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Pastimes : The Philosophical Porch -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (4159)	6/11/2009 11:24:10 AM
From: Real Man	Read Replies (1) \| Respond to of 26251

It's computerized. Banks are selling volatility for income and that pushes the markets higher regardless of fundamentals, provided that liquidity is ample. JPM may indeed push something up, but most likely it pushes its own stock higher. Overall, enormous Fed printing can and will lead to enormous nonsensical upside moves in stocks and commodities. This is a norm in hyperinflation. The bears should be careful simply because the Fed is insane, and is printing insane amounts, which then puts a strong upside bias to many markets. Given the amounts already agreed upon the monetary base will triple, so the value of the dollar was effectively cut by 2/3. That would mean the price of everything should soar 200%. Some things soar better than others. The insanity means the Fed is unlikely done with this, and even more will be printed if they deem it necessary. For example, since rates went much higher and they don't want this, they could expand QE treasury program to buy the whole budget deficit this year. To Hell with the dollar. The markets will soar on this. In hyperinflation there are "first receivers" of the printed cash - in this case, the banks. Whatever they invest in will move. The rest will catch up.

To: Rarebird who wrote (4159)	6/11/2009 11:54:59 AM
From: Real Man	Respond to of 26251

The insanity of the Fed is not in manipulating markets. They actually failed to do that. The QE program was aimed at reducing long-term interest rates, and the 10-year rates doubled since December. What they are doing to the monetary base is a monetary madness, a complete insanity, and there is every indication they will expand the QE program, should the system be threatened, as it will be. This action is certain to push the price of everything up, and some things will just soar more than others. Will the failure of the Fed's QE matter, or will this inflationary dynamics keep pushing the markets higher? It's now quite clear QE did fail in its objective, as folks exited the bonds fearing the Fed. They bought stocks.