The “Great Credit Crisis” of 2007 led to “The Great Recession”, and yet the FED still repeated the same mistakes. The FED kept the “easy money” policy in effect, and not only that, but, it also introduced “Quantitative Easing” and handed over FREE money to the large banks and corporations. Apparently, they have not learned anything from the last crisis and it looks as though they are on the path of pushing the economy into a deep recession, again. The dangerous part about this, is that they have already used up all of their ammunition, and there is now none left. In order to deal with the forthcoming “financial crisis” that we are presently facing in 2016.
How Wall Street led the US Fed to do what
The chart above is self-explanatory. It is very clear from the chart above, that throughout, Wall Street has dictated what it wants and the FED has obliged. Each rise has been supported by the FED. This indicates that the “real economy” never recovered in order to support the lofty valuations of the SPX, while all along, it was merely the “easy monetary policy” which kept the markets “elevated”.
The markets are again prodding the FED and other bankers to act:
The markets are once again taunting the FED. Sources indicate that some FED governors are already voicing concerns that rising rates were a mistake. However, many believe that, if the market continues to fall, which it will, it is only a matter of time before the FED announces new measures in order to support the markets.
Why the rate cut will not sort out the problem:
After the initial recovery from depressed levels, “real growth” has never taken off. The growth keeps slipping into negative territory which indicates that the QE and the rate cuts have not benefited the “real economy”. All of the benefits have been accrued by the bankers and stockholders of publicly traded corporations.
“The Global Reset”
The world leaders as well as the central banks, around the world have merely placed a bandage on their bleeding economies rather than enduring the pain, and pumping money into the “real economy” to generate long-term growth, they have opted to appease the stock markets, thus, creating a large “Asset Bubble”, today. The outcome of their actions, have placed the world economy in jeopardy, which is evident by the collapse of the commodity markets which are being lead down by collapse of oil and currency wars among nations, etc.
The only way we can get out of this predicament is to do what is now required, and let the markets implement
“The Global Reset”.
Growth has always returned to the economy after the excesses have been ironed out.
Conclusion:
It is going to be a sordid year for the stock markets! The US markets have just finished their worst two weeks of the New Year that have ever been recorded. This is an indication of what is to come in 2016. The FED is likely to panic and try to correct their past mistake of raising rates, of last December 2015. They will most likely do whatever it takes, but this time, the markets will not be receptive to their actions, mostly.
The best investments are going to be in gold and US Government Bonds. Continue to read more so as you know when the best time to invest in them is, and how to invest in them, SUCCESSFULLY.