Grand Rapids, MI -- (SBWire) -- 12/06/2010 -- Dennis Tubbergen, a noted financial advisor, often discusses the U.S. and world financial markets in his economic blog and his Moving Markets monthly newsletter. Tubbergen, who is CEO of USA Wealth Management, LLC, a federally-registered investment advisory company, has taken to calling the quantitative easing going on in many countries as a ‘worldwide poker game.’
“Many countries around the world have been engaging in quantitative easing – the printing of money virtually out of thin air,” explains Tubbergen. “When engaging in quantitative easing, the country’s central bank (like our Federal Reserve) purchases government debt using freshly-printed currency.”
Tubbergen calls the recent quantitative easing we are seeing the equivalent of a worldwide poker game, with many countries calling the bets of other countries also engaging in quantitative easing programs.
“When will these countries have to show their cards and deal with the consequences?” asks Tubbergen. “No one, including Fed Chairman Ben S. Bernanke, quite knows as we are in uncharted territory here.”
Tubbergen refers to an article on Bloomberg.com on November 4, 2010 in which the author describes Bernanke’s use of the ‘tools devised during the financial crisis’ as a test of unconventional monetary policy.
The article goes on to state, “Bernanke is gambling he can push down a jobless rate that has been stuck above 9 percent since the recession ended in June 2009 and encourage investors to take more risk without igniting an inflationary surge or fueling asset-price bubbles.”
What does Tubbergen have to say about the article?
“I find it interesting the word ‘gambling’ was used to describe Bernanke’s actions,” comments Tubbergen.
Tubbergen believes one can arrive at the following conclusions from the Bloomberg article:
• Congress has encouraged Bernanke to invent some new tools in an attempt to solve the problem of unemployment before the next election cycle;
• Congress is worried about a deflationary period during which the economy slows as it purges excessive debt.
“While the use of such tools was largely unsuccessful the first time around and may have caused more damage than accomplishing good, Bernanke, with Congressional support, is going to use them again in hopes of obtaining a different outcome,” concludes Tubbergen. “An old saying comes to mind: The definition of insanity is doing the same thing over and over again while expecting to get a different result.”
For more information on Dennis Tubbergen’s views, visit http://www.dennistubbergen.com.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.
Quantitative Easing Creates a Worldwide ‘Poker Game’
Financial advisor Dennis Tubbergen calls the worldwide quantitative easing we are seeing a poker game.