Sunday, August 31, 2014

You can't print your way to prosperity

"Monetary policy promised way too much back in 2012. As I’ve written repeatedly, at this stage of a most spectacular and protracted Credit cycle, monetary inflation can only make things worse. Where does it end? And not for a minute do I believe the alarming rise in geopolitical risk and instability is unrelated to years of prolonged global monetary disorder. Mismanagement of the world’s reserve currency is replete with huge consequences. Mismanagement of all the world’s major currencies is a complete fiasco. " Doug Noland of prudent

Stock markets that defy gravity with Central Bank promises of forever zero interest rates and liquidity. But this mother of all trickle down tricks has not trickled down to anyone that isn't in the top 1%. So it should come as no surprise, that wages have not grown with the expense of everything else.

Volume has dried up and now there is ample evidence that there is another group of buyers who have come in to replace those who have left. And they are the Central Banks themselves. What kind of fair market system has the central banks buying  s and p futures??

We already know our own Fed has bought near $4 trillion in us gov bonds, and we have the slowest, weakest recovery from Recession in the history of keeping those records.

With volatility near non existent, did you ever stop to wonder how " odd " that is? Even with world unrest, all seemingly is going unnoticed. Seemingly. Hedge Funds for the most part have done very poorly in this environment, because they are a " hedge" against volatility. But here we have none.

This period of immunity from declines will come to an end. The gaming accord of the central banks is said to end this year. I feel volatility will return in the not too distant future, and with it much lower stock prices.

At some point, there will be reversion to the mean, and the mean is nowhere in sight!


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