Those who were surprised by the Fed Minutes today have little understanding of what the Fed is really all about.
For public consumption, the Fed manages the economy for "full employment" and low inflation.
OK fine, that's a noble cause and all, but not based on recent reality.
THE GREENSPAN FED HAS BEEN THE MOST INFLATIONARY MAJOR CENTRAL BANK IN RECENT HISTORY! ONLY THE GERMAN'S WERE WORSE IN THE 1920's!
OF COURSE, IT'S ALL BEEN "ASSET INFLATION."
----AS IN STOCKS, REAL ESTATE, ART, ANTIQUES AND OTHER STUFF THE ULTRA-RICH LIKE TO INVEST IN.
BUT NOW OMINOUSLY OIL, GOLD AND OTHER COMMODITIES.
AS MS. STEIN MIGHT SAY: INFLATION IS INFLATION IS INFLATION!
And alas, The G-man's affection for the American working classes has yet to be fully documented.
THE FACTS ARE THAT THE FED PRINTED MONEY LIKE MAD TO SUPPORT ITS BELOVED "NEW ECONOMY" BUBBLE---THAT IS NOW TOTALLY DISCREDITED.
THE PRICE OF THAT LITTLE FOOLISHNESS IS A VERY VERY WEAK DOLLAR.
WORSE YET, THE GREENSPAN SUPPORTED "TWIN DEFICITS" SEEM TO BE TOTALLY STRUCTRUAL AND "BEYOND ALL HOPE," IF YOU READ THE FED STATEMENT CLOSELY.
Confronted with these COMPLETELY HOPELESS TWIN DEFICITS:
--and ULTRA-LOW INTEREST RATES BY ANY HISTORIC STANDARDS
--and a Business community more interested IN LOOTING THEIR COMPANIES, THAN IN GROWING THEM
--and AN INTERNATIONAL COMMUNITY THAT IS INCREASINGLY ANTI AMERICAN BECAUSE OF DUBYA'S BIZARRO FOREIGN POLICIES;
THE FED HAS NO CHOICE BUT TO KEEP RAISING RATES!
The only question I have is; why don't they go 50 basis points and shock the markets for a change?
THIS POLICY OF DEFENDING THE DOLLAR SOLELY BY WACKING THE LITTLE GOLDBUGS EVERY SO OFTEN IS JUST NUTS.
AND ALAS, IT'S NOT GOING TO WORK THIS TIME AROUND! BET ON IT.
ANY PROLONGED SELL OFF IN GOLD STOCKS WILL BE A MAJOR BUYING OPPORTUNITY.
Take Gold down 10% and everyone will be buying Gold Shares!
INDEED, THE BANK OF CHINA HAS MORE SAY ABOUT US INTEREST RATE POLICY NOW, THAN THE FED. AND EVERYONE "SECRETLY" KNOWS IT!
THERE IS ALWAYS THE DISMAL "1970's CURE" OF SHOCKINGLY HIGH RATES;
BUT THAT WOULD HAVE WALL STREET WANDERING IN THE WILDERNESS FOR A DECADE---JUST LIKE BACK IN THE 70's.
READY FOR BROWN BAG BROKERS REDUX!
Net Net:
BUBBLES HAVE UNAVOIDABLE CONSEQUENCES THAT CAN NOT BE WASHED AWAY WITH ULTRA-LOW RATES, OR ANY OTHER CLEVER MONETARY "TRICKS."
THAT'S WHAT'S EATING THE FED THESE DAYS. THAT'S WHAT THEY'RE "SEEING."
NOT INFLATION! NOT JOBS! NOT PRODUCTIVITY!
THESE COULD BE THE LAST DAY'S OF GREENSPANIAN BUBBLENOMICS.
THE FED HAS PAINTED THEMSELVES INTO A MONEYARY CORNER.
THE CHICKENS ARE AT LAST COMING HOME!!
BUT WHAT'S WAITING FOR THEM IN THE GLOBAL HEN HOUSE?
Stay tuned......................this could get interesting.
http://money.cnn.com/2005/01/04/news/economy/fed_rates.reut/index.htm
