Tuesday, September 22, 2015


'What is the Fed so afraid of?' Insolvency might be the correct answer. 

"You gotta know when to hold them … know when to fold them … know when to walk away … know when to run. The Fed is clueless and the elephant in the room, the Wall Street bankers, are laughing all the way home. Very soon, the derivatives bubble created by the Fed's monopoly money will burst, wiping out our money supply. What follows next is chaos.

"The Fed has become a political arm of Congress and the White House. All of this crap today is just silly meaningless chatter. The Fed keeps rates at zero simply to facilitate the crazed spending of politicians.

"If they were to let rates 'normalize,' the costs of servicing our debt would be so overwhelming as to leave little or no money for defense, entitlements, etc. The end of free stuff. The printing presses could not work fast enough. Disaster of unimaginable proportions would soon ensue. In any event, global forces will soon make the Fed actions meaningless."

As for what Fed policy means for stocks, it's less important than earnings – which are poised to shrink from here.

I would say the market is ignoring the central bankers and their dance around interest rates, and is focusing instead upon earnings. After all, that is why you invest. You exchange cash now for income in the future. The increase in the risk or the decrease in the income will reduce the value of the investment. As the Q3 earnings reports come in showing reduced levels of income and failure to meet analysts' expectations, we will see further corrections in the values of corporate equities.

We're facing a crisis of confidence today – and it's one of the most dangerous challenges for the markets.

Confidence in the outlook for economic growth.

Confidence in the knowledge and foresight of monetary policymakers.

Confidence that we will never, EVER be able to get back to a normal market … one that government officials aren't meddling in every other day to try to "fix."

"I think the economy will meltdown with results lasting for decades! And I'm an optimist!"

"When you say it can't be like 1929 through 1931 when stocks lost 89 percent of their value, you're right. It could be worse."

Dr. Kurt Richebacher, financial wizard was asked: What's the nature of this recession you predict? He answered: "It will prove unusually severe and long."

Bill Buckler, wrote, "Asian Central Banks alone hold $US 1.4 TRILLION in liquid U.S. 'paper.' If just a part of this immense stock of funds lent to the U.S. were to start to run for the exits, the entire U.S. financial system would be forced up against a wall and then off a cliff." The stampede has started. In the January 23, 2004 issue of the Asian Times they opined: "All Beijing has to do is to mention the possibility of a sell order going down the wires. It would devastate the U.S. economy more than any nuclear strike."

"In a country where savings are negligible, spoiled and pampered people are commonplace, millions of people enjoy subsidies and half the people can't scrape a thousand bucks together, you have the formula for national bankruptcy,… and confiscatory government."

We've arrived at an extraordinary point in history — when helicopter money, negative interest rates and the elimination of physical cash are suddenly mainstream ideas. 

Here in the real world, where highly-emotional people don't automatically obey unfamiliar and aggressive government edicts, things tend to spin out of control when markets are hijacked by Wall Street, Politicians, and economists.

There's one thing that's scarier than deflation: an even bigger credit-fueled economic bubble. Loose monetary policies helped inflate the credit bubble that led to the financial crisis, which has left us with deflationary pressures around the world.

The longer the Fed waits to raise rates, the bigger the financial market excesses become, and the bigger the risk of financial dislocation and global recession ensuing. Have we learned nothing from the 2008 Great Recession? Just get on with it!

The Fed is implicitly acknowledging that its policy action over the past five years of putting the U.S. economy on a sustainable growth path has been a failure and now if their international concerns become more pronounced, they will also admit to the world that they have no tools to deal with it. 

"The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." 

               Thomas Jefferson 

The party is almost over......

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