Bernanke speaks, markets fall, and then rebound

I'm starting to get these Ben Bernanke cycles. He was in total denial, cheerleading a decrepit economy leading up to the financial meltdown in 2008. Now that the economic cliff is transparent to all, Helicopter Ben is starting to sound like a sage soothsayer.

Bernanke is the fall guy these days--he has to be the sober, bearer of bad news, and the lightning rod of criticism since he's such a killjoy for stating the obvious (the economy sucks). But his function is useful for legislators to provide rationalization for more quantitative easing, or QE 2.0. "The economy sucks, so we need to print more money" is the ongoing dialogue. QE is fancy-speak for bailouts of more industries, and more people. It sounds humanitarian, but it also suppresses growth because it saddles our broke nation with even more debt. And debt will eventually choke this once-great nation of ours into default.

Wash, rinse, repeat. Every time he speaks or testifies before Congress, markets fall because things are so bad. But then markets rebound because "Hey, helicopter Ben is going to drop dollar bills out of the sky." Of course, this only works--until it doesn't work anymore. Financial stimulus is starting to have negative impact on GDP growth, because the cost outweighs the benefits due to our exorbitant debt levels (i.e. servicing the interest on the debt is getting increasingly costly, outweighing the temporary stimulative benefits of building bridges to nowhere).

So while I will enjoy the benefits to my portfolio of potential further QE, at some point, the market will realize enough is enough. When that time comes, no one wants to be naked when the tide rolls out.