No Way Out for the Federal Reserve

No Way out for the Federal Reserve

No Way out for the Fed­er­al Reserve

There is no way-out of here for the Fed­er­al Reserve now.

After so much talk of taper (“Taper-Talk”) the Fed final­ly did­n’t fol­low-through. Why not? Because they can­not. That should be clear to any­one. There is not sur­prise here.

This is just talk. Schmoozing…Jive-talk…Rhetoric..Lies?

This is the clear­est sign yet that Bernanke’s poli­cies have failed. The roll­back deci­sion. He knows what’s com­ing and does not want to be around when it hits — and thus he is resign­ing (read — “get the hell out of Dodge!”) at end of year.

It is very, very, very sim­ple to under­stand:

  • Inter­est rates MUST stay low
  • If not the amount of bor­ing of US Gov­ern­ment will bank­rupt USA (it is already tech­ni­cal­ly bank­rupt)
  • So print mon­ey, buy bonds, keep rates low

There is a HUGE prob­lem with this approach — They will either want to stop or be made to stop some­time:

  • They will be made to stop by oth­er coun­tries aban­don­ing “incred­i­ble” US dol­lar (quite sim­ply no longer sound mon­ey)
  • They will want to stop to try to restore cred­i­bil­i­ty to the USD cur­ren­cy (not pos­si­ble when print­ing 85 Bil­lion USD per month — 1 Tril­lion USD per year)

When they stop (or the print­ing press is tak­en off them) the inter­est rates will rise.

The house of cards will fall.

© Copy­right MMXIII RagingGoldenBull.com

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