Dear Mr. Berko:

I am convinced the Standard & Poor’s 500 is headed to 1,600 or higher this year. I’ve done detailed calculations (enclosed) concluding the S&P 500 will earn $107.42 and trade at 15.1 times earnings. Then by extrapolating these numbers, I place the Dow Jones industrials at about 15,864. My calculations agree with the top analysts at Goldman Sachs, Citigroup and Bank of America, each of whom believe the S&P will top 1,600 this year. Since you did not present your usual forecasts for 2013, I’d like to know if you agree with our projections.

G.H., Gainesville, Fla.

Dear G.H.:

You conspicuously used the words “our projections.” Am I to conclude you’re collaborating with Citigroup, Bank of America and Goldman Sachs, three of the deadliest snakes on Wall Street? I’m not making a prediction for 2013 because I can’t read the tea leaves as clearly as you and those friends. But thanks for your mathematical construct, which is too impressive for my linear thinking.

Your numbers may be on the mark. I remember when growing revenues and earnings moved stock prices higher. Today the primary reason for higher prices is that the Federal Reserve is engorging the economy by purchasing $85 billion of Treasury bonds and mortgages every month. This massive influx of cash into the banking system has gone into the stock market, precisely what the administration and Fed Chairman “Helicopter Ben” Bernanke ordered. They figure a rising market will give business and consumers enough confidence to spend and grow our gross domestic product (GDP) by 3 percent or more in 2013. The Fed believes it can inflate the economy to health, thinking that rising tides lift all boats. So it continues to create more money, realizing if the printing presses stop, the economy will sink (think of bailing a leaking lifeboat) deeper into recession.

Ben and the administration recognize:

• Consumers account for 71 percent of our GDP.

• Consumer debt has reached record numbers and is perilously high.

• New jobs are paying less and most family incomes are lower today than in 2007. So except for taking on additional debt, American families have little spending room left.

• This economy is facing a social crisis, a debt and tax crisis, a congressional crisis, and a Social Security, Medicaid and Medicare crisis. Municipalities are teetering, our infrastructure is in disrepair, real unemployment is over 10 percent, pension plans can’t keep their promises, and our welfare system is dangerously wobbly due to public demand.

• It’s becoming apparent that the costs of Obamacare will bankrupt the economy.

• Our largest trading partners – Europe and Japan – are in a recession and China is floundering. European workers are hurting; their income and safety nets are imploding, causing U.S. exports to decline.

• The administration won’t pull out of Iraq or Afghanistan because returning troops will swell unemployment numbers.

• The Middle East, a trouble spot for 5,000 years, may erupt into a major conflict.

• Finally, solutions to avoid the “fiscal cliff” will be temporary and political rather than economic and permanent.

Ben and the administration are mindful of this. They know falling stock prices will devastate consumer confidence and voters will stridently blame Congress for the economic mess. So they continue feeding new money to a sick economy, because the economy can’t feed itself. I doubt this feeding frenzy can ever stop. Therefore I believe the averages could rise to your numbers. At some point, these trillions of new dollars will inflate our currency so that a 15,864 Dow will actually be a 9,000 Dow in today’s dollars. That’s very scary!