Guest Post: The Magnificent Fed
By Tyler Durden
Created 09/19/2013 - 21:17
The Fed's decision not to taper surprised the financial world as many believed some token amount of tapering would have been announced. Recent declines in Federal deficits afforded the Fed discretionary room. For the first time in several years it was possible to taper without infringing on the government's ability to pay its bills. Perhaps the economy is worse than the Administration wants to let on (and it certainly is). The Fed may have felt it necessary to come out of the closet regarding this latter charade, trying to prevent another economic downturn. Just as the economy no longer responds to Fed stimulus, financial markets will eventually reach this point. Whether that occurs sooner or later is anyone's guess, but the fraud of overvalued financial assets becomes more apparent with each injection of liquidity. Market participants should be aware of the game that is being played.Message:
The economy is not improving and the Fed has just admitted as much with the failure to taper. The charade will continue for the time being until it becomes all too obvious to even the most clueless of the clueless that something is definitely wrong.
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