"The Stock Market Is A Mood Ring For Faith In The Fed"

Tyler Durden's picture

Submitted by Monty Pelerin's World blog,

Debt is the great palliative that has enabled the US and other major economies to escape reality, at least for a time. Ayn Rand described such behavior:

You can avoid reality, but you cannot avoid the consequences of avoiding reality.

It is possible to steal from tomorrow to improve today but only at the cost of having less of a future. That is what both nations and citizens have been doing. The ability to continue doing so has about run its course. The damage done to the future is real and will result in substantially lower living standards for those who foolishly believed that spending beyond one’s income was a miracle created by John Maynard Keynes.

The ability to continue the debt charade is nearing its end. As it slows down and reverses, the poverty and hardship that is covered up will surface.

 

When that occurs, another Great Depression, likely to be known as The Great Depression or The Greater Depression in the history books yet to be written will emerge.

For those wanting to learn more about the emergence of debt as an economic palliative and its implications for markets, a refreshing interview with Fred Sheehan. Here is one of Mr. Sheehan’s observations:

All asset markets are disengaged from their foundations. They have been elevated by governments and their central banks. Central banks have done so by prodding savers into stocks and bonds. They have set artificially low borrowing rates. These artificially low rates are the source of so many perversities that are not immediately evident but have fractured the structure of companies, industries and the stock market. With Treasury rates so low, the issuance of investment grade, junk, covenant lite, PIKs and almost every other category of sloppy finance that met its maker in 2007 set new world records in 2013.

 

The present and future consequences should be obvious.

Mr. Sheehan captures in one sentence my opinion of today’s markets:

The stock market is a mood ring for faith in the Fed.

Read this article if you want to learn some history and honest economics and understand the risks inherent in today’s financial asset markets.

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I Write Code's picture

Good article.

I'm actually more sympathetic to Bernanke than that, because only half of what Bernanke thought he was doing has worked.  If it had all worked - who knows.  But we have NOT had the inflation that he wanted, well at least not officially.  And we are still here (somewhat surprisingly) when we might not have been after 2008.  And he acted, when nobody else did.  Even if after five years drunk on printers ink he can't find the exit.

I will revise my opinions over time no doubt, looking backwards is so much clearer.  Things are so crazy these days, looking forward is a mug's game.  Are you guys aware of just who/what is president these days, omg.

Kirk2NCC1701's picture

They're not stealing from Tomorrow.
They're simply stealing Today and ENSLAVING for Tomorrow.

The NWO Elite are marching up and down the Field, because there is no substantial resistance to them. They act like the Borg, and people raised as Sheeple are all to eager to comply. Those who resist, are identified & tagged, marginalized & eliminated (economically or biologically).

Chupacabra-322's picture

That's one tight ass Ben's sporting there. He's going to get pounded in it pretty soon in a pound me in the ass prison penitentiary.

Spungo's picture

I had to post that cover picture on FB. It's too fucked up not to share.

dexter_morgan's picture

That picture needs to be updated for Ms. Yellen.........uggghhh

shankster's picture

Wow! Ben's been pumping iron!

Albert_'s picture

Debt as a means of avoiding reality?

Well, maybe, if you're a newbie. (Right now almost everyone still is)

If you abuse it, you will most probably have to default, sooner or later.

But if you learn about the limits of the tool that debt is, then the debt becomes a very versatile tool. Debt is for those who know how to use it.

Not to use the debt tool is like avoiding doing things because of fear of sin. 

 

 

stant's picture

well it was a factual picture hes wiped his ass with the flagg

fijisailor's picture

That picture is so disgusting that I have delayed for hours clicking to read the article.  

idontcare's picture

The only reason I opened the article was to see if there were a few couples shots of the various FED Prez's.  Oh well, not even one with Yellen in the buff.  Guess that we have to wait for the crash to see that one.

novictim's picture

Wow...listening to Alan Greenspan on CSPAN right now.  

Several incoherent points stood out.

1) People are not buying homes because they lack long term confidence...so they rent. (huh!? Could someone tell Mr. Greenspan that the American Citizen is TOO BROKE to afford both a house and paying their mortgage!?)

 

2) Wealth inequality is a real problem. 

3)stock market rise correlates with the lowering of American workforce pay. Greenspan notes that charts showing this are convincing.   Thankfully, he got that right but then he says:

 

4)He goes on to say that the problem of wealth inequality is due to poor GDP growth and if the GDP were to be spurred to 4% then the wealth inequality problem would solve itself.  WTF?  Cart before the horse!

 

5)Or, he says we, could get rid of the H1B-Visa program and allow an "opening up" of skilled positions for the world labor force to take American jobs here in America..."it would make incomes go down but it would spur US workers to compete"...  (America needs to get poorer in order to get better jobs...does that make any sense with you?)

 

6) and we should build a high-class k-12 education system. Well, he got that right.  Except that the local home owners across America are broke and can't pay more property tax until they get a raise

 

7) And we should allow illegal immigrants to just be legalized. 

Greenspan was sincere and the interviewer seemed to accept his evil nonsense as logical and good.

Americans, you have been betrayed by a clique of ideologues all cut from Alan Greenspan's mindset...they won't be satisfied til we are all beggars tapping tin cups at the nations street corners.  

The shackles are being forged by our own hands, brothers and sisters, and the internationalist oligarchs like Greenspan have only to slip the chains onto us with the acquiescence of our developing police state. 

Ukraine has shown us what we must do.  No more drumming circles! Rise up!