Where once Alan Greenspan was vilified for dropping interest 
rates too low for too long and thereby inflating a credit bubble (before his bouncing baby bubble forced him to try to head things off at the pass, eventually jacking the Funds Rate back up to 6%), today these very scary clowns talk boldly about buying stocks and other risk assets in order to keep the pretense of a normal economy and stock market intact. I mean guys, this stuff is supposed to be the product of tin foil and gamma rays, not reality!
Meanwhile, every month or so we are treated to a massively stupid ritual of ‘will they or won’t they?’ as the committee chaired by this woman talking crazy talk is taken seriously by many as it makes its profound decisions (like doing nothing, for instance).
What the hell is monetary policy tightening anyway when you’ve got a backup plan to buy the whole damned stock market and some corporate bonds to boot? It’s a joke. I can understand why perma bears are perma bears. This thing is so fake it’s… not laughable… it’s surreal. It’s Wonderland. And the whole financial services industry laps it up and plays it straight, as if it is providing a very sensible and buttoned down service to its clients.
Newsflash: If you’re depending on one of the 95% of advisers out there operating on conventional metrics you are playing little more than a game of ‘gee, I hope the Fed’s latest plans to rig the stock market will work’ because that is the game that the financial services industry is playing. That is not my bias speaking; it is Janet Yellen speaking.
Yellen says Fed purchases of stocks, corporate bonds could help in a downturn
The Federal Reserve could get benefits from buying assets other than long-term U.S. debt if in a future downturn it could not buy any more government bonds, Fed Chair Janet Yellen said on Thursday.
Referring to asset purchase stimulus programs in a video conference with a minority bankers meeting in Kansas City, Yellen said: “If we found, I think as other countries did, that they could reach the limits in terms of purchasing safe assets like longer-term government bonds, it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions.”
She’s literally saying that if we run out of safe assets we can purchase unsafe assets (i.e. risk assets) when things go off the rails. She is also saying that she would hope to leverage that risk into goosing consumer confidence if they show any signs of backing off. Ladies and Gentlemen, these are the “tools” of the next phase of Federal Reserve experimentation. I thought that Operation Twist, with its stated goal of “sanitizing” inflation signals by manipulating the Treasury bond market was ballsy; Bernanke after all, made Greenspan look like child’s play. Yellen? She’s simply guiding us deeper down the Rabbit Hole.
Subscribe to NFTRH Premium for your 30-45 page weekly report, interim updates and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com. Also, you can follow via Twitter @BiiwiiNFTRH, StockTwits or RSS.
The title was not meant as a play on words in reference to Operation Twist, but now that I think about it, maybe it should be. The Post-Twist financial world is far different than it was before the genius that is Ben Bernanke’s ‘bigger than yours or mine’ brain concocted a maniacal plan that would “sanitize inflation” signals from the bond market and break the then highly elevated yield curve.*
