Last March I wrote my first post for Tim and discussed what can stop the Fed. At the time we were going through our second bout of uninterrupteded ramping in the market, and I speculated on what will kill the economy. Please read here for the post
At the time the price of oil was $81, the price of gold $1130, and the interest rates were 3.7%. In one short year, all of the levers that will kill the Fed's ability to strengthen the economy through more debt are now pushing hard against them, and are at breaking points for the economy.
In addition, our inconvenience in these areas of price increases are turning into calamities overseas. China and India are experiencing food inflation that, in my view cause world changing social unrest. South Korea is releasing emergency food stockpiles to ease pricing pressures, North Africa is experiencing regime change, and the other two BRIC countries, Brazil and Russia are suffering from these same hot money flows. Oh, and don't forget Europe. We are one bad harvest away from a worldwide upheaval (a post for another day)
All of this calamity because the TPTB are protecting the bank and other fixed income bondholders. All of the extra money created worldwide is being used to buy hard assets (and being hoarded) with the fake money, and the money is being politically directed. So in the end, the imbalances continue until the masses here in the U.S. can't absorb the costs anymore. That time has come; as I always contend, the price of energy is the silver nail into the Fed. Food and transport companies are getting crushed via margin pressure, and they will release that pressure onto us. As that happens (already begun) the political heat ends the games and the long awaited debt destruction spiral can and will begin.
My bias is that we profit correct out of this quarter, the politicians panic regarding the Muni crisis, and we move into our last bout of the bubble, then it gets ugly.
Enjoy your weekend :-), and go Steelers.