Friday, October 24, 2014

3 Things Worth Thinking About

3 Things Worth Thinking About | Zero Hedge
Interesting Thought Of For The Day
"I believe that the Last Great Bubble is bursting — faith in central banks to solve all problems."
I agree with Michael. The mantra has been over the last five years that you "do not fight the Fed." The problem, as discussed above, is that the Bank of Japan, the ECB and the Fed have all failed in accomplishing their objective of "reflating" the global economy.
The issue that has been consistently ignored is the massive, and expanding, debt burdens that act as a deflationary drag on economic growth and inflation. Despite statistical economic headlines, the underpinnings of the domestic economy remain far too weak to create the level of consumption needed to support stronger economic growth. The bond market has already recognized that inflation isn't coming, Japan and the Eurozone economies are slipping quickly back into recession, and even China's seeming inexhaustible growth has begun to drag. These aren't the drivers of a "secular" bull market.
As Michael concludes:
"A growing economy coincides with rising inflation expectations. A healthy bull market coincides with rising inflation expectations. Fight the Fed? You sure they are going to get that inflation target when the market itself is screaming they won't, at the same time quantitative easing is ending?"
Or, maybe this time really is different?

No comments: