Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
New Data Shows Shopify Was a Godsend for Mom and Pop During Coronavirus - 18th Jun 20
Low Inflation Makes Powell a Dove. How It Affects Gold? - 18th Jun 20
Stock Market Waterfall Selling in S&P 500 Is Over Now - 18th Jun 20
NASDAQ: Some Historical Insights into Tech Stocks Mania - 18th Jun 20
XLF Financial Sector Stocks ETF May Break Below Price Gap - 18th Jun 20
REOPEN THE SCHOOLS! Kids Going Crazy in Lockdown Britain, Sheffield UK - 18th Jun 20
Stock Market S&P 500 ADL Predictions - 17th Jun 20
Silver is Going to have a Sudden, Massive Move to $50 that will Suprise Everyone - 17th Jun 20
Gold Stocks Investment Strong - 17th Jun 20
Silver Tops Gold in May, Setting up a Summer Surge - 17th Jun 20
Google - Investing in Best Artificial Intelligence Stocks for 2020 and Beyond! - 17th Jun 20
AMD Ryzen XT Refresh Very BAD Value for Money - 20% Price Hike for 2% Boost, 3900xt, 3800xt, 3600xt - 17th Jun 20
8 Rules for Forex Market Beginners - 17th Jun 20
The AI Stocks Mega-trend - Moores Law is NOT Dead! - 16th Jun 20
Gold Stocks Correction and Upcoming Opportunity - 16th Jun 20
Stocks Bulls Beware: A Dark Cloud Is Forming Over Oil Markets - 16th Jun 20
AMD Ryzen Refresh Bad Value for Money - 3800xt 3900xt 3600xt Specs - 16th Jun 20
How to Clip a Budgie / Parakeet Parrot's Wings Flight Feathers: Easy Steps! - 16th Jun 20
XLF Financial Sector Stocks Under Pressure and What It Means - 15th Jun 20
For History Unfolding To Stay Informed, Watch Less TV - 15th Jun 20
Black Lives Matter Protests to Trigger US and UK 2nd Coronavirus Wave - 15th Jun 20
Staying Cautious & Staying Prepared With You Stocks Trading Account - 15th Jun 20
Silver: How to Gauge the Crowd's Mindset - 15th Jun 20
When to Sell Your AI Tech Stocks Investments - 14th Jun 20
Gold and Silver Precious Metals Sector Correction Starts as Risk On and Seasonal Factors Weigh - 14th Jun 20
What Happens When Cars Can “See”? - 14th Jun 20
Rolex Watches — a Store of Value - 14th Jun 20
US and UK Black Lives Matter Protests, Riots and Looting To Trigger 2nd Covid-19 Wave Peak? - 12th Jun 20
US Dollar Cycle Points To New All-time Highs For Gold - 12th Jun 20
Will US Labor Market Recovery Sink Gold? - 12th Jun 20
Stock Market Shift Away from Safety Begins - 12th Jun 20
Gold Silver Ratio - 11th Jun 20
When Profits and Politics Drive Science: The Hazards of Rushing a Coronavirus Vaccine at “Warp Speed” - 11th Jun 20
Gold Sad Truth - 11th Jun 20
Silver’s Apparent Recovery - 11th Jun 20
Unnatural Distortions and the Precious Metals - 11th Jun 20
Perceiving Coronavirus as a Disruptive Technology Accelerating Quantum AI Mega-trend - 11th Jun 20
A 2020 guide to Business Opp Affiliate Marketing - 11th Jun 20
What Huge US Jobs Number Means For Your Market Positions - 10th Jun 20
New Stocks Bull or Same Old One? - 10th Jun 20
Inflation ‘A mirror image of the early 1980s’ - 10th Jun 20
Trump's Final Gamble: From Chinagate to Hybrid Wars - 10th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis

Stock-Markets / Quantitative Easing May 23, 2020 - 06:08 PM GMT

By: Kelsey_Williams

Stock-Markets

The 21st century was ushered in by fears about Y2k and how it might impact computer programming that was already in place. Part of the concern centered on the financial markets.

The Federal Reserve announced that they were ready to support the stock market and provide backup for financial institutions that might encounter difficulties.

The big day arrived and, other than an occasional glitch that seemed to be unrelated to the heightened global fears, the birth of the new century was pretty much uneventful. Overall, the markets remained relatively quiet. However, trouble was still brewing.


The hyper-bullish technology stock sector was about to reverse its nearly decade-long run to unsupportable and overly optimistic highs. At the center of the hype and fascination were new companies, headed by twenty-something geniuses. They were referred to as startups.

The multiples of earnings that normally applied in order to assess value of these companies was thrown aside. That is because most of them did not have any earnings.

Nevertheless, they were attractive enough to garner huge crowds of support.  Just the hint of a revolutionary idea could boost an unknown, small private company into the spotlight of the new issue market with oversubscription being commonplace.

Technology stocks collapsed in 2000, and were eventually joined by the broader stock market which began a two-year descent that saw the S&P 500 lose fifty percent of its value.

With sugar daddy Fed at the helm, prices recovered. Then, in 2006-07, real estate prices peaked  and cratered. Most of the obvious damage was in residential real estate.

Foreclosures were rampant and an entire cross section of the population was in transit, moving from their recently acquired new homes and into rentals, if they could find one.

Economic fallout spread to major investment banks and the stock market. Financial institutions with household names like Lehman Brothers, Merrill Lynch, Washington Mutual, and AIG were skewered.

The stock market finally recognized how bad things were. Beginning in August 2007, and continuing for the next eighteen months, stock prices declined with a vengeance. The overall market, as reflected by the S&P 500, lost nearly two-thirds of its value.

In February 2009, a bottom was reached. The past ten years has seen the market surge to new all-time highs, seemingly much higher than could have possibly been anticipated just a few years ago. All of it has come with ‘help’ from the Fed.

In the most recent example of huge volatility and financial turmoil, the stock market dropped by one-third in three short weeks. It was worse than the initial crash of the stock market in 1929.

Some say that fear and economic dislocation due to the COVID-19 pandemic was the culprit. I don’t think so. All asset prices were artificially elevated due to previous Fed reflation efforts. A lack of fundamental underpinnings had left the stock market extremely vulnerable to a selloff of considerable magnitude, regardless of the specific trigger event.

Not withstanding their broken record of bailouts, lower interest rates, and credit expansion, the Fed responded similarly again.

It was not exactly an about face. After a half-hearted attempt to return interest rates to more normal levels, the Fed had already begun lowering interest rates incrementally.

Several years ago, the Fed began raising interest rates because they were concerned that continued easing could again trigger huge declines in the US dollar. On the other hand, raising rates raised the possibility that the system would not tolerate the restrictions well enough to get better, and another collapse might ensue.

The collapse came anyway. If you think it doesn’t matter what the Fed does anymore, you might be correct.

The Federal Reserve doesn’t know what to do. That’s too bad. For all of us. The bigger problem is that it probably doesn’t make much difference what they do – or don’t do.” (see The Fed’s Dilemma)

Almost all Federal Reserve activity is comprised of reactions to problems that resulted from their own actions. And it has been that way ever since the Fed opened for business in 1913. (see Federal Reserve – Conspiracy Or Not?)

Over the course of the last century, the Federal Reserve has destroyed the value of our money. The U.S. dollar today is worth less than 2 cents compared to its purchasing power in 1913, when the Fed began its life on earth. This is a direct result of the inflation which the Fed creates continually by expanding the supply of money and credit.

Their initial attempt at controlling the financial markets ushered in the most severe depression in our country’s history beginning with the stock market crash in 1929. Former Fed chairman, Ben S. Bernanke agrees:

“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”…Remarks by Governor Ben S. Bernanke at the Conference to Honor Milton Friedman, University of Chicago Chicago, Illinois November 8, 2002

Promises, promises. Six years after his speech, Governor Bernanke presided over absolute catastrophe in the financial markets. Cheap credit and ‘monopoly’ money had blown bubbles in the debt markets that popped.

The beat goes on. Federal Reserve policy and actions are an abuse of fundamental ecomomics. The effects of their actions are hugely volatile and unpredictable. Their actions and effects have spawned problems that are nearly insurmountable.

Knowing these things doesn’t help much. The Fed can only react to the same news and headline statistics that we all see and hear.

Fed policy, special funding efforts, infinite money and credit creation – all of them combined may temporarily appease the dragon; but they will never slay it.

(also see Federal Reserve And Market Risk)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

By Kelsey Williams

http://www.kelseywilliamsgold.com

Kelsey Williams is a retired financial professional living in Southern Utah.  His website, Kelsey’s Gold Facts, contains self-authored articles written for the purpose of educating others about Gold within an historical context.

© 2020 Copyright Kelsey Williams - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.tssmoney.com - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules

两个人做人爱视频大全-两人做人爱费视频试看