Friday, July 22, 2016

Financial Repression Will Lead
To A Very Bad End
In her latest missive, former advisor to the Dallas Federal Reserve Danielle DiMartino Booth* highlights the overvaluation in the bond market as investors desperate for yield pile into the market .. "Overreaching central bankers are in fact doing more harm than good at this juncture. Though small investors may not be wise to the damage being wrought, veterans of financial market warfare are weary to the point of exhaustion. The endless waiting for Godot has apparently worn their resolve down to near nothing…with good reason. For all of central bankers’ Herculean efforts, expectations that U.S. job losses will accelerate are at a two-year high while households’ prospects for the economy over the next year have fallen to a two-year low. Pride will surely precede the fall of the orthodoxy of today’s accepted monetary policy framework. But at what cost? .. 'Everyone in the world needs yield and nothing else matters,' Melentyev laments. 'This has never ended in any sort of a problem before, so we can all go back to sleep.' And what happens when we’re abruptly shaken from our slumber? Recognizing the painfully obvious .. Thank you Chair Yellen & Co. for rendering snarling, lawn mower toting junk bond dogs cute and cuddly critters to retirees on fixed incomes."
LINK HERE to the essay

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