Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Fed Determined to Inflate Another Asset Bubble

Stock-Markets / Market Manipulation Oct 25, 2009 - 02:14 AM GMT

By: Mike_Larson

Stock-Markets

Best Financial Markets Analysis ArticleThere goes oil, surging past $80-a-barrel. That’s up 150 percent from the December low, in case you’re keeping score.

Gasoline? Wholesale prices are up more than 40 cents a gallon in just under a month …


Heating oil? Grab an extra blanket! It just jumped to the highest price in almost a year …

Corn? It’s up almost a buck a bushel since mid-September …

Wheat? Rising. Soybeans? Yep. Sugar? Near a 26-year high. And I hope you’re not planning on eating too much chocolate this Halloween. Replacing it will cost a lot more considering cocoa futures just soared to the highest level in almost three decades.

Rising commodity prices  mean bigger bills when you shop.
Rising commodity prices mean bigger bills when you shop.

But for everyone else, it just means higher prices at the pump … a dramatic escalation in heating bills … pricier bread … more expensive cereal … and so on.

And you know what? Federal Reserve policymakers probably couldn’t be happier! They want prices to surge. In fact, they are deliberately pursuing reckless monetary policies and a strategy of dollar debasement in order to ENSURE we get yet another round of asset inflation!

The Definition of Insanity: Doing the Same Thing Again and Again … And Expecting a Different Result.

I always liked that quip about the definition of insanity. And as far as I’m concerned, it definitely applies to the Fed.

You’d think these men and women would get it.

You’d think that after helping inflate two gigantic asset bubbles in stocks and housing … then watching them blow up in their faces … they might change strategies.

You’d think they’d realize the problems inherent in flooding the economy with cheap and easy money. Or in eagerly slashing rates by huge margins at the first sign of trouble … but only reluctantly — and belatedly — raising them.

But no … it seems they’re determined to inflate yet another asset bubble, this time in just about everything!

The tidal wave of liquidity flooding out of the Fed is floating every boat out there. Commodities are the most obvious example. But the same principle applies to equities … junk bonds … emerging markets … and many foreign currencies. The carry trade is driving the action in anything and everything.

Foreigners “Fed” Up With the Money Flood — But They Can’t Stem the Tide Alone …

So much funny money is flooding the world that more responsible foreign central bankers and policymakers are boiling over with anger. They’re warning the Fed to knock it off, and starting to take steps to stem the gains in their currencies against the greenback.

ECB President Trichet  warned that 'excessive volatility' in currency rates is 'bad for economic  development.'
ECB President Trichet warned that “excessive volatility” in currency rates is “bad for economic development.”

* The Bank of Canada warned on Tuesday that “heightened volatility and persistent strength in the Canadian dollar are working to slow growth … the current strength in the dollar is expected, over time, to more than fully offset the favorable developments since July.” That was a clear attempt to talk down the Canadian dollar, affectionately known as the “loonie.”

* European Central Bank President Jean-Claude Trichet warned again about “excessive volatility” in exchange rates, while a French economic advisor said the current euro-dollar rate is a “disaster for the European economy.” More verbal intervention, this time targeted at the euro currency.

* In Brazil, the carry trade (borrow cheap dollars here, plow ‘em into higher-yielding Brazilian assets) is so out of control, the government just slapped a tax on foreign investors. A 2 percent levy will apply to foreign purchases of Brazilian fixed-income securities and stocks, effective immediately.

* Minutes of the latest Reserve Bank of Australia meeting showed that officials were very concerned about the side effects of recklessly easy money. Policymakers warned that a “very expansionary setting of policy was no longer necessary, and possibly imprudent.” The RBA surprised the world several days ago by raising Australia’s benchmark rate 25 basis points to 3.25 percent.

The Fed is showing no sign of tightening  its 'easy money' policy.
The Fed is showing no sign of tightening its “easy money” policy.

Heck, even the financial newsmagazine Barron’s published a cover story this past weekend urging Bernanke to raise the funds rate. Barron’s said the rate should increase from its current 0-to-0.25 percent range to 2 percent.

There’s just one problem: All of these guys are ultimately powerless against the Fed! Sure, they might win the occasional one- or two-day battle in the markets. But until the Fed joins the fight, they’re going to lose the war. And as I’ve told you repeatedly, the Fed shows no sign of having the motive, means, or political willpower to do what’s right.

So what’s going to happen?

The Fed is going to keep monetary policy “too easy” in order to inflate asset prices. And the carry trade will live on. If that makes our lives miserable by driving up the cost of living … the Fed just doesn’t care.

They’re apparently more worried about helping Goldman Sachs generate the biggest quarterly profit in the firm’s history.

Until next time,

Mike

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules