It was suggested 1.5 years ago that the next stock market crash might be one orchestrated by the Fed to create interest from historic buyers of US debt. The scenario went like this: you let the stock market collapse (i.e. no interference by the infamous "Plunge Protection Team") to generate a “flight to safety” environment which would push billions, if not hundreds of billions, of dollars into U.S. Treasuries, soaking up its increasing debt issuance and roll-over with little difficulty thereby flooding the bond market with much needed demand. Were the recent dramatic declines in the U.S. stock markets so engineered by the Fed? Words: 852
Read More »Will the S&P 500 Rally or Fall Off a Cliff?
In the face of lackluster economic growth and no hopes for new stimulus anytime in the near future, the global tightening cycle may force the market back into a deflation scare. Either way, caution remains warranted in such an environment. [Let me explain further.] Words: 568
Read More »Forget the Doom and Gloom! TIPS Yields Say NO Inflation or Stock Market Decline
Real yields on TIPS are very good indicators of the bond market's growth and inflation expectations. Currently they are telling us that the bond market expects sub-par growth and no significant increase in inflation. Words: 401
Read More »Antal Fekete: The Fed Inadvertently Steering Economy on Road to Hell (+2K Views)
I would welcome a public debate of my thesis that risk-free bond speculation suppresses the rate of interest and destroys capital in the process. I have challenged neo-classical economists who still consider the open-market operations of the Fed as a ‘refined tool to manage the national economy’. I want them, instead, to see in open-market operations the cancer of the economy responsible for the withering of the world’s prosperity. So far my challenge has fallen upon deaf ears. Words: 2854
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