Submitted by Brian Rogers of Fator Securities
Markets are trading sharply lower this morning after yesterday’s late afternoon rally on the change in language in the Fed statement that will keep short interest rates essentially at zero until 2013. As I have stated before, I believe they will ultimately be forced to keep rates low forever, or at least until the bond market vigilantes eventually rise up and shock the world by demonstrating that indeed you can fight the fed. Which begs the question, who will be the George Soros that breaks the US Fed? We’ll see. In any case, by 2013, it’s highly likely that the US will have over $16tr in debt. If the average rate across the curve in 2013 is only 4%, which is low by any historical standard, then our annual interest payment will be over $600bn, or almost 30% of annual tax revenues. So the Fed faces problems on a number of fronts. They have to be seen as actively trying to do something so they continue to manipulate the price of money to artificial levels which only serves to send misleading signals throughout the economy. QE1 and QE2 have come and gone and yet unemployment remains sticky above 9%. Their balance sheet remains abnormally large and their policy tools to manipulate the market is dwindling. Now add to that the reality of the math of our huge fiscal debt and deficits. No matter which way you spin it, we have some tough times ahead that will involve some asset prices falling (commercial/residential real estate and other levered assets), other asset prices rising (agricultural land, commodities, gold/silver) and the façade that the Fed is all-powerful to come crashing to the ground.
Continue reading the article . . .
[CAF Note: The conditions are being created to aggregate and control land and real estate on an
unprecendented scale. Time to connect the dots between disparate monetary and fiscal policies]
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