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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (134586)	7/5/2013 8:21:29 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

The only thing I have less confidence in than the Fed's ability to centrally plan our economy to prosperity is the Fed's ability to predict the onset of inflation. We already have inflation in all major markets: equity, bond, housing. These markets are in priced higher than they would be if interest rates were floating freely. By definition, those markets are overpriced, because the Fed is holding interest rates at zero and buying up bond assets, which drives equity prices higher, mortgage rates lower, and housing and bond prices higher. This is inflation. The cost push inflation will come at a time of its own choosing and by the time everyone recognizes it for what it is, it will be too late for the Fed to put a lid on it. So we'll get stagflation, before a new Volcker arises to bring it back down. In the mean time, we're flirting with deflation. Economic growth is stagnant and slow and commodities are really low, because the world's biggest buyer, China, is in the doldrums. And even as we are flirting with inflation, the Fed is talking about tapering. Go figure. The only thing we can count on with almost 100% reliability is for the Fed to make the problems worse. It operations, we called this impact the bullwhip effect. The Fed is nothing more than a bullwhip amplifier. One day, the people will realize this and demand the Fed be abolished or restrained to its original mandate: monetary price stability and banker of last resort.