Well, it’s finally here, the REAL Crisis: the one where entire countries go bust, not just the banks. And this time around the Fed and central banks won’t be able to stop it.
Case in point, the Swiss central bank intervened in the markets on August 3 to suppress the Swiss Franc. The effect of its intervention lasted less than a few hours:
The same goes for any action the Fed might implement as well. I know that the bulls believe QE 3 can save the market. They’re right in the sense that the announcement of QE 3 would slow the pace of the unfolding Crisis.
However, QE3 wouldn’t stop the Crisis or cause the same kind of rally that QE 2 did for the mere fact that everyone now realizes that the Fed cannot solve the problems facing the Financial System. As I’ve pointed out many times, the Fed will be powerless this time around.
Indeed, as I write this the US Dollar AND stocks are tanking, indicating that the Fed’s ability to reflate the markets by devaluing the Dollar is ending. And what happens when the Fed’s primary monetary tool (devaluing the Dollar) becomes useless?
Just like in 2008 we’re going to see a full-scale market Crash. Only this time it will also involve countries defaulting on their debt, bank holidays, civil unrest, and more. In simple terms, it’s going to be 2008 on steroids.
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