wide variances were driven by the
\nfact that the stock and bond market rallied during the 2009-2011 period
\nwhile the housing market remained flat.<\/em><\/p>\n

Affluent households typically have
\ntheir assets concentrated in stocks and other financial holdings, while
\nless affluent households typically have their wealth more heavily
\nconcentrated in the value of their home.<\/em><\/p>\n

From the end of the recession in 2009
\nthrough 2011 (the last year for which Census Bureau wealth data are
\navailable), the 8 million households in the US with a net worth above
\n$836,033 saw their aggregate wealth rise by an estimated $5.6 trillion,
\nwhile the 111 million households with a net worth at or below that level
\nsaw their aggregate wealth decline by an estimated $0.6 trillion.<\/em><\/p>\n

There may be a “recovery” going on. But it is a recovery for the rich, not for the middle class.<\/p>\n

Regards,<\/p>\n

\"Bill<\/p>\n

Bill<\/p>\n

To learn more about Bill visit his Google+<\/a> page or Bill Bonner’s Diary<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Bill Bonner Gold seems to be coming back fast. It rose $38 per ounce yesterday. Of course, the Fed’s monetary meddling doesn’t work. And it will most likely cause a financial disaster. But the biggest scandal of today’s central bank policy is that it is essentially the grandest larceny of all time. The normal … <\/p>\n

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