BUBBLE 3.0: NO WAY OUT
“We’re paddling against the current in trying to sustain public faith in the Fed.”
–Federal Reserve Chairman JEROME (JAY) POWELL
“The FOMC (Federal Open Market Committee, the Fed’s key rate-setting entity) is in panic mode now, facing the Frankenstein monster balance sheet it has created. The FOMC has come to the realization that it cannot unwind it.”
–Jones Trading’s chief strategist MIKE O’ROURKE
“The Fed today is as much a prisoner of the market as the market today is a prisoner of the Fed.”
–Epsilon Theory’s BEN HUNT
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INTRODUCTION
At the beginning of 2018, we initiated a new EVA series titled “Bubble 3.0” with excerpts from David Hay’s upcoming book titled “Bubble 3.0: How Central Banks Created the Next Financial Crisis”.
If you are just joining us in the middle of this ongoing series, which will eventually culminate in a full-length publication, please take a few moments to review the prior installments in the series:
- Bubble Watch: A New Series Dedicated to Investors Interested in Preserving Their Wealth(December 22, 2017)
- Biggest Bubble Ever Quarterly Webinar (February 9, 2018)
- Bubble 3.0: How Central Banks Created the Next Financial Crisis (April 27, 2018)
- Bubble 3.0: How Did We Get Here? (Part I) (June 1, 2018)
- Bubble 3.0: How Did We Get Here? (Part II) (June 8, 2018)
- Bubble 3.0: A Fast and Furious Challenge (July 6, 2018)
- Bubble 3.0: Up from the Ashes (August 24, 2018)
- Bubble 3.0: The Biggest Bubble Inside the Biggest Bubble Ever (September 21, 2018)
- Bubble 3.0: What Could Go Right (October 12, 2018)
- Bubble 3.0: The Upside of Downside (November 30, 2018)
- Special Edition EVA: The Stealth Bear Market (December 14, 2018)
- Bubble 3.0: What Price Prosperity? (Part I) (January 11, 2019)
- Bubble 3.0: What Price Prosperity? (Part II) (January 18, 2019)
In this month’s edition, David looks at how a recent policy pivot from the Fed could create a longer-term crisis with no way out for the US economy or stock market.
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BUBBLE 3.0, CHAPTER 10: NO WAY OUT
“Big hat, no cattle”. “All sizzle, no steak”. “Talks a good game”. Those and other popular sound-bites are meant to refer to someone who is, to use another colloquialism, “all bark and no bite”. When it comes to most of the world’s central banks, all of those quips apply.
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