WARNING: This blog entry is based on data from Steve Forbes which, after some research, I am beginning to seriously doubt.

Update: I have decided Steve Forbes is seriously wrong on a number of points, and I must conclude that he says whatever is good for business, even if it screws investors. I base this on his stance on mark-to-market accounting, and his apparently blatent lies claiming that the Federal Reserve has withdrawn money since December. I AM SORRY for not checking my facts and simply relying on a well-known name.

Everywhere you turn, you hear about how the Federal Reserve is printing money like mad. The most fascinating thing about this is... they're not.

Paul Krugman wrote a while back that the way to pop out of a liquidity trap was to produce a credible threat of inflation. If people think prices will go up, they will behave accordingly and make that prophecy self-fulfilling. Everyone is aware that printing money makes prices go up.

So what is Ben Bernanke doing? He is claiming to be printing money. And people around the world are yelling and screaming that this is gonna be real bad. Even the Chinese premier.

But if you look closely, the federal reserve has withdrawn $400 billion since December. They are tightening. If you don't understand the "credible threat" theory, or if you think printing money is going to help, the action appears completely absurd.

Ben Bernanke claimed in December the Fed would buy $500 billion in mortgage backed securities. So far they have bought... none. In January, they claimed they would be aggressive. So far, they haven't. Then in March they promised 1.2 trillion. Who knows if they will do that or not. So far, it is all talk. All just a credible threat.

Gee... I hope I didn't spoil it.

Friends, please don't bet your future on imminent massive inflation. Hold some gold for insurance, some cash for insurance, and buy quality companies with low debt and positive cash flows, at bargain basement prices... preferably in China.