The numbers are just monstrous. The Fed’s own data illuminate the historic Monetary Disorder that today runs wild. Finance has completely run amuck and it will lead to devastating instability.
September 17 – Wall Street Journal (Greg Ip): “Can words take the place of actions? The Federal Reserve hopes so. On Wednesday it issued a policy statement promising to get inflation above 2%. In their accompanying projections, officials indicated that…
I have for years fretted China might resort to military conflict to divert attention from its failings in managing its domestic economic and financial systems.
QE fundamentally changed finance. Aggressive Fed stimulus exacerbates dangerous financial excess and economic maladjustment – fomenting precarious “Terminal Phase” Bubble excess. Fueling a spectacular equities speculative melt-up comes with great risk. Spurring the issuance of Trillions of mispriced corporate Credit will haunt the system for years to come.
The Fed committs to digging ever deeper holes.
The Fed’s stunning pandemic response has greatly exacerbated at least two pernicious dynamics – Inequality and Moral Hazard.
Is a so-called “safe haven” losing almost 4% in a single week really a safe haven? Rising yields were a global phenomenon this week.
There is today no doubt in the marketplace that the Fed, in the event of market instability, would quickly replay March’s crisis operations. Markets see nothing inhibiting Fed intervention measures. The sanguine view holds even for the Federal Reserve’s extraordinary international crisis operations.
If we could chart “inequality,” it would at this point be rising parabolically – following the trajectory of the Fed’s balance sheet. I had been assuming Fed holdings would at some point be getting a lot larger. It seemed clear inequality would only get worse. COVID dramatically accelerated both trends.
This Bubble has turned unstable. Chinese stocks reversed sharply lower after the U.S.’s shocking closure of China’s Houston consulate. Fundamentals and geopolitics do matter.