I fought the Fed and the, Fed Won
Robbing people with - six percent inflation
I fought the Fed and the, Fed Won
I fought the Fed and the, Fed Won
The Bobby Fuller Four may have sung it a little differently, but the sentiment is the same. I'm not breaking rocks in the hot sun, nor can I say I needed money 'cause I had none, but I fought the Fed, and the Fed won. On Wall Street they say you can't fight the Fed, and I figure they're right, in normal times. If the Fed wants to throw money out the window, or from helicopters for that matter, stocks will go up because the companies can use that free money to buy their own stock and drive shares up.
But bubbles burst when regular people become skeptical that the party will go on forever, and I was hoping that between the mortgage travesty, consumer debt and the hidden inflation, that time was coming. I didn't count on the Fed to cut even a quarter point, but being completely lacking in courage, that's what they did. Of course, the market dipped because economists for the big brokerages had figured the Fed was so weak that they'd cut a half point. This morning, the Fed rolled out their new free money plan, in association with the great central banks of the Western world. They've all joined together and declared that the risk of falling stock prices outweighs all other monetary considerations, and they'll do whatever they can to keep the bubble inflated.
My own back of the napkin estimate of real inflation over the past decade is an average of around 6%. That's inflation in terms of my basket of goods, food, fuel, housing. I don't give a rat's behind what the latest electronic gadgetry costs or whether I can get cloned for less than 10 years ago, one of me is plenty. But I do think that the moral hazard introduced by the central banks will be with us for decades. There is no justification for extending the world-wide asset bubble into the future, and every effort to do so can only have two possible outcomes. The first is a bigger crash, and the second is higher inflation.
I fought the Fed and the, Fed Won
I fought the Fed and the, Fed Won
The Bobby Fuller Four may have sung it a little differently, but the sentiment is the same. I'm not breaking rocks in the hot sun, nor can I say I needed money 'cause I had none, but I fought the Fed, and the Fed won. On Wall Street they say you can't fight the Fed, and I figure they're right, in normal times. If the Fed wants to throw money out the window, or from helicopters for that matter, stocks will go up because the companies can use that free money to buy their own stock and drive shares up.
But bubbles burst when regular people become skeptical that the party will go on forever, and I was hoping that between the mortgage travesty, consumer debt and the hidden inflation, that time was coming. I didn't count on the Fed to cut even a quarter point, but being completely lacking in courage, that's what they did. Of course, the market dipped because economists for the big brokerages had figured the Fed was so weak that they'd cut a half point. This morning, the Fed rolled out their new free money plan, in association with the great central banks of the Western world. They've all joined together and declared that the risk of falling stock prices outweighs all other monetary considerations, and they'll do whatever they can to keep the bubble inflated.
My own back of the napkin estimate of real inflation over the past decade is an average of around 6%. That's inflation in terms of my basket of goods, food, fuel, housing. I don't give a rat's behind what the latest electronic gadgetry costs or whether I can get cloned for less than 10 years ago, one of me is plenty. But I do think that the moral hazard introduced by the central banks will be with us for decades. There is no justification for extending the world-wide asset bubble into the future, and every effort to do so can only have two possible outcomes. The first is a bigger crash, and the second is higher inflation.
posted by Morris Rosenthal | 7:11 AM
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