Financial Markets and the Fed

It would be hard to purposely wreak the level of harm on the United States as has Federal Reserve. I seem to be alone in recognizing monetary policy as a political agenda. It didn’t start with the financial crisis. The financial crisis was caused by the relentless goosing of asset values for years prior to 2008. Ostensibly Federal Reserve policy is a tireless effort to improve the financial wellbeing of all citizens. It is troubling that all but a few believe that. Now the president is trying to pass the stimulus baton to the arena of fiscal policy. Who would have guessed?

So, QE is finished and everyone is waiting for a reckoning. The reckoning may come. I have written many times that the reckoning will occur for sure when the country, government and economy are destroyed. The reckoning could also occur if the political scene turns against the Fed and there is a general understanding that stimulus is theft. There is not much chance of that happening.

There is not a doubt in my mind that the stock market is ready to drop big time. I have even taken some small bearish positions, bearish ETFs. I am still at least 90% cash. I am also certain that if it does start to tank, all of the central banks in the world will stop at nothing to crank it back up.

Lets suppose a serious decline begins. What is responsible for any good economic numbers? It is the unending asset enhancement initiative. If asset prices start to drop without permission form the folks at the top, a national emergency will be announced. The Federal Reserve will accept the responsibility of buying stock outright with both hands to “save the world.” Congress may also authorize them to do so. Will Americans believe it is a right and necessary policy? All of them who are long stock in their IRAs and through their pension funds will buy into it automatically.

So, just because it is time to unwind QE all around the world, don’t thing the various governments around the world will stop tampering with the financial markets. Do they have any tools left? They can come up with new ones.

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.