Posted on 08/29/2015 8:01:11 AM PDT by Brad from Tennessee
THE financial markets and the Federal Reserve Board have been playing out a tragicomedy in three acts. Here’s how it works: Initially, a flurry of news stories appear about how, a few months hence, the Fed intends to raise short-term interest rates for the first time in years. Second, the predictable market swoon, as Wall Street traders ponder the fact that the morphine drip of free money that they have been enjoying since the aftermath of the 2008 financial crisis might be pulled out of their arms. Finally, the Fed backs away from its much-overdue policy change, causing traders to rejoice and the artificially stimulated bull market in both stocks and bonds to continue. The curtain comes down, and the audience roars its approval.
A similar drama occurred in the spring of 2013, during what has been called the Taper Tantrum. And now it’s happening again.
Some background: At end of the 2008, the Fed dropped its benchmark short-term interest rate to around zero. It also began a program with the Orwellian name of quantitative easing — buying huge sums of bonds to suppress long-term interest rates and stimulate lending and spending. Thanks to Q.E., the cost of borrowing money was pushed to next to nothing. This was a bonanza for those who make money from money — hedge-fund managers, private-equity moguls, banks — and a disaster for savers, retirees and anyone on a fixed income. (Have you checked the interest your bank pays you on your savings account? Mine: .06 percent per year.)
(Excerpt) Read more at nytimes.com ...
The money gamblers are addicted to the heroin of free QE hot air.
It’s hard to believe the Slimes ran this, seeing as how it criticized their buddy Summers, the hedge fund boys, and impliedly Obummer.
But the author got it exactly right—whatever the feds get involved in always makes things much, much worse. If the Fed and government had taken no action in 2008 and following the economy would have already self corrected. The horrible economy we have can be laid directly at the feet of Bernacke, Yellen, JugEars, and idiots like Summers.
It can't go on forever.
When this charade falls apart the crash is going to be epic. I saw an article the other day projecting a coming Dow 5000.
Might not be that far off.
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