“Bubbles were blindingly obvious,” said James Bullard (Fed Governor) on CNBC this morning. Zero Hedge picked up on the interview which can be seen here.
“Blindingly obvious” yes but we have a little problem; Janet Yellen who is the proposed next chairperson of the Fed “missed” them. She missed the stock and real estate bubbles leading up to 2000 and 2008 and is obviously blind to the current systemic credit bubble.
Alan Greenspan has said that you can never recognize a bubble until after the fact and Ben Bernanke is famous for his belief that bubbles can be “contained.” Now, James Bullard tells us that the bubbles were blindingly obvious. Really? To whom? To us foolish bloggers and Austrian economists who not only saw them but warned of them as they were in progress? Or were they “obvious” to those pulling the levers but nothing could be done because “bubbles” were merely an offshoot of the credit expansion that had to and still must continue…or the entire global fiat system will collapse?
Bullard went on to state that the Fed doesn’t want to “support fiscal recklessness.” How quaint? Does he not already see that the “fiscal recklessness” that has already taken place has fiscally wrecked us as a nation? The Fed is now purchasing about 70% of all Treasury bonds issued and they already own 1 in 3 of all “10 yr. equivalents,” was this not “support?” If this is not complete foolishness to buy the securities of a fiscal derelict and in the process aid them to bankrupt themselves even further?
From what we have seen over the last few years (and more often recently) where one after another, Fed governors contradicting each other in public, the only description can be termed as “dysfunctional.” Nearly every single day we hear of a Fed governor saying one thing and then followed by another saying the exact opposite the following day…or even in the very same day! They act like an out of control bobsled that bounces from one side of the track to the other, banging from wall to wall, all the while “over steering.” This is what we are left with, “moral suasion” otherwise known as jawboning. Fed governors are paraded in front of the public day after day and say “whatever it is that is necessary” at the time. When I say “at the time,” I mean that they will say things to make markets move in whatever direction that they feel is needed for time in the immediate. They may need stocks up, or interest rates or gold down. They may need a stronger or weaker dollar depending on whatever the “story du jour” happens to be. Whatever the day requires…will then determine who is sent up to the plate. A hawkish story? A dovish story? Taper? No taper? Whatever is necessary…they have a “batter” for that!
Thinking back to high school and college days where sides were chosen for a debate, sometimes you were put on a side that you just knew was wrong…either morally, fundamentally or logically. So, what to do? “Spin, twist or outright lie” were the only options which is exactly where the Fed and its members find themselves. Were they dumb enough when they took the job in the first place to believe that “printing” 100% un backed currency could work? Maybe? Do they ALL now understand exactly where this whole charade stands? Probably. Does it even matter? No, other than for the sound bites offered up to the unknowing in the hopes of “moving the herd” in a direction that can prolong the game. Whether they individually know or not is only of importance between them and their own God, if they do know then shame on them…if not? …well even more shame on their degrees hanging on the walls.
You ask what the problem is. The Fed now has no options left. They can step on the brake (no they can’t), stomp the accelerator and turn the steering wheel in any direction as far or as many times as they’d like. This will not stop the crash that is coming. When you begin a monetary system that is a 180 degree antithesis to Mother Nature…it will fail and fail miserably. The biggest problem is that this “experiment” is a global one. This is not “some country” that will fail and have to pull up their bootstraps, no, we are talking about the reserve currency of the world that is the foundation for virtually every single banking and financial system on the planet. Understand that a dysfunctional man cannot repeal Mother Nature or her laws and well more than half the battle is already won.
Mother Nature requires balance. If one species grows beyond what she can support, she will find a solution. Disease or starvation perhaps, but whatever, she will always come up with some mechanism to bring back equilibrium. In the end nature’s balance will always have its day.
Today in our economy there are tremendous imbalances. In my view, due to a generation that has been raised on the concept of debt and funny money, the new economic model is buy on credit and pay back the debt with dollars that are inflated. The reason for the method is transparent, the banking system has been allowed, by the politicians they own, to makes huge profits on usury interest rates. This system has created some big bubbles; of course the 2008 housing crisis is now a well documented example of one of them. In my opinion there are two big bubble that are about to pop. One is due to the misallocated funds that have been poured into stocks due to ARTIFICIALLY low interest rates. People have to put their money in the stock market because the amount of interest that can be earned on money saved in banks is now a joke. But the bigger bubble, indeed the HUGE bubble, that HAS TO pop, is Government Spending. The money to keep up the charade of entitlement programs, welfare, education, food stamps, disability payments, government pensions… the funds to continue keeping up with all these pay outs simply DOES NOT exist – and it cannot be created out of thin air.
If you believe this can go on there is something seriously wrong with your cognitive processes, or you’ve got your head in the sand. Simple math bears it out, the day of reckoning is coming, and at this point financial collapse CANNOT be avoided.
Do the math.
“The government is attempting to service 76 trillion dollars in debt with just 2.5 trillion in revenue, while spending 3.6 trillion annually.” ~ Rick Rule
Don Paul is correct in what he says, but sometime Mother Nature is so overwhelmed by foreign substance it takes more than her ability to reverse the damage.
The Florida Everglades is a case in point where the foreign snakes that have been let loose in the Everglades by uneducated individuals have disrupted the natural system and not only kill and eat small and large animals but also kill and eat very large alligators.
This is tardy but I agree with Paul on the subject of the invasive species humans have introduced, not just in Florida, but worldwide. I personally consider myself to be an environmentalist. Man monkeys with nature’s balance world wide, but at the same time, man is part of nature… In the end, no matter what man does, nature will balance things out / given time equalibrium will be restored. Nature will shake off mankind’s negative influence on mother earth like we humans shake off a bad cold.
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