Home > Articles by PoliticalMetals > Two Charts, One Story

Two Charts, One Story

When discussing the correlation between the sharp rise in Commodities Index (CCI) and the two QE programs by the Fed, I wrote:

When new money is “created out of thin air”, it quickly find its way, amongst other things,  into the commodities and equities market as hot speculative money.This explains why, despite high unemployment and a struggling economy, the S&P managed to hit the 1,300 mark this week.

Here’s another chart showing performance of a narrower selection of 30 US stocks – the Dow Jones Industrial Average over the duration of QE1 and current on-going QE2. Correlation? – YES! Causation? You decide.

These 2 recently published charts from ZeroHedge further illustrate the point. They clearly show how closely the CRB index (another index tracking commodities futures market similar to the CCI) and the S&P 500 index correlate positively with the growth in the Fed’s balance sheet.

Commodity prices driven by newly created money at the Federal Reserve

Commodity prices and the Fed's balance sheet. Chart from ZeroHedge


S&P 500 and the Fed's balance sheet. Chart from ZeroHedge

The “causation” factor is now so obvious. Newly created “Zero Cost Money” flows through the Wall Street banks working hand in glove with the PPT to prop up the stock market, giving an illusion of economic growth while pushing up prices of  commodities. End result - the Wall Street elites enjoy the cream of the asset inflation cake while passing the effects of inflation in daily essentials to the Main Street.


  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Connecting to %s


Get every new post delivered to your Inbox.

Join 172 other followers