Friday, October 28, 2016

With QE Near Dead, 
It’s More And More Pretzel Time
Economist Jeffrey Snider sees the mainstream is being mired in "pretzel" logic on what is supposed to be good for the financial markets versus what is supposed to be good for the economy .. "Stock investors show more preference for 'accommodative' monetary policy than actual growth. A lower rate ceiling implies without much ambiguity continued awful economic conditions here and elsewhere around the world. But to the screwed up nature of mainstream thought, so long as monetary policy is lower overall continued stagnation is forgiven, perhaps even to be mildly celebrated? .. We are led to believe that low (meaning desperately insufficient) growth isn’t all that bad so long as interest rates don’t rise too far. Investors are supposed to be paying for growth, not the failure of interest rate 'stimulus' to seed it. If the Fed feels it can’t raise rates all that much, with a true 'ceiling' yet to be determined, it is a much riskier, not less risky, environment .. The world of the near future is going to be bad, worse than everything 'we' have been expecting, but take heart, the Fed’s monetary policy will reflect just that. Translating it from the original mainstream thought-bubble language truly reveals its truly absurd premise .. The Fed failed, and that changes everything; including and especially what is to be made of “accommodation” and what it is that might have 'reassured' equity investors in the past and might do so (or not) going forward."
LINK HERE to the essay

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