The Fed Shocker: Part II The Consequences

20 Minutes, 32 Slides

The Fed shocked the markets with its reversal on the expected September initiative of a "Taper" Policy. What are the consequences of this apparent "delay"?

There are immediate ramification and there are others associated with Moral Hazard and (Un)intended Consequences due to a protracted period of what can only be termed Monetary Malpractice. These and the following are discussed in this video by Gordon T Long and John Rubino.

Clearly Evident

• With economy decelerating and interest rates already rising, Fed can't end QE.
• Massive infusions of new dollars for as far as the eye can see.
• Rising danger of instability.
• Hot money flows back into emerging markets, destabilizing them AGAIN.
• Weaker dollar?
• Rising precious metals?
• Stock market? Technically ready for a major correction, but all that new money...
• Bonds? Fed will keep trying to force long rates down. Will they succeed?

Not So Evident

• A Glimpse At What Will Be a Much Larger Problem - The Fed Was Caught Off Guard in June!
• We have Past the Event Horizon and a Return Near Impossible without a Crisis - Credibility Shaken.
• We Now Have Global "Abe-nomics"
• Serious Shortage of Risk Free Collateral - The TBAC Warning Left Unheeded
• Mispricing & Mal-Investment
• Elements of Moral Hazard and Unintended
• Currency Wars Return - Now "Risk-On" with Hot Money Flows

The question John & Gordon grapple with is whether the Fed has now intentionally or unintentionally placed the world on the road to a Von Mises Crackup Boom?

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