{"id":24441,"date":"2017-07-13T19:07:47","date_gmt":"2017-07-14T00:07:47","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24441"},"modified":"2017-07-13T19:08:17","modified_gmt":"2017-07-14T00:08:17","slug":"24441","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24441","title":{"rendered":"How Dumb Is the Fed?"},"content":{"rendered":"
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How Dumb Is the Fed? <\/a><\/h3>\n<\/div>\n
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Bent and Distorted<\/strong><\/h3>\n

POITOU, FRANCE \u2013 This morning, we are wondering: How dumb is the Fed?<\/p>\n

The question was prompted by this comment by former Fed insider Chris Whalen at\u00a0The Institutional Risk Analyst<\/em>\u00a0blog.<\/p>\n

\"\"They\u2019re not the best map readers, that much is known for certain. [PT]<\/p>\n

[O]ur message to the folks in Jackson Hole this week [at the annual central banker meeting there] is that the end of the Fed\u2019s reckless experiment in social engineering via QE and near-zero interest rates will end in tears.<\/em><\/p>\n

\u201cMomentum\u201d stocks like Tesla, to paraphrase our friend Dani Hughes on CNBC last week, will adjust and the mother of all rotations into bonds and defensive stocks will ensue. We must wonder aloud if Chair Yellen and her colleagues on the FOMC fully understand what they have done to the US equity markets. [\u2026]<\/em><\/p>\n

Once the hopeful souls who\u2019ve driven bellwethers such as Tesla and Amazon into the stratosphere realize that the debt driven game of stock repurchases really is over, then we\u2019ll see a panic rotation back into fixed income and defensive stocks.<\/em><\/p><\/blockquote>\n

If you believe the newspapers, the Fed has begun a \u201ctightening cycle.\u201d It is on course to raise its key interest rate, little by little, in quarter-point increments.<\/p>\n

It must know that this is a perilous thing to do. After so much market manipulation over such a long period, prices all up and down the capital structure \u2013 from junk bonds to quality stocks and solid real estate \u2013 have been bent and distorted.<\/p>\n

After all, that was the idea: drive up the price of stocks and bonds by driving down interest rates. People would be forced to spend or invest their money rather than save it. And higher financial asset prices would make the rich feel even richer.<\/p>\n

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

How Dumb Is the Fed? Bent and Distorted POITOU, FRANCE \u2013 This morning, we are wondering: How dumb is the Fed? The question was prompted by this comment by former Fed insider Chris Whalen at\u00a0The Institutional Risk Analyst\u00a0blog. They\u2019re not the best map readers, that much is known for certain. [PT] [O]ur message to 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":[5728,6190,303,451,3650],"class_list":["post-24441","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-bill-bonner","tag-fed","tag-janet-yellen","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24441","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=24441"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24441\/revisions"}],"predecessor-version":[{"id":24443,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24441\/revisions\/24443"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}