Federal Reserve QE resolve has yet to be tested by either dollar or Treasury market instability.
“You break it, you own it.”
At least for now, for the markets its Weirder the better.
Whether it’s the recession, Credit issues, COVID consequences more generally, or even the President’s illness – markets have been well-conditioned for “mild case.”
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.