Let’s try an intellectual exercise.

Suppose I charged you with task of monitoring one individual, and reporting to me their activities at any given moment.

This, you might be able to do, provided you had the freedom from personal needs (such as food and shelter) to spend your every waking moment watching this individual. And even then, in your non-waking hours, you would have to surrender that the individual could slip away from you.

However, your chance of success is arguably high.

Now, let us up the ante, and say I charge you with the task of watching 2, 3, or even 4 such individuals. Could you possibly monitor their every activity?

For those of you with children, I daresay you will happily respond “Hell no. They’re everywhere.”

And finally, suppose I asked you to monitor the activities of somewhere between 133 to 200 individuals, of whom anywhere between 30-60 we have no inclination of how to find at any given moment? In fact, as many as 20 people are actively trying not to be found.

That’s the best case situation.

The worst case situation is more like you being asked to track 400 such persons. Or 1,000. In fact, since many people in the government are charged with equivalent tasks, you could very well be asked to keep tabs on the activities of 100,000 people.

Far from ever being able to organize or direct such a crowd with much control, you probably don’t even stand a chance of keeping tabs on what these groups of disperse individuals are doing.

This is about how much of a chance Bernanke and the Federal Reserve have at “targeting GDP”.

The Federal Reserve had almost no chance whatsoever of targeting inflation, which can at least be directly affected by money printing.

Now, they are saying they’re going to target economic activity itself.

This is the equivalent of the farmer saying “My sheepdog sucks at herding sheep. So I’m going to see how he does herding feral hogs.”

This guy’s dog is going to get ripped to shreds. And the farmer is going to be so sad. And left looking like an idiot.

But as I don’t care about his dog, I’m more than too happy to watch him try.

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Let me play the devil’s advocate and say that, after the Fed disappointed earlier this year, no one is left expecting any further easing before the end of 2012.

The election is simply too close at hand. Bernanke moving here is not feasible. There is no such thing as “autonomy”. Fed independence is a myth.

I thought we might actually get some action back in July – if only for a second, the possibility seemed plausible to me.

But here, just two months away from the presidential elections, taking action would result in making the Fed the single target of Republican’s ire. They would launch an endless assault on the institution. Any other time, the fiscal conservatives would complain, but the social conservatives would turn a def ear (social conservative absolutely love fraudulent money to spend – on their terms…).

If Ben moves now, the entire GOP establishment would feel threatened. They would act in unision to take him down. Bernanke cannot risk the central bank’s freedom to determine monetary policy.

And I think we all pretty much agree on that point here and now. Despite the rabble rousing murmurs starting to usher from “the media”, most sensible people who actually have skin in the game aren’t expecting anything from Ben. When he doesn’t act, news personalities will begin doomsaying and dark prophesizing, only to watch the market action shrug off the event. Financial journalists will look stupid, again, and life will go on.

This is not a catalyst for a big reversal. I think that if a selloff materializes this year, it will come in October as the “election year stats trade” falls apart; that’s not scientific, it is simply the outcome that leaves the most people looking dumb caught with thumbs up their asses.

But generally, I am prepared to hold fast, with a big cash position. I don’t want to bet on downside until 2013.

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Good morning, and welcome back to my cozy abode.

I’m afraid that that theme which I’ve been harping on for so long now has again reared its ugly head; and once more, Ben Bernanke has no room to make loose policy announcements.

For a moment, I thought it might be possible, with oil in the high $70’s. But in just a matter of weeks, that lull was completely erased, and oil this morning is pushing $90 a barrel.

Now, it is possible that this is an insider response of some kind to a yet-to-be-official announcement that QE3 is under way.

However, in any fashion, what we are seeing continues to be a commodity market ready and willing to hold the world hostage at the slightest hint of news it doesn’t want to hear.

“Buy commodities to escape inflation” has been programmed into the head of every citizen within reach of a brokerage account. I know that gold bugs like to pretend that, somehow, their argument is still this novel revelation which has yet to go mainstream.

“Just wait until the average citizen learns about what the government is up to.”

Look here. The average citizen is the guy who tells ME to buy PMs when I chance upon a random conversation in the street. Everyone knows how this works. It’s not a secret. There won’t be a sudden surge in PMs and other commodities as the “average retail investor” gets in on the trade, because he’s already there.

The commodity trade is probably still overcrowded – and worse, by dumb money.

So maybe now we don’t get a QE3 announcement again. I was about ready to hear one, even if I thought it was a quarter off. Will Bernanke juggle hand grenades with $90 oil about? I don’t think so. But I could be wrong.

For the moment, I continue to hold lots of cash, and a small ERY position. AEC, CLP, CCJ, APC, and physical silver continue to be a standard part of my repertoire.

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Shhh. Keep your head down.

Let me show you something. (Glances, first left, then right).

Here, come see. Take a look at this:

That’s the dollar you are insisting is so high that “Bernanke MUST act”.

I know. Doesn’t look that high to me either.

I know; but Ben is just clamming around until he can break skulls and fling free money everywhere, like he’s skiing with hookers in Bernie Madoff’s penthouse.

I know. I know…

But, let me fling some ice water down your back for a minute here.

What if, when Ben says “Monetary policy isn’t a Panacea,”…he means it?

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Issue forth and spay them. Let none go unpunished. Into the close, their cheerful demands of sugar will be met on the receiving end of a sharp instrument, piercing their naked breast.

ERY going green for the day.

Commodities and idiot, untalented hedge fund managers over allotted to them being pushed to the point of desperation.

Kill them all, until Bernanke is forced to intervene in two weeks.

Two…LONG…weeks…

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Thankfully, I had the good sense to get most of the hard work done last week. By selling SCO, only ERY can drag me back to the abyss. However, ERY is still rather large, and so I am definitely rolling the dice a bit here.

However, last week I also purchased a half sized position of APC (5% of assets) which is conversely championing it up.

If it looks like stimulus will win the day, then I will cut ERY (in about 20 minutes from now), take my losses (even now greatly diminished) and be content with the gains that will follow. I will also likely buy a little silver, and take my APC position up to a full 10%.

I will be holding cash.

But if Bernanke should disappoint…then I will relish in the sheer terror that is even now preparing to hit the tape.

Just remember this: Yellen and Evans have ALWAYS been this dovish. Nothing has changed here. They were both advocating raining free money since…God, ever, probably. But definitely since early 2011 – the first time I ever cared to listen to either of them.

What else do you expect from two chicken shits from California and Illinois?

So, the question of the day is – are you reading too much into things?

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