The Fed is caught in a
catch-22 of its own making.
"But unlike the financial media’s dopey dithering about “dot plots”,
Yellen at least has something to hide behind all the gibberish. Namely,
she and her merry band of money printers are becoming more petrified
each month that they will trigger a thundering Wall Street hissy fit if
they move to “normalize” interest rates—-even as they are slowly
beginning to realize that continuance of ZIRP much longer will only
intensify the market’s addiction to rampant speculation, free money
carry trades and the associated risks to financial stability."
Zero interest rates are unsustainable, so rates will rise.
"Needless to say, that has generated a dangerous and ever widening
disconnect between the real main street economy and the nominal value of
assets in the financial system. This rupture has been
called “financialization”, but it amounts to this: Fed attempts at
monetary stimulus are now short-circuited; added liquidity essentially
becomes sequestered within the financial system where it generates
persistent inflation of existing asset values. That is, stimulus never
leaves the canyons of Wall Street."
This is always true. It's why the Fed gives money to banks, not people.
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