Rising stock market, smoke and mirrors provided by the Fed...

The Real Victims of Fed Monetary Policy
by Bill Bonner


The Dow went up more than 70 points yesterday. The higher it goes, the more dangerous it becomes.

What’s the matter with this downturn? Shouldn’t it lower stock prices? Shouldn’t it empty tables at fancy restaurants? Shouldn’t it close down some of these luxury shops and make it easy to upgrade to business class?

Nah… The Great Correction is a failure. At least so far. It’s correcting only the people at the bottom.

Last week, we went shopping for a birthday present. We went around Bethesda, to Bloomingdales…to Saks…even to Tiffany’s. In one shoe store there were five middle-aged clerks, ready to help us. How could there be enough profit in a pair of shoes to support so many clerks? Then we found out…when Elizabeth bought a pair. Leaving the store, she picked up the wrong bag… The clerk called her. He offered to meet her to exchange bags. “Just look for me. I’ll be in my black Mercedes,” he said.

What? How can shoe clerks afford Mercedes?

Then, we went to Tiffany’s, where there were so many Asian customers, the clerks barely gave us the time of day.

Everywhere we went we found shockingly high prices – and people paying them.

Here in LA too…the numbers show typical families are poorer –thanks largely to falling house prices. But there are still many people at the top…with expensive cars…expensive habits…and the money to keep at it. And despite all the talk of downsizing chic – we don’t see much evidence of it.

At the upper income levels, there doesn’t seem to be much correction happening. And why should there be? The feds give them money.

Stocks have recovered most of their losses. Bonds – which should be worthless by now – still trade hands at par. Corporate profits are at record levels.

Where’s all this money coming from? You guessed it, the feds.

But pity the poor lumps at the bottom. The official unemployment rate has gone down…but most of the improvement in the numbers comes from dropping people off the list of those who are looking for work.

So, what happened to those who didn’t find jobs? They’re getting food-stamps (42 million of them at last count). Or, they’re living hand to mouth.

Many of them have now been out of work for so long they’ll probably never work seriously again.

Read more:
http://dailyreckoning.com/the-real-victims-of-fed-monetary-policy/#ixzz1II7OrS7E