{"id":20156,"date":"2016-04-22T18:52:46","date_gmt":"2016-04-22T23:52:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=20156"},"modified":"2016-04-22T18:52:46","modified_gmt":"2016-04-22T23:52:46","slug":"a-total-illusion-from-qe-and-financial-engineering","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=20156","title":{"rendered":"\u201cA Total Illusion from QE and Financial Engineering\u201d"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/04\/22\/a-total-illusion-from-qe-and-financial-engineering\/\">\u201cA Total Illusion from QE and Financial Engineering\u201d<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>The 10-Year Treasury Is Less Than You Think<\/strong><\/p>\n<p>When the Fed was created in 1914, it was set to task of controlling short-term interest rates in an attempt to iron out financial cycles.\u00a0It succeeded for many years. But by avoiding the natural rebalancing (and occasional pain) from free markets, we just got a bigger bubble into 1929.\u00a0Then, when it finally burst, we got the greatest depression in all of modern history!<\/p>\n<p>Since the Fed and other central banks were created, they have always manipulated short-term interest rates to try to encourage borrowing and spending in slowdowns \u2013 to make the natural economic cycle \u201cgo away.\u201d<\/p>\n<p>And every time, it suppresses the economic cycles that were already in place, until finally they come roaring back.<\/p>\n<p>So it always strikes me as funny to see highly educated, seemingly reasonable people in pin-striped suits and pantsuits stand in front of us and basically say that there\u2019s a free lunch after all \u2013 that we can get something for nothing!<\/p>\n<p>To them, economics is no longer a matter of supply and demand, free markets and rebalancing. They think we\u2019ve found a way to program the economy so we never have a recession again.<\/p>\n<p>All the apparent education and sophistication\u00a0<a href=\"http:\/\/economyandmarkets.com\/demographic-trends\/life-cycle\/what-economists-and-the-fed-dont-get-about-the-economy\/\" target=\"_blank\">of these top economists<\/a>, financial officials and central bankers boils down to this simple automaton explanation: if we don\u2019t keep taking more of the financial drug that we used to keep the bubble going, like zero interest rates and QE, we will collapse and go into detox.<\/p>\n<p>It\u2019s the same logic of any extreme addict. When a serious drug addict comes off a high, he realizes the only non-painful choice is to take more of the drug.<\/p>\n<p>As Charlie Sheen said: \u201cthe key to drinking is to not stop.\u201d<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u201cA Total Illusion from QE and Financial Engineering\u201d The 10-Year Treasury Is Less Than You Think When the Fed was created in 1914, it was set to task of controlling short-term interest rates in an attempt to iron out financial cycles.\u00a0It succeeded for many years. But by avoiding the natural rebalancing (and occasional pain) from [&hellip;]<\/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":[124,1675,303,383,4726,534,558,661,662,3650,4255],"class_list":["post-20156","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-economic-cycles","tag-fed","tag-great-depression","tag-harry-dent","tag-monetary-policy","tag-negative-interest-rates","tag-qe","tag-quantitative-easing","tag-us-federal-reserve","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20156","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=20156"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20156\/revisions"}],"predecessor-version":[{"id":20157,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20156\/revisions\/20157"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}