Posted on 07/10/2014 6:21:44 AM PDT by Java4Jay
Federal Reserve officials agreed at June's policy meeting to end their bond-buying program in October, putting an explicit end date on the experiment for the first time and closing a controversial chapter in central-banking annals with results still the subject of immense debate.
(Excerpt) Read more at online.wsj.com ...
When will the Fed start selling the Trillions $$ that they already have sitting on their balance sheets ?
2- The ECB and Japan are expanding their money printing.
I imagine that the biggest result will be in the bond market; but I will not hazard to guess in which way.
They have been propping up government bonds, but has this taken investment funds away from other bonds; or has it artificially inflated the bond market that will now correct?
Bonds are an oddity, because as their price drops, *typically* their yield rises. However, if their price drops and their yield does not rise, it may cause a stampede out of bonds.
Commercial, taxable yields are more volatile, and market driven; and tax free municipal bonds are more stable, and based on the ability of cities to build new infrastructure. And because muny bonds are often medium and long term, even cities with financial problems continue to pay yields on them, so as not to destroy their credit.
After that it’s Orange Juice and Chocolate bars.
BS. The FED can’t stop creating money. There is no one to buy $1 trillion a year in US debt.
This will be a smoke and mirrors psych opp. Proxy buyers of Treasurys. Maybe Belgium will move up to be the biggest buyer. It already somehow holds over $400 billion. Not bad for a country with a 2013 GDP of $482 billion. /sarc
Every blade of grass.
That's the dilemma, isn't it? Should I move my investments out of bonds (which have been doing quite well lately) and move them to something like a money market fund?
Should I let my large and small cap investments ride? Should I move in or out of equities? Or is it just something no one can predict?
The Fed policies have led to Hot Money going to the Stock Market because of no returns anywhere else.
For certain now that interest rates will go up.
The Hat trick will be the Fed trying to unwind their Bond Portfolio now at about $5 Trillion bucks.
Truthfully, I sincerely suggest what I have been suggesting for some years now: to keep a significant amount of cash, perhaps $5,000, in a secure place at home.
It’s most important element is that you have complete control over it at all times. Unlike a bank deposit, withdrawals cannot be “halted” by the government, or the bank itself. (Just a year or two ago, the rules were changed so that even “demand” accounts are no longer safe.)
It cannot be savaged by any kind of “currency run” on banks. (N.B.: there is only enough physical currency to support 4% of US daily retail trade.)
And paper money and coin cannot be hyperinflated, as such, because there are only two US printing offices, that already work around the clock producing mostly $1 bills, and proportionately fewer higher denominations. So they cannot produce *more* money, and there are not enough $20, $50 and $100 bills to support even a $500 denomination, much less a $1000 denomination.
So the weird situation might exist of hyperinflation in virtual money, and hyper-deflation of physical money, at the same time. That is, *starting* with a nickel being worth a dollar, rapidly becoming a penny worth a dollar, then a penny worth ten dollars. While at the same time, virtual money becomes worthless, because no one will accept it.
The biggest twist here is that physical money is legal tender, and virtual money is not. So creditors *must* take physical money, but they can refuse any form of virtual money. So pay in cash, or nothing.
The final blessing of having cash at home is that if there is an economic disaster and massive inflation affecting all currency, you can spend it immediately.
I'd probably work out an arrangement to share the profits with the driver, and I'd have GPS tracking installed to keep the driver honest.
If I had big bucks to invest I'd be looking at the nation of Panama (in fact, one of my own aspirations is to open an office there).
hmmmm, sounds like I should get out of everything.
And get a 1% CD. yippee!
Does anyone really think the Fed will take away the punch bowl?
Does the Fed really want to crash the market back to 13.5 by Christmas?
The Fed has hooked Wall Street on free meth/money and if the junkie goes cold turkey, he's gonna be real real sick.
Plus, does anyone think that Barry's boys will let this happen on Barry's watch and send a weak economy into big recession?
Nope, nope and nope.
The Fed as pusher is here to stay for a long long time, until something outside blows the whole rotten scheme up.
Correct.
This is a play at the 2016 elections. Crash the economy (well, it is really dead, this just removes the life support)right before mid terms and blame it on the TEA party conservatives.
In two years, proclaim an emergency of some sort and the game is over.
Well if the crash is inevitable we can all get fabulously rich like John Paulson and laugh at everybody.
Just tell me when to load up on shorts and puts!
“This way the inevitable crash can be blamed on the Republicans who will have kept the House and just retaken (I hope) the Senate.”
i’ll take it
“And paper money and coin cannot be hyperinflated”
I thought that was the basis of hyperinflation, and the stories of paper money in wheel barrels during the weimer republic?
I hope you are right.
Inflation cuts across numerous commodities and assets. So if you move to cash now - then commodities / assets should drop in price - you can reinvest opportunistically.
I'd say ammo is always a safe bet - keeps you safe, fills the freezer, and needs to be replaced due to consumption...
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