The news media has blamed the fiscal cliff worries for the post election sell of. But maybe this is not the true reason, just maybe it has something to do with the US Federal Reserve.

The rumor is that Ben Bernanke is not keep for another term, this means he can do more of what he pleases without answering the demands from the White House (shock horror the FED is not independent).

Recent Bernanke speeches have called for more fiscal responses to stimulate the economy. Now ask yourself why has the stock market fallen -6.5% since the start of QE3?

Maybe the market sell off is due to FED NOT expanding its balance sheet. Maybe the FED wants to send a message that Washington that they must do more, and there is little the FED can do, maybe a 10% fall in the stock market is the 'scare' politicians need to act. Just maybe! Yes, this is a long bow to draw, but funny things have happened, so why not this scenario.

The test is: When the Fed balance resumes, so does the rise of stock prices. Funny that!

This video does not cover the above scenario. It does refer to the Fed Balance sheet and is on subject of Fed activity, us dollar and gold.

James Turk Capital Account Nov 9th 2012