Deutsche: The Fed Has Created “Universal Basic Income For The Rich” And Now It Can’t Get Out
by Tyler Durden
ZeroHedge.com
Jul 15, 2017
Two weeks after Aleksandar Kocic highlighted the moment in 2012 when the market stopped caring about newsflow and reality, and, in a word “broke” with pervasive complacency setting in regardless of macro uncertainty…
… Deutsche Bank’s post modernist master of stream-of-consciousness narrative is back with a new essay dissecting his favorite topic, the interplay between the Fed and markets, the so-called “umbilical limbo” that connects the two in the form of ultraeasy monetary policy and QE in general, and more importantly, the narrative that the Fed has spun over the past ten years, which while supportive of risk assets, has concurrently resulted in what Kocic calls a “permanent state of exception” from normalcy as a result of the Fed decision to defer the financial crisis indefinitely.
It is the unwind of this exceptional state, created symbiotically between the Federal Reserve and the markets, that is the source of consternation for markets, and manifests itself in the upcoming “tricky” renormalization of both the global rate structure, and the unwind of central banks’ balance sheets and trillions in monetary stimulus. And, quick to revert to his favorite philosophical abstraction, Kocic notes that more than anything the Fed is hardly eager to “disown” the power it has been exercising for years in its attempt to avoid, or at least delay the next crisis:
The Fed (and central banks in general) carries an implicit responsibility for orderly re-emancipation of the markets, which makes stimulus unwind especially tricky. This highlights the deep dichotomy of power: While a state of exception is an exercise of power, there is a clear tendency to disown that power. And the only way to avoid facing the underlying dilemma is to never give up the power. This creates a new status quo — a permanent state of exception.
The Rest…HERE
