Thanks for the "portal" into your deranged mind. I guess playing the ignoramus while declaring that you've "won" the debate is a ploy for attention? Sounds like Trolling 101 to me. I stick by my Peter Griffin comment.
Another really good read on the Fed becoming essentially impotent at driving real economic growth apart from asset bubble blowing. This cut and paste (pointed out as such since bigarrow will certainly leap to inform the world of such - despite the fact that that is essentially how all forums work to a point) comes from Hussman. Some people are hard on Hussman, calling him too much of an academic, and that he has missed the last few years rally being bearish. The truth is that Hussman plans for longer time frames. And while he has been bearish these past few years, he hasn't just shorted everything known to man, but played hedges. Over the past 10 years, I believe he has done better than the market - which is what his goal is. Anyway, back to his commentary on the Fed. I only copied the relevant Fed comments here, but the entire market commentary is a good read if you care to broaden your mind (fat chance on this forum!) Bolded text my emphasis. ------------- http://hussmanfunds.com/wmc/wmc120723.htm ...The key question - in view of extreme credit market strains in Europe, and accelerating economic deterioration in the U.S. â is why the S&P 500 continues to trade within a few percent of its April bull market high. The answer is simple: investors are scared to death of missing the widely anticipated market advance that they expect to follow a widely anticipated third round of quantitative easing. Good economic news may be a relief for investors, but bad economic news in this context is just as much of a relief because it brings forward the anticipated delivery date of the sugar. The follow-up question, however, is that if more QE is widely anticipated, and a market advance is widely anticipated to result, isnât that the precise definition of an event that is already priced into the market? If you look at the Federal Reserveâs own research on quantitative easing â large scale asset purchases (LSAPs) â nearly every paper emphasizes the âportfolio balanceâ effect. Put simply, as the Fed removes longer-term Treasury securities from the menu of portfolio choices available to investors, it forces investors to consider alternative securities, raising their prices and lowering their yields â with a particular impact in driving down the risk premiums of risky securities. Indeed, as weâve noted, QE has generally been effective in helping stocks to recover the peak-to-trough loss that they have suffered in the prior 6-month period (though the most recent LSAPs in the UK and Europe have been failures in that regard). Still, once risk premiums are already deeply depressed (we estimate the likely 10-year prospective total nominal return for the S&P 500 to be only 4.8% annually), once stocks are trading near their bull market highs, and once Treasury debt already sports the lowest yield in history, should investors really expect much of a portfolio-balance effect from further attempts at QE? Frankly, I doubt it, but in the eventuality of a third round of QE, weâll focus on our own measures of market action â not on any blind faith in the Fed. The more troubling issue is that Fed papers on the effectiveness of QE focus almost singularly on the effect of QE on interest rates and risk premiums in the financial markets, with the notable absence of any analysis of the resulting effect on the real economy. This is like showing that squirting gas into an engine will make the engine run faster, without any concern for the fact that there is no transmission that connects the engine to the wheels. In a nutshell, the problem with QE is the lack of any material transmission mechanism from monetary interventions to real economic activity. This is a problem that the Fed should have recognized years ago, because there is strong and consistent historical evidence that real economic activity has very weak âelasticityâ with respect to financial market fluctuations, particularly in equity values. Invariably, a 1% change in the value of the stock market is associated with a change of just 0.03-0.05% in GDP, and even that change is transitory. What the Fed has been doing is little but bubble-blowing, while at the same time driving the global financial system further from equilibrium rather than toward it. Unfortunately, I expect these efforts to continue, but I also expect that it will be useless in averting an unfolding global recession. If the Fed was to initiate a third round of QE near present levels, it would likely be disappointing in the sense that it would fail to reverse economic weakness and at the same time would fail to drive equity prices higher than they already are, or interest rates materially lower than they already are. This would damage confidence in the Federal Reserve and force it to resort to language about monetary policy working with âlong and variable lags.â Moreover, at a 1.45% yield and an 8-year duration on a 10-year bond, any interest rate increase of more than about 18 basis points a year will now produce a negative total return for the Federal Reserve over the period that the bonds are held, which comes at public expense (reducing the amount of interest that the Fed would otherwise turn over to the Treasury). As a result, talk is presently much cheaper than action. It seems likely that another round of QE will await obvious economic weakness and a significant spike in risk premiums â probably best measured by the depth of the drawdown in the S&P 500 from its most recent 6-month peak. Still, given that the rationale for much higher risk premiums is very real, itâs not clear that QE will have durable effects on stocks even in that event. In short, a broad array of observable evidence suggests extraordinary strains in Europe, and abrupt though expected deterioration in U.S. economic activity. The Federal Reserve certainly has policy options, but those options have no material transmission mechanism to the real economy. Weâve always viewed the Federal Reserve as having an important and legitimate role in providing liquidity to the banking system in the event of heavy withdrawals; creating new reserves in return for high-quality, default-free securities backed by the full faith and credit of the U.S. government. This remains an important role, but the Fedâs actions have gone far beyond this role into areas that distort financial markets without transmission to economic activity. Thatâs just a reality we have to accept, and weâll respond to further interventions with particular attention to trend-following measures of market action. Here and now, we remain defensive in the face of accelerating strains the global economy â new highs in Spanish yields, negative interest rates across more stable European countries, new lows in the Euro and U.S. Treasury yields, collapsing new orders and backlogs, a sudden plunge in the employment component of the Philly Fed index, collapsing M2 velocity, and other factors. Due to some modest interest-rate considerations, our estimates of prospective return/risk have improved negligibly from the most negative 0.5% of historical observations, and are now among the most negative 0.8% of historical data. This rare extreme keeps us on red alert for now.
Its hard to make a pack of lies square up with each other. It takes too much energy and more brainpower than a male enema nurse can muster. Welcome back.
I put you on ignore because on the imbalanced can come and put up a zillion posts on a dozen threads and think himself normal. I am glad you are back tho. I was worried you had gone out and done something....Lucrumish.
I'm not an alcoholic, and given your long documented history here of lies I doubt too many here are naive enough to believe I am just because you say so.