Will Janet Yellen, nominated by President Obama to head the Fed, provide a reasoned defense of current Fed policies in her upcoming Senate confirmation hearings? It isn’t likely.
It wasn’t long ago that such an idea was beyond the pale. No longer.
What else is the Fed going to do? It will likely keep easing until it can’t ease any more. (For whatever reason.) It has no way out.
“Very clever men have a capacity for very great mistakes which often elude simpler souls.”
Fight the Fed if you want. It’s rotten. It stinks. But it is reality.
A good op-ed from Paul B. Farrell at Marketwatch.com. He explains that despite how different things seem in the markets, despite the technologies utilized and new strategies employed, it is never “different this time.” And we ignore this reality at our peril. But ignore many do. They’ve “sequestered their brains” says Farrell.
Many of us have watched the climb of the stock market since March of 2009 with a general sense of of unease. We’ve watched our central bank, the Federal Reserve, do all that it could/can to move shares up. Every time the markets faltered the Fed came to the rescue and dumped piles of cash on Wall Street. Check out this chart of the correlation between the Fed’s printing efforts of the past few years and performance of the S&P.
The tone of the Federal Reserve has shifted a bit. Is it broadcasting a new tightness? Maybe. We’ll find out soon enough.
This is about right.
The major economic players of the world are in the midst of devaluing their currencies, or attempting to. The goal is to increase competitiveness of exports and boost domestic economic activity especially in manufacturing. One of the problems is that this sort of thing often results in price inflation, often damaging inflation and societal disruption. The last big currency war happened in the 1930s.
Bill Fleckenstein explains that the reason the economy doesn’t feel like it’s recovering is because it’s not. The rise in asset prices and bonds is purely a creation of central banks printing with unprecedented abandon. Like the tech bubble and the housing bubble, the current Fed driven asset inflation will end badly. But when it ends this time the scale will be much larger.
And we may have passed the event horizon.
QE Infinity just keeps on trucking, I guess that’s the point.
We pray that this is very dry satire. I honestly can’t tell. Let’s hope this is a joke.
We now have the announcement that Ben Bernanke’s Fed will buy $45 billion a month in treasuries, QE4, until unemployment reaches 6.5% or his version of inflation exceeds 2.5%. What a surprise!