Ben Bernanke - The "Prince of Paper"

It's no coincidence that on January 31, 2006 - the same day that Ben Bernanke succeeded Alan Greenspan as Federal Reserve Chairman - the price of gold also hit a 25 year high!

That spike in gold is hardly surprising to those who are familiar with Ben Bernanke. As Morgan Reynolds, former chief economist at the U.S. Department of Labor recently stated, "Bernanke has the power to screw things up royally, and he is off to a fast start: gold has gone up nearly $100 an ounce since Bush nominated him."

Ben Bernanke has a renowned fondness for crisp new greenbacks. In his own words, "The U.S. government has a technology called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost."

Now while it may be true that it may not cost the government much, as anyone who studied Economics 101 in college knows, whenever the government cranks up the money machine, it costs you and me plenty because it devalues every single dollar we make and every single dollar we scrape together to invest.

The Fed's problem is that it's facing government deficits in excess of $8 trillion. That's about $27,000 for every man, woman and child living in the United States. And what's worse, Treasury Secretary John Snow has just asked Congress to raise the national debt ceiling, which 14 months ago, was set at $8.1 trillion. (The only other option is for the federal government to declare bankruptcy, and that's unlikely to happen).

So what does a fed chairman do in order to get control of the largest debt in all of history? Simple: if you devalue the currency then you also devalue the debt.

Several experts are in agreement that Bernanke will have no problem in turning on the printing press. Peter D. Schiff, President of Euro Capital Pacific, Inc, has stated: "Bernanke's finger will...be on the printing press: and he seems to be itching to crank it up."

Richard Russell, publisher of the Dow Theory Letters, believes the Fed is on course to add one trillion dollars to the banking system within a year.

According to James Turk, author of The Coming Collapse of the Dollar and How to Profit From It, "Bernanke will attempt to lessen the burden arising from the growing mountain of debt in this country as well as to maintain the illusion that the economy is on solid footing. This action will build the growing pool of liquidity, which in reality is excess dollars."

To top it all off, the Fed has quit publishing its M3 report, which to date has been the only way for investors to monitor the incredible growth in the money supply. If this lack of transparency sounds a bit fishy, that's only because it is!

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