While Wall Street cheers the actions by the Fed to further enlarge its already bloated Balance Sheet, those of us who live on Main Street should get accustomed to further increases in our food and energy costs. What I find rather perverse, is the statement by the FOMC that “longer term inflation expectations remain stable”. Yeah, maybe on the salaries and wages front but sure as hell not on the raw materials front.
Take a look at where hedge fund money is now flowing – right back into the hard or tangible assets category again. Get used to higher gasoline and heating oil prices and brace yourself for the food sticker shock you are going to experience in the weeks and months ahead.
I do not know whether to laugh at such utter stupidity or to weep for my nation’s future. After the Fed has already conjured into existence the piddly sum of $2.5 Trillion for QE 1 and QE2, we now get another $40 billion/month of agency debt purchases for as far as the eye can see. A lot of good the first $2.5 Trillion did. this latest one will do the same – nothing as far as curing what the real problem is in the US economy.
This is supposed to keep long term interests rate low to encourage home mortgage borrowing. Right, I am sure all those folks who were holding their breath waiting for the yield on the Ten Year to drop further from the 1.4% level it was trading at six weeks ago before taking out that mortgage. Guess what, thanks to all this money creation from the both the Fed and the ECB, the bond market is now shifting away from the deflationary scenario towards one of inflation, regardless of the Bullsh*t in the FOMC about inflation expectations remaining subdued. The yield on the Ten Year is now 1.8% AFTER all this FOMC nonsense. NIce work guys! Maybe you can do yet another round and drive the Ten year over 2% for us.
It also looks as if the long bond might be breaking down the technical charts also. That tells us that LONG TERM INFLATION EXPECTATIONS ARE INCREASING. the exact opposite of what these serial liars told us this morning.
Make no mistake about it, the bond markets and the commodity markets are signaling inflation. Pay no attentiont to the worthless claptrap being spouted by these monetary buffoons. The real picture is in the price charts which are always forward looking.
by the way, the rally in the stock market, which is now sitting at higher levels than when the current inept-in-chief took over, is a perfect picture of what happens when inflation hits the paper asset category.
By the way, in case anyone did not notice, I am particularly incensed to see this QE nonsense. I am disgusted at what the long term impact is going to be on my children and their future. so, today, you all who are reading this, get to read a written rant instead of an audible one!