KEYNES SAID...SPEND MONEY WHEN THE ECONOMY IS DOWN...
AND TAKE MONEY BACK...OR...MAKE MONEY SCARCER A/K/A "TAKE THE PUNCHBOWL AWAY" WHEN THE ECONOMY IS STRONG...
OK...NOW ENTER, GREENSPAN AND RAY-GUN-OMICS:
GREENSPAN DISCOVERED THAT BY KEEPING THE PUNCHBOWL FILLED TO OVER-FLOWING...GROWTH AND EXPANSION COULD BECOME PERMANENT...
AND THE EXCESS "DOLLAR PRINTING" ENDED UP IN CENTRAL BANKS OR THE SOCK DRAWS OF THE GLOBAL MAN ON THE STREET...IN EUROPE, ASIA AND ELSEWHERE...
WE ENTERED THE POST-KEYNESIAN ERA OF PERMA-BUBBLES...
THE CURE FOR CHEAP MONEY WAS EVEN CHEAPER MONEY... THIS "ALLOWED" ALL MANNER OF PERVERSIONS IN THE AMERICAN ECONOMY...LIKE "STRUCTURAL" TRADE DEFICITS...AND DE-INDUSTRIALIZATION...AND MASSIVE ISSUANCE OF CONSUMER CREDIT...
THAT LASTED UNTIL 2008 ...THEN THE BUBBLE ERA ENDED ....
THE REAL FINALE OCCURED WITH THE RISE OF OIL AND GOLD THIS SUMMER...AND THE COLLAPSE OF THE DOLLAR.... (THIS TURNING POINT IS STILL NOT RECOGNIZED BY THE MSM...OR THE ECONOMIC ESTABLISHMENT!)
ESSENTIALLY WHAT "INVESTORS" ...READ HEDGE FUNDS...WERE SAYING IS THAT STOCKS AND OTHER PAPER ASSETS WERE TOO INFLATED AND THE AMERICAN CONSUMER TOO WEAK... AND THE DOLLAR IS TOO STRONG...
THEN THE LIQUIDATION PHASE KICKED IN... BUT AMAZINGLY THE DOLLAR GOT STRONGER AS PEOPLE SOLD PAPER AND OTHER ASSETS...FOR CASH... AND THE FED THOUGHT...WELL, THAT MEANS WE CAN PRINT EVEN MORE DOLLARS!!
THAT CREATED THIS HUGE AND MASSIVE PILE OF CASH ... "ON THE SIDELINES"....BUT STILL A REALLY PUNK ASSET MARKET FOR STOCKS AND OTHER SPECULATIONS...
NOW ENTERS THE POST-POST KEYNESIAN THINKING...
THE CURE FOR A PILE OF CASH...AND PUNK ASSETS PRICES...IS...!!
MORE CASH...!!
SO THE FED IS BUYING UP THE PUNK PAPER...AND ADDING GOBS OF CASH TO A SYSTEM THAT IS ALREADY STUFFED WITH CASH...!! BUT CONSIDER: WOULD THE FED BE ACTING THIS WAY IF THE DOLLAR WERE STILL "WEAK" BUT FOR THE "LIQUIDATION PANIC" OF THE LAST TWO MONTHS...? NO WAY!
WHAT NEXT...?
WELL WE SIT AND WAIT FOR THE CASH TO "COME OUT" OF THE SYSTEM...
BUT WHERE WILL IT GO...?
THE FED AND WALL STREET HOPES IT GOES BACK INTO PAPER ASSETS...
BUT THE HISTORY OF EXCESSIVE MONEY PRINTING SHOWS THAT EXCESSIVE PAPER TENDS TO GO INTO HARD ASSETS...LIKE GOLD, OIL AND OTHER COMMODITIES...
IN SHORT....SOME OF THE MONEY HOARD MAY GO INTO STOCKS AND BONDS AND PAPER...
BUT ENOUGH WILL GO INTO COMMODITIES...TO ESSENTIALLY PUT THE SYSTEM INTO A HYPER-INFLATION MODE...AS HAPPEN THIS SUMMER...THE LAST TIME THE MARKETS WERE "ALLOWED" TO ACT RATIONALLY AND WITHOUT MASSIVE GOVERNMENT AND FED MANIPULATION!
WATCH THE INTERACTION BETWEEN GOLD, OIL AND STOCKS...IT'S BIZARRO... THERE IS NO LOGICAL PATTERN...THIS COULD BE MANIPULATION OR PLUNGE PROTECTION...OR JUST HEDGE FUND GROUP THINK AND THEIR PROGRAM TRADES...
THERE ARE SO MANY TREES IN THE DAILY TRADING "FOREST" THAT...THE BIG PICTURE IS LOST AMID THE SCREAMING...
WHERE WILL THE CASH HOARD GO NEXT...?
THAT IS THE ONLY QUESTION WE NEED TO ASK...
WHEN THE PUNCH BOWL IS FULL...?
POST-POST-KEYNESIAN ECONOMICS SAYS:
GET A BIGGER PUNCH BOWL!!
THIS IS HYPER-INFLATION INCARNATE...
