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Quantitative Easing: The Greatest Con Ever Sold

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September 24, 2017, 10:45:16 pm Psalm 51:17 says: The specific rule pertaining to the national anthem is found on pages A62-63 of the league rulebook. It states: “The National Anthem must be played prior to every NFL game, and all players must be on the sideline for the National Anthem. “During the National Anthem, players on the field and bench area should stand at attention, face the flag, hold helmets in their left hand, and refrain from talking. The home team should ensure that the American flag is in good condition. It should be pointed out to players and coaches that we continue to be judged by the public in this area of respect for the flag and our country. Failure to be on the field by the start of the National Anthem may result in discipline, such as fines, suspensions, and/or the forfeiture of draft choice(s) for violations of the above, including first offenses.”
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http://www.naturalnews.com/2017-08-11-new-fda-approved-hepatitis-b-vaccine-found-to-increase-heart-attack-risk-by-700.html
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Exodus 20:5  Thou shalt not bow down thyself to them, nor serve them: for I the LORD thy God am a jealous God, visiting the iniquity of the fathers upon the children unto the third and fourth generation of them that hate me;
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Author Topic: Quantitative Easing: The Greatest Con Ever Sold  (Read 458 times)
Psalm 51:17
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« on: March 11, 2013, 06:15:06 pm »

3/11/13
Last week the bond market continued to be put to the test, and if it could go wrong, it did go wrong.  Across the board stronger than expected economic data, including Friday’s better than expected employment data, provided plenty off ammo for risk behavior that saw the yen make new lows against the dollar, pushing equities to new highs with the Dow (INDEXDJX:.DJI) making a new all-time high seemingly every day. The upward momentum was not lost on the mainstream media as on Thursday I heard CBS Evening News anchor Scott Pelly refer to the announcement of a new high as sounding like “a broken record.”

The 10-year yield, up 20bps on the week, closed at 2.04% near the highs of this leg with the US bond futures contract completely reversing the recent rally, slicing through my pivot level now 141-16 adjusted for the June contract settling right at 141-00 even.  This level has acted as previous support throughout the past month of consolidation, but clearly some technical damage has been done.
 
Nevertheless despite some pretty severe pressure from risk markets the long end of the curve did not break down and the US bond futures contract still remains within the rising regression channel I have been monitoring.  Over the next couple of weeks I expect this level to be tested which rises into the 139-16 level, providing the bond market with a critical make-or-break level to hold.

Equity market investors were very proud of themselves this past week and there were a lot of “I told you so” comments from born-again bullish traders and pundits.  However I think these people are missing a very important point.  In my experience most equity investors are extremely ignorant of bond market dynamics and oblivious to what drives interest rates or how much more money is flowing in and out of that market.  The stock market is a sideshow compared to the bond marketIf equity investors think that stocks can rise if the bond market is topping, I believe they are in for a rude awakening.

I was ridiculed on Twitter this week for suggesting that this market was potentially mirroring 1987, which saw rapidly rising bond yields crash the stock market.  One person commented that the equity risk premium was too cheap today relative to 1987.  Another said it was silly because interest rates in 1987 were 10%.
 
I believe these two metrics are shortsighted and highly flawed.  The equity risk premium (earnings yields – 10-year yield) when measured against negative real interest rates is a faulty valuation tool.  Of course it’s going to look cheap.  If the S&P (INDEXSP:.INX) were 100x earnings the ERP would still look relatively cheap against a negative yield.  In terms of the 10-year yield comparison, it’s not the outright nominal yield that matters, it’s the relative interest rate and degree of the move that are more important.

more: http://www.minyanville.com/business-news/markets/articles/Quantitative-Easing253A-The-Greatest-Con-Ever/3/11/2013/id/48629?camp=syndication&medium=portals&from=yahoo&refresh=1
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« Reply #1 on: April 20, 2013, 10:09:33 pm »

EL-ERIAN: It's Official — The World Needs To Worry About The Damage Caused By QE
4/20/13

It is now official: "We will be mindful of unintended negative side effects stemming from extended periods of monetary easing." This is how the G-20, the most important country grouping today, put it in the communique they issued Friday night. But what exactly are they talking about?

It all started with the difficulties that most advanced economies faced in generating adequate growth and employment after the 2008 global financial crisis. Rather than catalyze the political system into action, this "new normal" worsened polarization. Feeling a "moral obligation" to step in, central banks (led by the Federal Reserve) embarked on a series of bold and unprecedented policies – or what became known as "QE infinity."

QE, or quantitative easing, refers to the use of central banks' balance sheets to manipulate financial prices. It follows the flooring of policy interest rates at zero for a prolonged period of time, and also commitment to keep them there for a lot longer.

The idea is simple: manipulate key financial markets in order to "push" investors to take more risk, thus also stimulating spending and investing. With time, improving fundamentals would validate the artificial prices, thus also allowing central banks to exit.

Most investors have responded to QE as very few wished to take on institutions with a printing press in the basement. Yet, despite the manipulation of financial markets, growth and jobs have consistently fallen short of expectations.

Facing insufficient demand, structural impediments and policy uncertainty, the real economy has not responded as envisaged by central bankers. In response, officials have widened the scope and scale of QE.

The G-20 now recognizes what Fed Chairman Ben Bernanke told us back in August 2010: the intended "benefits" of unconventional policies come with "costs and risks."

So, what exactly are these collateral damages and unintended circumstances?

Modern market-based economies are not wired to function well at artificial prices for any prolonged period of time. The pricing system loses its critical signaling role. Markets operate less well. And, critically, resources are misallocated – both in the financial sector and also in certain parts of the real economy
.

So, less than five years after a global crisis triggered by irresponsible risk-taking, concerns are again surfacing about bubbles. The worry is heightened by the fact that both governments and central banks now have fewer weapons to counter the detrimental effects of another financial crisis.

There are also worries about the integrity of central banks, institutions critical to sustaining high, non-inflationary growth. Prolonged QE exposes them to possible losses, potentially undermining their political autonomy.

Then there is the risk of inflation. While not an issue today, some understandably question the optimistic view that central banks will have no problem in soaking up all the liquidity they have injected should this become necessary.

These "costs and risks" are not limited to the country pursuing QE. Since the U.S. is the issuer of the world’s reserve currency, many other countries end up importing complex economic and financial challenges.

All this explains why the G-20 is now recognizing what was already obvious to many others. That is the good news. The bad news is that neither the G-20 nor any other official entity can deliver a solution as long as politicians remain divided.

So, we are all like patients compelled to take a medication that has not been clinically tested. We were initially told it was good for us – indeed necessary. Now we are being warned that there may be unpleasant side effects.

Pending good alternatives, we should do more than hope for the best. We should also take steps to manage exposure to the damage should central bank experimentation eventually end in tears.


Read more: http://www.businessinsider.com/el-erian-g-20-warns-of-qe-collateral-damage-2013-4#ixzz2R3zNuoBF
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Kilika
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« Reply #2 on: April 21, 2013, 05:03:30 am »

Quote
There are also worries about the integrity of central banks, institutions critical to sustaining high, non-inflationary growth. Prolonged QE exposes them to possible losses, potentially undermining their political autonomy.

 Shocked Did I just read that? Just how many lies and how much misinformation can you cram into one sentence?

What's it called when someone makes a false statement as a basis for another statement? As in, "...undermining their political autonomy". Who says they are politically autonomous? See what I mean? Straw man? Whatever, I call it bunk NWO propaganda.
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