Friday, October 11, 2013

The Market Economy has badly humbled the professors at The FED

And what has happened? Interest rates have increased. According to David Rosenberg, it is actually the fifth-worst sell-off in the 10-year Treasury note since the 1960s. Whereas we can all agree that many factors other than the Fed’s policies have had an impact on the economy (regulation, Obamacare, etc.), it is crystal clear that the Fed’s QE3 and QE4 policies have completely failed in their stated objectives. This is now an instance where the market economy has badly humbled the professors at the Fed.
When the Fed announced QE1 in late 2008, it was clear to me that monetary inflation would lead to some price increases somewhere in the system. My initial thought was that QE1 would boost gold and commodities (in December 2008, oil touched a low of $32 per barrel) as well as equities around the world, which were at the time extremely oversold. But it didn’t cross my mind that money printing would most benefit gaming stocks and the high-end luxury sector of the economy (art, vintage cars, wines, high-end real estate, etc.). - in dailyreckoning

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.


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