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The Clinton economy was part of the boom cycle
Posted on: December 20, 2017 at 17:58:17 CT
JeffB MU
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created by Fed intervention goosing the markets with super low interest rates... when the bubble pops all hell breaks loose.
Unfortunately, under Obama the Fed pulled out all stops pumping unprecedented levels of money into the system to try and reinflate the bubble that about took down the world economy when it popped during the Bush administration.
Look at what they did to the monetary base in about 2008 & following:
https://fred.stlouisfed.org/graph/?g=gUOQ
That unbelievable influx of money from the Fed is what has been artificially holding up the economy, but it is the Mother of All Bubbles, waiting for a pin ***** to cause economic catastrophe... and the Fed is supplying that pin and trying to ***** the bubble with a vengeance. They have already started raising interest rates and have already announced a massive sale of the toxic assets they accumulated during their last disaster. This will suck money out of the economy on a scale that has never been done before.
This is probably more than will be needed to pop the bubble and crash the economy. The Fed is the elephant in the room and they're moving ostensibly to slow the economy down, but this is unprecedented. It may take awhile but it could get very nasty, despite tax cuts and additional deficit spending.
From David Stockman, the Director of the Office of Management and Budget under President Ronald Reagan:
http://davidstockmanscontracorner.com/the-coming-fiscal-derailment-why-fy-2019-will-sink-the-casino/
By next April the Fed will be shrinking its balance sheet at $360 billion annual rate and by $600 billion per year as of next October.
Altogether, the Fed's balance is scheduled to contract by upwards $2 trillion by the end of 2020. And it's apparently on a path that is so locked-in----barring a recession---that Janet Yellen affirmed in her swan song that the Fed's giant bond dumping program (euphemistically called "portfolio runoff") would no longer even be mentioned in its post-meeting statements.
So the net of it is this: The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995!
---------
All of this happening with a deficit that has already risen 75% last year & another $133 billion appropriated for disaster relief.
and the stock market has been hitting high after record high, with all of the investors on the same side of the ship... that's another recipe for disaster.
and this boom cycle is already getting long in the tooth, we're typically at a time when things begin to turn around and the excesses are liquidated as a recession hits.
See also:
How the Asset Bubble Could End – Part 1
http://www.acting-man.com/?p=51969
How the Asset Bubble Could End – Part 2
http://www.acting-man.com/?p=51984
Edited by JeffB at 18:00:30 on 12/20/17
Unfortunately, under Obama the Fed pulled out all stops pumping unprecedented levels of money into the system to try and reinflate the bubble that about took down the world economy when it popped during the Bush administration.
Look at what they did to the monetary base in about 2008 & following:
https://fred.stlouisfed.org/graph/?g=gUOQ
That unbelievable influx of money from the Fed is what has been artificially holding up the economy, but it is the Mother of All Bubbles, waiting for a pin ***** to cause economic catastrophe... and the Fed is supplying that pin and trying to ***** the bubble with a vengeance. They have already started raising interest rates and have already announced a massive sale of the toxic assets they accumulated during their last disaster. This will suck money out of the economy on a scale that has never been done before.
This is probably more than will be needed to pop the bubble and crash the economy. The Fed is the elephant in the room and they're moving ostensibly to slow the economy down, but this is unprecedented. It may take awhile but it could get very nasty, despite tax cuts and additional deficit spending.
From David Stockman, the Director of the Office of Management and Budget under President Ronald Reagan:
http://davidstockmanscontracorner.com/the-coming-fiscal-derailment-why-fy-2019-will-sink-the-casino/
By next April the Fed will be shrinking its balance sheet at $360 billion annual rate and by $600 billion per year as of next October.
Altogether, the Fed's balance is scheduled to contract by upwards $2 trillion by the end of 2020. And it's apparently on a path that is so locked-in----barring a recession---that Janet Yellen affirmed in her swan song that the Fed's giant bond dumping program (euphemistically called "portfolio runoff") would no longer even be mentioned in its post-meeting statements.
So the net of it is this: The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995!
---------
All of this happening with a deficit that has already risen 75% last year & another $133 billion appropriated for disaster relief.
and the stock market has been hitting high after record high, with all of the investors on the same side of the ship... that's another recipe for disaster.
and this boom cycle is already getting long in the tooth, we're typically at a time when things begin to turn around and the excesses are liquidated as a recession hits.
See also:
How the Asset Bubble Could End – Part 1
http://www.acting-man.com/?p=51969
How the Asset Bubble Could End – Part 2
http://www.acting-man.com/?p=51984
Edited by JeffB at 18:00:30 on 12/20/17
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The Clinton economy was part of the boom cycle - JeffB MU - 12/20 17:58:17