The Bernanke Put Is Real.

Depending upon whom you listen to, the US economy is either headed for a double-dip recession or in the midst of a renaissance for its policymakers preferred (read: easily manipulated) asset values. By preferred, we are talking about equities, debt and real estate. According to the latter camp, the worst of the financial crisis is over, the banks have been back-stopped at the expense of the taxpayers and the equity market is in the throes of a secular bull uptrend within a cyclical bear thingymajig.

Analysts at EurasiaTrade are rather more circumspect given the conflicting signals emanating from the USs own Federal Reserve. On the one hand, they say, Chairman Ben Bernanke has claimed that a double-dip recession in the worlds biggest economy is unlikely but, on the other, the Federal Open Market Committee or FOMC the body which meets regularly to set interest rates and effect monetary policy adjustments is busy deciding, for the second consecutive month, on whether or not to embark on another fresher and presumably larger round of quantitative easing to help boost a faltering economic recovery.

Mr. Bernanke recently intimated that the Fed would jump on the print button if the outlook were to deteriorate significantly. Well even a cursory glance at US economic data since he spoke at the Jackson Hole summit two weeks ago would convince most that his conditions have been met. Whatever time the Federal Reserve bought itself when it announced that it was to reinvest the proceeds of maturing assets into the purchase of long-dated treasury bonds has more or less run out and the markets are demanding more Kool-Aid regardless of what that would mean for the long-term global economic outlook.

A EurasiaTrade analyst put it less than succinctly; If the Fed green lights on fresh QE, not only would it would invite ridicule but it would more than likely trigger an escalation of the beggar thy neighbor attitude several key economic powers are so obviously engaged in. Japan will almost certainly jump back into the markets to suppress the strength of the yen and then, perhaps the Chinese and the Europeans will join the party.

In addition, it would reinforce the mounting suspicion that the Feds policy decisions represent nothing more than a safety net for asset prices, investors and the wealthy. EurasiaTrade believes there are a number of ways in which the investor can protect his or her wealth. One involves the acquisition of precious metals like gold and silver whilst the other involves the exchange of the sterlings, euros and US dollars for Canadian or Australian dollars as well as some Asian currencies like the Thai baht or the Malaysian Ringgit for the more adventurous.