{"id":51359,"date":"2020-02-24T18:00:33","date_gmt":"2020-02-24T23:00:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=51359"},"modified":"2020-02-24T18:00:38","modified_gmt":"2020-02-24T23:00:38","slug":"no-the-fed-will-not-save-the-market-heres-why","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=51359","title":{"rendered":"No, The Fed Will Not “Save the Market”–Here’s Why"},"content":{"rendered":"\n

No, The Fed Will Not “Save the Market”–Here’s Why<\/a><\/h3>\n\n\n\n

The greater the excesses, speculative euphoria and moral hazard, the greater the reversal.<\/em><\/p>\n\n\n\n

A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will “save the market” from COVID-19 collapse. They won’t.<\/strong>\u00a0<\/p>\n\n\n\n

I already explained why in\u00a0The Fed Has Created a Monster Bubble It Can No Longer Control<\/a>\u00a0(February 16, 2020) but it bears repeating.<\/p>\n\n\n\n

Contrary to naive expectations, the Fed’s primary job isn’t inflating stock market and housing bubbles<\/strong>, though punters are forgiven for assuming that, given the Fed has inflated three gargantuan bubbles in a row, each of which burst (1999-2000, 2007-08 and now 2019-2020).<\/p>\n\n\n\n

The Fed’s real job is protecting the banking\/financial sector from a richly deserved and long overdue implosion.<\/strong>\u00a0Blowing speculative asset bubbles is a two-fer, enabling rapacious, parasitic financiers and banks to profit from debt-serfs borrowing and gambling in rigged casinos (take your pick: student loan casino, housing casino, stock market casino, commodities casino, currency casino, etc.).<\/p>\n\n\n\n

Blowing guaranteed-to-burst bubbles also generates a bogus PR cover, the Fed’s beloved “wealth effect,” an\u00a0idiots’ delight<\/em>\u00a0belief that the greater the speculative bubble, the more tax donkeys and debt serfs will spend, spend, spend on defective junk and low-value services they don’t need–in essence, speeding up the global supply chain from China et al. to the local landfill, all in service of Corporate America profits.<\/p>\n\n\n\n

The Fed’s secondary interest is maintaining some measure of control over the financial sector and the real-world economy it ruthlessly exploits.<\/strong>\u00a0Just as the Fed gets panicky if interest rates start getting away from its control, the Fed also gets nervous when its speculative bubbles get away from it via\u00a0infinite moral hazard<\/em>:<\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

No, The Fed Will Not “Save the Market”–Here’s Why The greater the excesses, speculative euphoria and moral hazard, the greater the reversal. A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will “save the market” from COVID-19 collapse. They won’t.\u00a0 I already explained why […]<\/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":[2,4],"tags":[1806,127,29011,195,303],"class_list":["post-51359","post","type-post","status-publish","format-standard","hentry","category-economics","category-environment","tag-bubble","tag-charles-hugh-smith","tag-covid-19","tag-debt","tag-fed"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51359","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=51359"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51359\/revisions"}],"predecessor-version":[{"id":51360,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51359\/revisions\/51360"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}