Zero Hedge: What a farce.
A few short hours after NY Fed President John Williams sparked mayhem in the markets by dropping the most dovish of hints in a speech:
“First, take swift action when faced with adverse economic conditions.
Second, keep interest rates lower for longer.
And third, adapt monetary policy strategies to succeed in the context of low r-star and the ZLB.”
Signaling to the market that lower, sooner, and longer is the way forward, a Fed spokesman has issued a ‘just kidding’ statement in a desperate attempt to walk back market expectations. more …
Opinion: “It’s better to take preventative measures than to wait for disaster to unfold.” John Williams, New York Federal Reserve President.
Used to be that when stocks made new highs and unemployment was low, interest rates would climb to hold off inflation. No more.
That the Fed’s desired 2% inflation rate is elusive and all the above are happening, means something big has changed. I believe the change is a residual of quantitative easing (QE), or money printing, that began in the 2008-9 financial crisis.
The Federal Reserve printed $4 trillion to stimulate the global economy in the hopes that when the crisis was over they would simply raise interest rates to normal levels, pay off the $4 trillion and everything would go back to normal. Hah.
Today the Fed, who cannot pay off its QE debt, is signaling more rate cuts despite a robust economy/stock market. A chorus of voices, including the president, are calling for QE4 to remove any chance of an economic slowdown and let the next generation worry about the debt.
Equity prices will likely rise as investors avoid low yielding bonds. But there is more than one problem:
- Debt and deficits will rise to unimaginable levels
- Pension plans who must keep up to 40% of assets in government bonds will fail to meet payments to participants
- The gap between the rich and the working man will explode
- The US dollar will be debased causing the middle class and poor to pay more for goods and services
- Social upheaval is a given along with a growing chorus of Socialist politicians
The outcome at some point is found in Revelation 6:5-6. Economic hyperinflation. And at this point there does not appear to be any way to stop it.
The tipping point? 1 Thessalonians 4:16-17 – all roads lead to the fulfillment of prophecy.