3 replies to this topic

[Douglas]

There have been two almost perfect 61.8% retracements since the SPX top with a third one about to wrap up as shown in the plot below (please excuse my crude art work) unless, of course, the third time is the charm and it breaks through. We shouldn't have long to wait to see.

 

 

Do any of you guys still remember this button from the Arthur Burns FED days?  

Whip Inflation Now.  Burns and the accidental president, Ford, thought they could talk inflation down without actually doing anything serious to stop it.  The current clueless FED appears to be using the same play book.  Over the last two days FED heads and ex-FEDers have been plying the airwaves with all kinds of tough talk about inflation, but they're still holding the "real" FED funds rate to  roughly a minus 7 to minus 10 percent depending on whose inflation figures you believe.  This dog is all bark and no bite.  Instead all this hot air emanating from the FED heads is actually just blowing the bubble bigger.  Until they channel Volker, they are as much of a joke as the above button turned out to be. I suppose it's a lot to ask of the folks that started the fire to actually put it out and not just roast some more marshmallows while sitting around the fire singing kumbaya.

 

Regards,

Douglas

[kinga200]

You r right. N well put!

[pdx5]

Could not agree more.
FED has not defended the dollar since Volker was the chair.
Where do the FED gets the idea it is their main job to kill natural economic cycles and attempt to remove recessions from happening ?
When I worked in the private sector, in a cyclical business, when sales slowed down, we had to work hard to reduce waste and and improve productivity. If the FED wants to keep printing money like it is going out of style, wasteful procedures do not get improved.

[Douglas]

pdx5, the FED has seen behind the curtain in Oz, but is terrified that the great unwashed masses might someday get a glimpse of the truth.  The truth that the dollar has been made worthless by their actions and has been reduced to simply a means of exchange between a barber and grocer.  One haircut is exchangeable for one pound of sirloin, but the exchange vehicle itself has no inherent value.  Since the FED is constantly increasing the supply, the amount of the vehicle, the dollar, required for this transaction continues to increase siphoning wealth away from labor which is paid in the devaluing vehicle.  Business can increase its prices a long as competition follows suit, labor cannot.  The nickel size Baby Ruth candy bar of my youth which now costs a dollar, twenty times as much, is now put on the shelves of the grocer by workers who don't make even half of  twenty times what I did when I worked at the corner shop.

 

The FED has almost single-handedly enabled the great wealth disparity in the US by disconnecting the medium of exchange from real wealth.   What the FED did was provide a tool to constantly extract more wealth from labor by providing a constantly devaluing medium of exchange to pay labor with. 

 

The natural deflation in prices which should be resulting from technology has been stifled by a constant loss in value of the medium of exchange.  Prices for products should be decreasing each year, not increasing.  Technology should be driving them down.

 

Currently the FED is permitting inflation to decrease the value of labor at an even more steep rate thinking that the war or the covid or Putin or something else will get the blame.  So far they are getting away with it, but at some point in the not too distant future, that rude finger of blame may be pointed their way. 

 

Regards,

Douglas