{"id":16658,"date":"2016-01-19T14:47:42","date_gmt":"2016-01-19T19:47:42","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16658"},"modified":"2016-01-19T14:47:42","modified_gmt":"2016-01-19T19:47:42","slug":"the-feds-phony-boom-is-becoming-a-real-bust","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16658","title":{"rendered":"The Fed\u2019s Phony Boom Is Becoming a Real Bust \u2026"},"content":{"rendered":"
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The Fed\u2019s Phony Boom Is Becoming a Real Bust \u2026\u00a0<\/a><\/h3>\n<\/div>\n
No More Juice
\n<\/strong><\/div>\n
\n

Friday\u2019s\u00a0391-point drop in the Dow \u2013 a nearly 2.5% fall \u2013 ended the worst 10-day start to a year in U.S. market history.<\/p>\n

The average stock in the S&P 1500 \u2013 which includes about 90% of all stocks in listed in the U.S. \u2013 is now down more than 26% from its high. The standard definition of a bear market is a sustained fall of 20% or more from recent highs.<\/p>\n

\"bear\"The bear got loose somehow. Who let him out?\u00a0Photo credit: Lukas Holas<\/p>\n

\u201cWoeful earnings<\/em>,\u201d suggested\u00a0MarketWatch<\/em>\u00a0as a cause. Another guess: \u201cThe stock market is freaking out over Trump and Sanders<\/em>.\u201d Barron\u2019s\u00a0was closer to the real source of the plunge: \u201cWithout Fed\u2019s Juice, Market Suffers Withdrawal Pains<\/em>.\u201d<\/p>\n

In 1971, phony fiat money replaced the old gold-backed dollar\u2026 and money that came \u201cout of nothing\u201d replaced real savings. At first, inflation rates rose. No one trusted the new fiat dollar. But then, incoming Fed chairman Paul Volcker showed the world that the U.S. could manage its currency in a responsible way.<\/p>\n

Consumer price inflation fell, along with interest rates. Debt increased. And gradually, every Middlesex village and farm has become dependent on more and more bank credit.<\/p>\n

The dot-com bubble blew up in 2000. The mortgage finance bubble blew up in 2007. Now, it looks as though another bubble is deflating\u2026<\/p>\n

\"1-DJIA\"<\/a>DJIA, daily \u2013 there\u2019s not enough juice left to keep all the bubble balls in the air\u2026 \u2013 click to enlarge.<\/p>\n

Booze Binge<\/strong><\/p>\n

In 2008, the Fed cut rates all the way down to the \u201czero bound\u201d to try to keep the jig going. But after seven years of its emergency zero-interest-rate policy (ZIRP), it became obvious that something had to be done to get back to \u201cnormal.\u201d<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Fed\u2019s Phony Boom Is Becoming a Real Bust \u2026\u00a0 No More Juice Friday\u2019s\u00a0391-point drop in the Dow \u2013 a nearly 2.5% fall \u2013 ended the worst 10-day start to a year in U.S. market history. The average stock in the S&P 1500 \u2013 which includes about 90% of all stocks in listed in the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,6190,8435,8436,9257,303,305,431,534,11806,4469,1939],"class_list":["post-16658","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-bill-bonner","tag-boom","tag-bust","tag-djia","tag-fed","tag-federal-reserve","tag-interest-rates","tag-monetary-policy","tag-phony-boom","tag-zero-bound","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16658","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16658"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16658\/revisions"}],"predecessor-version":[{"id":16659,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16658\/revisions\/16659"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16658"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16658"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16658"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}