Posted on 05/12/2013 9:13:10 AM PDT by whitedog57
According to the Wall Street Journal, The Fed is planning to dial back the incredible monetary stimulus. But it won’t go “cold turkey.”
We can always rely on The Dallas Fed’s Richard Fisher for a pithy comment:
“I don’t want to go from wild turkey to cold turkey,” Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview Friday. “I think we ought to dial it back.” Mr. Fisher is part of a contingent of Fed hawks who are wary of the central bank’s easy-money policies.
After all, Central Banks have lowered interest rates 511 times since June 2007 in an attempt to jump-start economic growth.
Of course, house prices have risen quite a bit since Q2 of 2012, mostly due to investors.
And of course the stock market has been frothed to dizzying heights by Fed intervention.
If we adjust for inflation, the S&P 500 is still below its previous peak.
Will the stock market or housing “bubble” decline with a slow paring of the asset purchases? That is the $3 trillion dollar question.
While The Fed went Wild Turkey starting in 2007, they should proceed with caution on removing the stimulus. As Henry Hazlitt said in his November 22, 1948, column in Newsweek:
“The economic future, like the political future, will be determined by future human behavior and decisions. That is why it is uncertain. And in spite of the enormous and constantly growing literature on business cycles, business forecasting will never, any more than opinion polls, become an exact science.”
The Fed will not go cold turkey, even though they went wild turkey since 2007.
“Central Banks have lowered interest rates 511 times since June 2007 in an attempt to jump-start economic growth.”
WTF? Why not just keep hitting themselves in the head with a hammer expecting different results?
Oh, wait - it’s US they’re bludgeoning, LOL!
Nobody likes the FED’s solution. The FED agrees with the government that a slow grind of debt deleveraging is better than a shorter, sharp depression and the social unrest and suffering that would take place.
It’s fine to cuss the pain caused by the FED, as long as we remember there are no painless ways out of this situation.
I gave up worrying over what the govt and/or the FED does long ago and learned to react to my advantage instead. This has worked out very well, but then I’ve had 30 years of practice at it.
Wild Turkey ?
Cold Turkey ?
and for fun, just have a few “Wild Turkey Slammers”
on me.
Order a drink in a shooter glass (not a shot glass)
Half Wild Turkey and half Ginger ale.
need to leave it about a finger from the top.
Hold the glass with a firm grip
Cover the glass with something that is non absorbent and will make a seal.
With a firm seal, and a tight grip on the glass (this takes two hands)
SLAM the glass on the bar really hard.
The entire drink will foam up.
Drink the whole thing.
Repeat as necessary.
It tastes like a root beer float.
I will caution you that at times you may become soaked by rookies.
“I don’t want to go from wild turkey to cold turkey,”
Nobody does, dear.
The pain would have been over in 2009 had the government not bailed out the huge banks. They should have gone under. The pain would have been limited to Wall Street. The Fed's "solution" has spread that pain across the entire country.
You're smart to profit by it, but the opportunity shouldn't be there.
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