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Recent Fed desperate efforts to sustain both the Bubble in leveraged speculation and the deeply mal-adjusted U.S. economy are futile. As for the leveraged speculating community, it would be better for the long-term health of the system to let the bust run its course. Today’s reflationary efforts are clearly fueling further wild and destabilizing global speculation and excess, with major – and increasingly obvious - negative consequences here at home. As for the U.S. Bubble economy, throwing additional Credit at the Current Unsustainable ("services-based") Economic Structure only ensures greater future Credit losses and financial sector upheaval, along with more problematic economic dislocation. Importantly, the Fed (Kohn and Bernanke) made another major mistake this week downplaying inflation and dollar risk – focusing instead on economic risk. Ironically, the Fed is today impotent with respect to the economy. It had best start paying attention to the stability of the currency markets, where it could have some impact.

Doug Noland is a market strategist at Prudent Bear Funds. Their website is www.prudentbear.com.