The markets are still flooded with money and will continue to be flooded with money until it cant any longer, you can all disagree if you want to, but the next collapse is going to be significant, what bubble ben bernanke has done is irreversible at this point, all they are doing is flooding the market with cheap dollars to inflate everything possible, this can only last so long until it finally reverses and collapses.
That's why excess job growth requires tightening... and so does inflation... So... high inflation -> tighten; excess job growth -> inflation -> tighten; low job growth -> expand. Why is this not doable? (policy lag aside)
quality of created jobs deteriorates. Bad longterm. Skillset of workers is destroyed in this process - sack-hire. Cant produce high value items anymore.
It seems to me that it is the price CHANGES that are inversely correlated between the dollar and asset prices. It is not the low VALUE of the US dollar. This means that the dollar must continue to weaken for the markets to continue to rise. It's not like the dollar is dropping to some magic level where it will stop and markets will go along their merry ways.. If the dollar needs to weaken for the market to rise, this obviously can't go on indefinitely. The dollar can't go to zero. So the question becomes, how low can the dollar go before everything gets destabilized? And it also seems to me that the Fed cares very much about what people think. Their job is to instill confidence and increase inflation expectations. They want people to think there is inflation so that they spend their money today instead of tomorrow. So if everyone is freaking out about golds parabolic rise, they care. It's just working in their favor. If they say there is inflation then they gotta raise rates. They keep saying no inflation, keep rates low, and people panic and buy things. b
there is a distinctive difference. most asset classes show correlation to a fed increasing it's balance sheet. what we're talking about here is a fed maintaining it's balance sheet at the same level. that isn't the same thing. i'm not saying the fed doesnt still have its collective head up it's ass, but a different effect could be seen.
Clueless US Administration is destroying their $15 trillion domestic economy to counter $3 trillion Chinese foreign exchange reserves by devaluing/printing dollars.
pray tell, what do you do when you have a situation like now - stagflationary environment represented by rising prices in all of the things we need, vs. falling prices in all of the things we own, and wages? loosening policy exacerbates prices, and only drives the margin compression element of companies and reduces overall consumption of all but the most basic needs. this in turn lowers the capability of businesses and companies to employ and expand, and forces wages and compensation to be cut to meet breakeven. so a loosening of policy results in a de facto rise in unemployment while at the same time providing more cash into the system. the ease of more cash available as debt is great for companies to expand, but only in an environment where they have acceptable margins. but no one is about to expand with parabolic rises in raw goods and products that force them to actually cut back on expansion. so you've essentially got two forces countering each other on the employment front - the proverbial "pushing on a string" analogy - while prices get worse. the dual mandate and the monetary model the fed uses is not applicable in an environment such as this. it is broken and must be adjusted.