“[Fed Chairman] Ben Bernanke has pulled off a neat trick that could well give us the worst of all worlds: a brief commodity deflation, future inflation and a stagnant economy”

◼ Steve Forbes: Fed Policy Continues to Plague Asset Markets, Economy - MoneyNews

“It will earn him a prominent place in the central bank’s Hall of Infamy.”

The weak economy has helped push inflation down, leading to gold’s recent drop, he says. “Leveraged speculators are waking up to the fact that we won’t be getting a 1970s-style inflation in the near future and are bailing out — for now,” Forbes writes.

“Gold rose sharply in anticipation that all that quantitative easing would flood the economy with excess money just as happened in the 1970s.”

But that water has now been bottled up. “Or a better metaphor, it lies in a vast reservoir. However, in this case, the water is held in place by a very weak dam,” he notes.

“The Fed is still doing enormous damage to the economy by distorting the credit markets both in the pricing of credit and in creating uncertainty about the future value of the dollar.”