As anticipated, “higher commodities shrink profit margins,” reports Barron’s. Some analysts were justifying high stock prices on the grounds that earnings were at record highs. Of course, if they were at record highs, we commented, they would most likely come down.

What’s bringing them down? Ben Bernanke’s hot money. He juices up the world’s hot money. Commodity prices go up. Commodities – especially oil, which appears to be headed over $110 a barrel — are a major cost for most producers. Higher costs with little pricing power (remember, we’re still in a Great Correction) mean lower profits.

That’s a big weakness in Bernanke’s program. He prints money ($600 billion in the first half of this year). But the money never gets into the consumer economy. Wages don’t rise. But commodity prices do. This raises prices for consumers…and business. Net result: less discretionary spending. The opposite of what Bernanke wanted, in other words.

But that’s what government almost always gets – just what it doesn’t want.

Investors didn’t seem to care yesterday. The Dow rose 69 points anyway. Gold was flat.

But let’s move on.

We want to introduce you to a new principle we just thought of last night. We call it, modestly, Bonner’s Principle:

Without free prices and profits, you can never know when you succeed.

This is why most charitable activities – especially government to government foreign aid – are a waste of time. And it’s why all government programs that are designed to raise the quality of human life – including Ben Bernanke’s easy money policies.

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