Don't count me among Henry Blodget's admirers, but he makes an interesting argument in a recent video posted on BusinessInsider.com (see below). Blodget argues that Federal Reserve Chairman Ben Bernanke has a "secret plan" to keep interest rates too low for too long on purpose. Why? To encourage inflation. According to Blodget, Bernanke has two good reasons for doing this:

• Faster economic growth, which leads to more jobs, fewer angry constituents, and a Congress that's happier with Ben Bernanke.
• Faster erosion of the real value of our debts. Consumers and the government are drowning under a massive debt load. One way to make paying off this debt easier is to make the dollars it is denominated in worth less. Bernanke will try to hasten this process as much as possible, taking it right to the point where our creditor China is mad as hell -- but not quite to the point where China actually stops lending to us.

So, I was flipping through some articles in Rolling Stone, when I found a very interesting economic story - yes, in Rolling Stone. The article, "Wall Street's Naked Swindle," takes a look at what happened in the options pits leading up to the death of Bear Stearns and Lehman Brothers. According to the article, an unknown option buyer made "one of the craziest bets Wall Street has ever seen," by shorting Bear Stearns. The unknown trader felt that Bear Stearns would lose "more than half" of its value in nine days or less, a bet that one financial analyst likened to buying 1.7 million lottery tickets.

What is crazy is that this bet paid off, leading to only one conclusion: insider trading (cue dramatic music). When Bear Stearns dropped from roughly $63 to $2 per share on March 17th (just six days later), the person purchasing the options made roughly $270 million. Senator Chris Dodd from the Senate Banking Committee thought that something wasn't on the up and up with this trade, and the Securities and Exchange Commission (SEC) promised it would look into the trade. Of course, nothing has happened since.

The Commerce Department released GDP numbers today for the second quarter, and showed that the economy shrank less than expected for the April - June period.

According to today's report, second quarter GDP figures dropped by 0.7%. Before the report, analysts had been expecting to see that GDP actually dropped by 1.1%, providing some fresh evidence that the economy will probably start growing again during the second half of the year.

We've seen the market move up in a rather dramatic way since March, which is somewhat logic defying because most of the news has been bad over that time.

Certainly earnings weren't anything to shout about, but many of the forecasts sounded optimistic. Unemployment keeps growing. That's never good for the market. Housing lately is starting to find footing, stopping the continuous slide of lower prices, but over the last 18 months it's been in a depression. So with all the bad news, can the market keep its momentum?

Most likely it will. That's because the market looks ahead by at least six to nine months, and ignores the here and now. With the latest economic data and the re-appointment of Benjamin Bernanke as the Fed chief, investors have reason to believe there are numbers, not just hope, behind the latest market moves.

What exactly is the Fed appealing? On August 24, Loretta Preska, Chief U.S. District judge, ruled that the Fed must disclose the identities of borrowers in 11 lending programs amounting to $2 trillion dollars.

In its motion, the Fed argued that "The immediate release of these documents will destroy the board's claims of exemption and right of appellate review."

The Fed's statement went on to say that "the Fed's ability to effectively manage the current, and any future, financial crisis would be impaired." It said "significant harm" could befall the U.S. economy as well.

August 25, 2009. Ben Bernanke is nominated to serve a second term as Federal Reserve Chairman.

August 25, 2009. Ben Bernanke and the Fed are ordered by a federal court to disclose details of their bailout transactions during the financial meltdown last year.

Two reporters from Bloomberg News filed suit in federal court under the Freedom of Information Act and won a case that "ruled against the U.S. Federal Reserve's attempt to block disclosure of companies that participated in and securities covered by a series of emergency financial programs as the global credit crisis began to intensify."

Ben Bernanke has pledged $12.3 trillion to help the banks and financial institutions. Where is all this money going? Much of it is going directly into the banks' accounts, hidden from the public.

This is how the game works. The Fed is Wall Street's biggest customer, buying massive amounts of mortgage-backed securities from banks. Now the Fed is being Mr. Nice Guy and publishes in advance the securities it intends to buy. Mr. Rip Off, the bank, simply raises the selling price to the Fed. The inflated prices produce huge profits for the banks. Of course the Fed knows all this is going on. This is simply a backdoor method of funneling government money into bank coffers.

Two countries, the United States and China, are playing financial poker, with the U.S. Treasury and the Federal Reserve on one side and China on the other.

On one side, wearing a visor and dark glasses, we have Ben Bernanke of the U.S. Federal Reserve, who must fund our $1.8 trillion deficit. So the U.S. Treasury and the Fed are issuing record amounts of treasury securities. Last week alone the Treasury issued $200 billion of debt securities. The results of at least two auctions were a bit shaky.

Upset about last year's major bailouts? Well, you aren't the only one. At a town-hall meeting in Kansas City, Mo., Fed Chair Ben Bernanke said that he had to "hold my nose" over the bailouts, which were funded by the taxpayer.

Of course, that was about all the outrage that Big Ben had reserved for the situation, as he noted that the action had to be taken in order for the financial system and economy to not fall apart. Bernanke made the comment in response to a small-business owner who complained that small businesses were shortchanged.

Today's news boiled down to two issues. First was that five DJIA components reporting earnings this morning, with details on three components. The second issue was Ben Bernanke testifying that inflation was not a huge concern because the economy is likely to stay frail for some time. The markets were mixed to down most of the day until a late day rally saved shares.

Here were today's unofficial closing bell levels:

Dow 8,911.71 +63.56 (0.72%)
S&P 500 954.10 +2.97 (0.31%)
Nasdaq 1,914.13 +4.84 (0.25%)

Top 10 Analyst Upgrades/Downgrades

The U.S. Federal Reserve has an important job for its top dog: be able to say with a straight face that it will be able to control inflation. Bonus points are available if you can claim the ability to do this over the long-term. Fed Chairman Ben Bernanke showcased his skills yesterday, claiming that the Fed has everything at its disposal needed to stem inflation for the next few years.

Specifically, he laid out five ways that the Federal Reserve can keep money supply and inflation from spiking, with interest rate management the primary tool. It looks like he's trying to get out in front of inflation concerns early, but only time will tell if he can deliver the goods. For now, keeping inflation contained remains a "top priority."

My final all-American brand is Colgate-Palmolive (NYSE: CL). The company is well-known for its toothpaste and toothbrushes. But Colgate-Palmolive also owns dozens of strong brand names, including Irish Spring, Speed Stick, Ajax, and many others.

Some investors may think of Colgate-Palmolive as a dull stock. That's fine by me.

The shares are far less volatile than most stocks on Wall Street. Even though the market overall is well below the highs it reached in the third quarter of 2007, shares of Colgate-Palmolive were never punished nearly as hard.

Bank of America (NYSE: BA) CEO Ken Lewis threatened to use a "material adverse change" (MAC) clause to kill the agreement to buy Merrill Lynch because he wanted to get a lower price, according to the Financial Times. New e-mails reveal how he was then pressured to proceed with the deal.

A House committee on oversight and government reform is investigating whether or not undue pressure was put on Lewis in order to complete the deal to purchase Merrill Lynch. Reportedly, the Federal Reserve would not comply with the committee's request for documentation and e-mails regarding the accusations, but the committee issued a subpoena to the central bank on Tuesday. Lewis is set to testify about the matter today at a congressional hearing.

Fed Chairman Bernanke gave an outline of regulation for banks and financial institutions today, and the weekly jobless claims gave some hope that tomorrow's unemployment might come in under expectations. There is a "sell the news" mentality that is going around ahead of the stress test and there was some tech profit taking after John Chambers was less optimistic. It looks like at least some profit taking is actually possible to see again.

Here are today's unofficial closing bell levels:

Dow 8,376.64 -135.64 (-1.59%)
S&P 500 907.28 -12.25 (-1.33%)
Nasdaq 1,716.24 -42.86 (-2.44%)

Top Analyst Upgrades
Top Analyst Downgrades

An outspoken group of Bank of America (NYSE: BAC) shareholders has been calling for CEO Kenneth Lewis's head lately, with investors none too pleased by the bank's near-disastrous acquisition of Merrill Lynch. However, testimony is hitting Wall Street today that indicates Lewis was simply following government orders by keeping hefty losses at Merrill under wraps.

Lewis testified under oath before New York Attorney General Andrew Cuomo in February, asserting "it wasn't up to me" to disclose Merrill's fourth-quarter losses toward the end of 2008.

According to Lewis, Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson pressured him to stay mum about Merrill Lynch's troublesome balance sheet. The regulators reportedly urged Lewis to proceed with the merger, warning that the deal's failure would "impose a big risk" to the nation's financial system.