{"id":7669,"date":"2015-04-29T05:43:49","date_gmt":"2015-04-29T10:43:49","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7669"},"modified":"2015-04-29T05:43:49","modified_gmt":"2015-04-29T10:43:49","slug":"why-markets-are-manic-the-fed-is-addicted-to-the-easy-button","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7669","title":{"rendered":"Why Markets Are Manic\u2014-The Fed Is Addicted To The \u2018Easy Button\u2019"},"content":{"rendered":"

Why Markets Are Manic\u2014-The Fed Is Addicted To The \u2018Easy Button\u2019<\/a><\/h3>\n

Later this week another Fed meeting will pass with the policy rate still pinned to the zero bound.\u00a0The month of May\u00a0will make the 77th consecutive month\u00a0of ZIRP\u2014\u2013an outcome that would have been utterly unimaginable even a decade ago; and most especially not with the unemployment rate at 5.5% and after 23 quarters had elapsed since the official end of the recession.<\/p>\n

There never was an Armageddon-like crisis in 2008 that justified all this; it all happened because two emotionally unstable and misguided high officials\u2014-Ben Bernanke and Hank Paulson\u2014-panicked Washington into the utterly false fear that Great Depression 2.0 was at hand.<\/p>\n

<\/div>\n

I debunked\u00a0this urban legend by\u00a0chapter and verse in\u00a0The Great Deformation,<\/strong>\u00a0but suffice it to say here that\u00a0not withstanding all the crony capitalist larceny that this financial terrorism enabled, it is impossible with the stock market at 2100\u2014-50% above its pre-crisis level\u2014that there remains any justification for maintaining these \u201cextraordinary policies\u201d seven years later.<\/p>\n

In fact, the Fed\u2019s cowardly dithering for yet another meeting this week has precious little to do with the so-called Great Financial Crisis\u2014-the ostensible reason why we ended up with perpetual free money subsidies for financial market speculators. Instead, it is a product of a policy ideology and insular culture that has been building at the Fed and most other major central banks for more than two decades.<\/p>\n

Central bankers now have their big fat thumbs perpetually on the Easy Button because they are addicted to it. In the case of the Fed, it has been in a rate cutting or rate holding mode during 80% of the time since 1990. Stated differently, during 240 of the last 304 months, the Fed has been riding the Easy Button.<\/strong><\/em><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Why Markets Are Manic\u2014-The Fed Is Addicted To The \u2018Easy Button\u2019 Later this week another Fed meeting will pass with the policy rate still pinned to the zero bound.\u00a0The month of May\u00a0will make the 77th consecutive month\u00a0of ZIRP\u2014\u2013an outcome that would have been utterly unimaginable even a decade ago; and most especially not with 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":[2120,303,305,1154,431,5020,5019,506,534,662,3597,1940,1939],"class_list":["post-7669","post","type-post","status-publish","format-standard","hentry","category-economics","tag-david-stockman","tag-fed","tag-federal-reserve","tag-interest-rate-policy","tag-interest-rates","tag-mania","tag-manic","tag-markets","tag-monetary-policy","tag-quantitative-easing","tag-the-great-deformation","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7669","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=7669"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7669\/revisions"}],"predecessor-version":[{"id":7670,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7669\/revisions\/7670"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}