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More talk about tapering

September 19, 2013

As I stated a while back, I have very little motivation to read about our financial markets, much less write about them. The last time I wrote anything was July 22. I’m not having “writer’s block,” but I am having Financial Markets Manipulation Disgust, better known as “FMMD,” and I’m fairly certain I could get a shrink to write me some type of prescription drug for it. Furthermore, I still think everyone has an opinion about these markets, so why should anyone consider mine? Have you ever seen a time when so many people had so many opinions, but each is the only one who really knows what is going on? Anyway, that has been my excuse not to write these past couple of months.

My friend Wayne sent me an excellent article by one of the best financial minds currently writing on the markets and economy, Chris Martenson. I actually like reading his stuff. His thoughts and charts are definitely worth reading. Every financial expert, including Mr. Martenson, seemed to be predicting that the Fed would taper between $10 billion–15 billion yesterday, Sept. 18, 2013. The Fed’s decision to maintain their bond and mortgage purchasing (with freshly printed greenbacks) to the tune of $85 billion per month drove up all asset classes, except the dollar, immediately upon announcement. It is clear that the Fed will not do anything that disappoints the markets and yesterday’s decision is just more evidence of what monetary policy is really all about. Even Martenson was surprised by the Fed’s decision not to taper yesterday.

In my June 25 blog post I wrote:
I am so cynical these days that I have a very difficult time believing that any of the Fed’s ‘taper’ talk is real. I think if this monetary experiment has proven anything, it is that for liquidity to work, it requires the exponential increase in liquidity. Bernie Madoff’s pyramid scheme is not even a grain of sand compared to all the beaches on this earth when one considers the magnitude of the world’s central banks’ pyramid scheme. Bottom line, you can’t taper a pyramid scheme, but I will stand to be corrected if Ben can taper long-term and actually reverse the Fed’s massive balance sheet.

It all seems so predictable. The Fed talks like they have an exit strategy, but one can’t have an exit strategy from an unexitable (and yes I know this is not a real word) position! And by the way, I don’t really care who is going to be the next Fed chair, because they all come from the same mold and the house of cards is a mile high. The maestro Alan Greenspan dropped the TNT economic bomb in Ben Bernanke’s lap and Ben is about to drop a nuclear bomb in Yellen’s (or whoever is the next poor sap) lap. Both Ben and Alan Summers must be smarter than they look! Who is stupid enough to be at the helm when the “mother of all bubbles” bursts (see Martenson’s conclusion).

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