Friday, July 11, 2014

Is The Fed Going To Attempt A Controlled Collapse?

Via Jonathan


As most Fed watchers know, last week was interesting because Janet Yellen, speaking at IMF came out and said something quite surprising.  In a nutshell, she said “It’s not the Fed’s job to pop bubbles”.   While many market participants immediately took this to mean, “To the moon, Alice!”
 and started buying equities hand over fist, there’s another possible explanation for Mrs. Yellen’s proclamation of unwillingness:  The Fed could be preparing to do exactly what it said it wouldn’t.

Here’s a quick re-cap of events:  In the recently released Annual Report of the BIS: Bank for International Settlements  (commonly thought of as the “central bank’s central bank”) the BIS made a rather ominous recommendation to it’s member banks: Pop this bubble now. Their specific language wasn’t quite so direct, but the message was just as clear.
The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on.
Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms," …
"The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.
More @ Alt-Market

4 comments:

  1. It has been my experience, having spent some time posting on both left leaning and right leaning comment boards, that in terms of methodology and tactics of the two sides have more in common than in difference.


    There are goodly percentages on both sides that are ideologically hidebound to both party affiliation and visceral hatred of any and all who they perceive as or have been told by leadership is the "enemy".


    That said I find the leftists to be far quicker to leap to generalizations, name calling and outright viciousness when it comes to responding to any content they don't agree with.. Present them with hard facts and reference historical source materials and the reactions can grow to bordering on violence. Whatever the reaction don't ever expect them to respond with a logicly constructed counter argument. It happens but not very often. Engaging in open, honest debate is the last thing they want to do. When they can't counter an argument they resort to distraction, accusations , name calling and vilification.


    Again there are elements on both sides of the aisle that are guilty of this. Both parties suffer from a form of atrophy.. The Democrats have not had a new movement, new idea or direction come forth since the hard left took control of the part in 1972 with the nomination of George McGovern. The Republican elites reestablished control after the Regan presidency with George H. W. Bush and has fought tooth and nail to retain it ever since. They fear and loath the emergence of the so called "Tea Party" as much or more than the democrats do.


    And no this is NOT an endorsement of the Tea Party on my part. They are as naïvely wedded to economic free trade policy as any capital R republican or capital D democrat establishment type. Both parties are deeply dependent upon the financial elitests and imperialists that have pushed this false notion since before the American Revolution. These forces don't really care which party claims "control" of the government just as long as it is their agents that maintain control over economic policy.


    Anyone who doubts this need only look at the pedigree of those who have held the post of Secretary of the Treasury over the last decades. The names of Goldman Sachs, J. P. Morgan etc. come up over and over again regardless of that party occupying the White House or in control of Congress. They are not there to serve the best interest of the party or the administration or the American people. They are there to maintain policy continuity and control by the financial elites.


    They happily set one side against the other, encouraging and financing the most vicious behavior for the singular purpose of keeping the general populace distracted from their continued accumulation of wealth and power.


    The Tea Party may be right when calling for the return to founding principles but they will be destined to failure unless and until they also call for the destruction on the power of the financial elites and the return to sound asset based monetary policy. Something that believe it are not, there are elements within the traditional old school Democrats, would agree with.


    Getting past the ideological horse blinders and conditioned hatred is and will remain a most difficult obstacle for both sides to overcome. And that is just the way the financial gods of Wall Street and the City of London want it.


    In spite of their long standing animosity both Jefferson and Hamilton were right when it came to the need for an open an honest American financial system.


    http://theeveningchronicle.blogspot.com/2014/07/left-vs-right-false-paradigm.html

    ReplyDelete
  2. When government fosters cheap and easy credit (for itself and all others) it is encouraging poor investment of available credit and eventually nothing to show for the credit except debt. When debt reaches high enough levels there is no way to service it and economies slow to a standstill from the weight of the debt. Eventually the only way out is to destroy the bad debt through a depression or recession. Our bad debt is far too large to destroy by recession. The trillion dollar a year welfare state is going to be destroyed and those used to the government check are going to act like drug addicts who are without a fix. People had better be prepared for this shit.

    ReplyDelete
    Replies
    1. The trillion dollar a year welfare state is going to be destroyed and those used to the government check are going to act like drug addicts who are without a fix.

      They can keep printing money, but at some point, people lose confidence in it, though remember, the South Vietnamese piaster was still being accepted on April 30, 1975, but at a huge discount.

      Delete