Everyone invested in the Wall Street is worried that the Federal Reserve will finally take away the punch bowl. Buzz Ben made such statements recently to the effect of scaring the market.
Can this be made sense of?
First of all, the accommodating policy to shore up balance sheets with massive injections of liquidity in 2008 was the right move. But as Dr. Alan Meltzer admonished, ‘you don’t create a rule in the middle of a crisis’. Translation: TBTF (to-big-to-fail) became an institutionalized policy. Buzz Ben was even hijacked into financing a limp recovery so as to help the re-election of team Obama; in a sentence, he became a political player and ruined the political independence (read integrity) that was created by Vockler.
Where are we now?
My guess is that Buzz Ben (Buzz Lightyear) fears the impact the policies his successor with pursue. This is dangerous territory, for it presages imminent decline if the Federal Reserve will pursue opaque monetary policies that eschew Congressional authority, especially numerated authority regarding fiscal integrity.
In a sentence: purchasing parity.
The U.S. Dollar as we speak is SHOT!
Yes, the price of gold is declining. But this is discovered in both Congresses drive to find secure fiscal ground throughout the Sequestration & real fear of deflation.
Deflation is most difficult to fix, especially if its located in popular sentiment. The Keynesians think they can fix this one too!! They can’t, but more on that later.
The Wall Street-Washington-Credit-Subsidy is screaming. Why? Because free money from the Federal Reserve is coming to an end, and their bets (positions) are exposed to massive deflation.
Richard Fisher, the Dallas Fed. President spoke of ‘feral hogs’. The overreaction to Buzz Ben’s remarks should have been expected. The real task here is to find the adults in the room and speak manly of an unrealistic monetary accommodation. How else to say it: the Fed policy of Q.E. (to infinity and beyond) must end.
The question for both feral hogs and wild turkeys is this: does the Federal Reserve have the political will to exert dominating political influence?
My guess is Buzz Ben knows a thing or two of the catastrophe that’s coming with his successor. Get ready for a wild bear run downhill.
William Holland
