What is a clear indication that you don’t live with free markets? One is that when a bureaucrat speaks it has a huge impact on the value of the stock market, in either direction.
From the Bloomberg editors: “Explain Yourself, Ben.”
One day soon, perhaps at its meeting this week, the Federal Reserve will decide to curtail monthly bond purchases aimed at reviving the U.S. economy. When it does, it had better be careful with the message it sends to markets.
If the Fed starts to taper because of concerns over financial stability rather than because it has grown more optimistic about the pace of recovery, it had better make that crystal clear. Otherwise the markets will bring forward their expectations for higher interest rates and tighten monetary conditions in a way the Fed doesn’t intend. The best way to provide that clarity is to be straightforward: Explain why the risks of quantitative easing have come to outweigh the benefits, and underline that interest rates will stay very low until rising inflation becomes a concern.
When Helicopter Ben Bernanke speaks Wednesday afternoon, the markets will either celebrate further monetary counterfeiting, or go into a funk. Mark this: His words have absolutely no bearing—none—on the profitability of true commerce, but they will have a massive impact on the phony games played by bankers and bigwigs—illicit games fully protected by their bought-and-paid-for members of Congress.
The Federal Reserve is nothing more than a market distortion machine, which exists to keep the folks at Goldman Sachs, JP Morgan Chase, Citigroup, Wells Fargo, Bank of America—and worse, the biggest banks in other nations around the world—swimming in obscene bonuses, based on creating financial products that add nothing positive to the real economy.
To taper, or not to taper, that is the question market players are looking to answer today. Just know that when it is, the result will be more unassailable testimony that we do not have a free market, but a playground for the biggest white collar criminals in the history of the world.
Those criminals will one day—probably all-too-soon—see their games unleash another economic meltdown which will dwarf 2008, and all of us will pay a huge price for their unsustainable actions.