While the Nikkei-225 lost 4% to the gold market, and the EuroStoxx-600 lost 15% last year, the Dow Jones Industrials surrendered 23% of its value, falling below 20 ounces of gold per one Dow share, to its lowest level in nine years. The results might have been far worse. Not until the appointment of Super-dove Ben Bernanke to lead the Federal Reserve and the onset of powerful stock market rallies abroad did Santa Claus come to Wall Street.
Bernanke’s reputation as an easy-money man is engraved by his most infamous speech in November 2002. “The US government has a technology, called a printing press that allows it to produce as many US dollars as it wishes at essentially no cost. By increasing the number of US dollars in circulation, or credibly threatening to do so, the US government can also reduce the value of a dollar in terms of goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.