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.
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