According to Peter Schiff, president of Euro Pacific Capital, those of you looking to learn what's happening in the U.S. are better off paying attention to almost anything other than Fed Chairman Ben Bernanke's Congressional testimony. "You might be able to to trade off what he has to say but it doesn't have any bearing on what's actually happening," he states.
The author of The Real Crash: America's Coming Bankruptcy says Bernanke is caught in a logic trap. On the one hand he can't pretend things are good. They aren't. On the other hand Bernanke can't signal too much weakness because he doesn't want markets assuming QE3 is inevitable. Schiff says more quantitative easing is a foregone conclusion but it's best for Bernanke to hold such measures in reserve.
It would be ideal for Bernanke to start pulling the plug on the monetary stimulus we have to allow the economy to detoxify. We have serious structural problems exacerbated, if not directly caused by fiscal and monetary intrusions already. Comparing our economy to Keith Richards, cancer patients and other terminal cases, Schiff thinks it's long past time to "'fess up, level with the American public and tell them what needs to be done." (See: America Heading Towards a Collapse Worse Than 2008 AND Europe! Says Peter Schiff)
Comparing the economy to a heroin addict avoiding withdrawal, Schiff says the only remedy is going cold turkey. The pain of such a move would be brutal for many Americans, but for working taxpayers picking up the tab the relief would be immediate and welcomed. Sounding like a more Draconian version of Ronald Reagan or even Bill Clinton, Schiff thinks reducing benefits will get more people off the dole, drive prices lower and eventually result in a more healthy economy.
None of which you'll hear from Bernanke. The testimony of today and yesterday bring out the worst instincts in everyone involved. Bernanke will evade and the politicians will pander while groping for that one soundbite that will be perfect for an campaign ad. Speaking into microphones and in front of cameras on the Hill is the best way on earth to ensure nothing useful gets done.
"Everybody is resisting the needed reform because it's bad politics," shouts Schiff. Whatever you think of his solutions it's hard to disagree with that assessment.