The Fed is printing more money to satisfy Washington’s runaway spending and hopefully prop up an ailing economy.

I’ll leave the merits and menaces of QE2 — and the nautical puns — up to those on the rest of the Internet. The bottom line is that regardless of whether another round of quantitative easing is a success or failure, the result will be the eventual rise of inflation and devaluation of the dollar.

To help investors prepare their portfolios, here’s a 10-step inflation survival guide.

10-step inflation survival guide

Federal Reserve Bank of Atlanta and Rutgers University
November 5–6, 2010, Jekyll Island Club Hotel, Jekyll Island, Georgia

This special conference marks the centenary of the 1910 Jekyll Island meeting that resulted in draft legislation for the creation of a U.S. central bank. Parts of this draft (the Aldrich plan) were incorporated into the 1913 Federal Reserve Act. To commemorate the 100th anniversary of the drafting of the Aldrich plan, the conference will take place at the Jekyll Island Club Hotel on Jekyll Island, Georgia—the same building where the 1910 meeting occurred.

The conference's discussions focus on three themes: the origins of the Fed and lessons from the pre-1913 era, how closely the Fed's actual performance has adhered to the original vision expressed by the framers of the Aldrich plan, and what the Fed's almost 100-year track record teaches us about its role going forward.

The webcast from the conference, "A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve," is scheduled to be available at the date and time below. Featured panelists will include: Ben Bernanke, Alan Greenspan, and Gerald Corrigan.

Date: November 6, 2010
Time: 10:45 AM EST

Federal Reserve Bank of Atlanta

During his recent European tour, Mr. Wen reminded politicians in Brussels that China had acted as “a friend” to Greece, Spain, Italy and other troubled European countries in their darkest hour by buying bonds as other investors fled. In return, he admonished regional leaders not to “pressure China on the yuan’s appreciation,” referring to the Chinese currency, formally called the renminbi.

In the past several months, China has pledged to buy Greek bonds when the government starts selling again, and purchased $625 billion in Spanish debt. On his visit, Mr. Wen hailed scores of business deals in Italy and Greece, including one that allows a Chinese state firm to run Greece’s top shipping port — one of the largest European gateways for Chinese goods.

For China, plowing a small but growing share of its more than $2.3 trillion in foreign currency reserves into European investments instead of low-yielding United States Treasury bills helps diversify its portfolio. Beijing also hopes that this kind of push helps reduce the international political pressure to raise the value of its currency.

--

With friends like that......

Looking for Investments, China Turns to Europe

Former Intel chief Andy Grove, who gambled big — and won — on billion-dollar U.S. manufacturing facilities a generation ago, worries about “a general undervaluing of manufacturing — the idea that as long as ‘knowledge work’ stays in the U.S., it doesn’t matter what happens to factory jobs,” he wrote in Bloomberg BusinessWeek.

“But what kind of a society are we going to have if it consists of highly paid people doing high value-added work — and masses of unemployed?” he asked.

--

Fair question...

Commentary: Loss of manufacturing jobs hollows out the economy

For nearly a century of solid profitability, Merrill Lynch was the company that brought Wall Street to Main Street, turning tens of millions of Americans into investors. But by the early 2000s, under C.E.O. Stanley O'Neal, it had developed a raging case of Goldman Sachs envy and began a blind stampede into unprecedented risk. In an excerpt from their new book, Bethany McLean and Joe Nocera chart the evisceration of the “Mother Merrill” culture as the firm crashed head-on with the mortgage meltdown.

The Blundering Herd

As Wall Street hangs on the question “Will Greece default?,” the author heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery, which brought down the last government, laying bare the country’s economic insanity. But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit. After systematically looting their own treasury, in a breathtaking binge of tax evasion, bribery, and creative accounting spurred on by Goldman Sachs, Greeks are sure of one thing: they can’t trust their fellow Greeks.
..

As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.

Beware of Greeks Bearing Bonds

interesting quote:

-

Some companies and countries will do better than others. "In China and India," he says, "there's no need for any innovation. Their business model for the next 20 years is copy the West." The West, he says, needs to do "new things." Innovation, he says, comes from a "frontier" culture, a culture of "exceptionalism," where "people expect to do exceptional things"—in our world, still an almost uniquely American characteristic, and one we're losing.

"If the universities are dominated by politicians instead of scientists, if there are ways the government is too inefficient to work, and we're just throwing good money after bad, you end up with a nearly revolutionary situation. That's why the idea that technology is broken is taboo. Really taboo. You probably have to get rid of the welfare state. You have to throw out Keynesian economics. All these things would not work in a world where technology is broken," he says.

Technology = Salvation

What we are experiencing is a post-bubble bust, similar to what Japan has spent two decades suffering through in the wake of its own real-estate bubble. As I pointed out many, many times as ours took shape, there is a big difference in terms of consequences between a bubble that is focused on equity, like stock market/dot-com mania, and one that uses massive amounts of debt, as our real estate bubble did.

So while there is a great deal of focus on whether we are about to have a double-dip recession, I would say that there is nothing to double dip from. The economy overshot to the downside in 2009 and has snapped back. (While many debated whether our recovery would be V-, W-, L-, or U-shaped, I maintained that something like a square root sign was more likely.)

Cost of this time down: Stagflation

Read the 17 point investment plan.

--

ARROYO GRANDE, Calif. (MarketWatch) -- Yes, it's going to get worse, a whole lot worse ... Bill Gross warns this is the "New Normal. Forget 10% returns. Think 5%". ... Economist Larry Kotlikoff, author of The Coming Generational Storm, warns: "Let's get real. The U.S. is bankrupt. Neither spending nor taxing will help the country pay its bills" ... Economist Peter Morici warns: "Unemployment is stuck near 10%. Deflation coming. Stock market threatens collapse. The Federal Reserve and Barack Obama are out of bullets. Near zero federal funds rates, central bank purchases, a $1.6 trillion deficit have failed to revive the economy." ... Simon Johnson, co-author of 13 Bankers, warns: "We came close to another Great Depression, next time we may not be so lucky." Why? Because Wall Street's already well into the next bubble/bust cycle - the "doom cycle."

Warning: More bad news ahead. Welcome to a bleak second half 2010, worse for 2011.

Warning, bear market 2010: 11 'sells.' Only 6 'buys' - New Normal: Bankrupt nation. Deflation. Zeros. Junk. No jobs. Depression

It’s Friday the 13th and markets blogs are buzzing about a so-called Hindenburg Omen that popped up yesterday on the NYSE.

From Wikipedia: “A Hindenburg Omen occurred on August 12th, 2010, the first since the market lows of 2009. One nearly occurred on August 11th, failing only in that 67 stocks hit new lows, rather than the required 69.”

FT Alphaville and others have picked up on the Zero Hedge post that flagged the bearish pattern.

“Currently we are facing weakening growth expectations globally, a debased U.S. currency, simultaneous concerns about near term deflation and longer horizon inflation, sky-high unemployment and crushing debt,” said Andrew Barber, strategist at Waverly Advisors, in an email. “If people need spooky stories to make them fear a market collapse then they are missing the forest for the trees.”

Freaky Friday