Is the Dollar and Equities Ready to Crash?
James Hall
BATR.org
August 20, 2014
As the yearly end of summer doldrums engulf the Hamptons, the uber-wealthy position themselves for a rocky coming storm when the robust fall trading season begins. Some of the most memorable major equity collapses happen during this time of year. Logic, fundamentals and sound business analysis has very little to do in forecasting when the actual plug will be pulled on the rocket ride in stocks. In a rigid game, the house always knows when and at what time the fleecing of the mark happens. Such timing projections do not apply to the decline in the purchasing power of the dollar. More appropriately, Federal Reserve Notes are only compulsory money because of the legal tender laws. Yet, financial instruments are gauged in terms of their worth by the dollar redemption value they produce.
In a short and concise account, ZeroHedge nails this one front and center, Why The Fed Can’t, And Won’t, Let The Stock Market Crash.
“The illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys . . . The only lifeline left is pushing pension funds out of their existing asset allocation sweet spot and forcing them to buy stocks. Whether this gambit will work is unknown.”
Will the Fed be able to avoid a market crash?
The answer of course is no. But, while we have explained countless times why central-planning always fails in the end, we will give the podium to Fred Hickey, aka the High-Tech Strategist, who gives a very poetic summary of what the Fed’s endgame will look like:
“The Fed hasn’t made the world a better place with its interventions. It has created moral hazard, encouraged the formation of asset bubbles that eventually pop (leaving economic messes), widened the wealth inequality gap to record levels, discouraged savings and investment, severely penalized retirees on fixed incomes, encouraged spending, funded massive government deficit spending by monetizing the debts, lengthened the recession and likely reduced the number of jobs that would have been created if the economy had been allowed to take its normal course. Eventually the Fed’s policy interventions will also have created debilitating, widespread consumer inflation, the “cruelest tax” against the poor and middle classes.”
The Rest…HERE
