There Is Not Much Difference Between The Fed And Greece

Hello everyone and happy Cinco de Mayo.

Let's start with Greece. It is an ongoing disaster that nobody wants to face, especially the bankers who may have to take a 50% haircut on their loans, that's if they're lucky. I think it was Citibank's former chairman, Walter Wriston, that said, "Countries don't go bankrupt." Welcome to the real world Walter. Greece is going to default or there is going to be a revolution in the country.

That leads us to the Federal Reserve. I'm not sure they fully understand and know what they're doing. I think this grand experiment of quantitative easing has gotten way out of hand. In hindsight, it looks like the Fed got the country into something that we didn't have a plan to get out of. The answer to this conundrum was always down the line and some time in the future. The Fed has had over six years to figure this out and there is still no plan to get out of it. "More data" is another way for the Fed to say, "we don’t know!" Ben Bernanke is gone and now has a new job with a hedge fund and Janet Yellen, the new Fed chairwoman, is another disciple from the same school of thought that Ben came from. So, what do you think? Do you think the Fed has any idea what it's doing?

Let's take a look at the markets. The big news is crude oil, which just cruises along to new highs. I guess all the pundits who were calling for oil to go a lot lower are now missing in action. I will also be looking at gold which has made a remarkable comeback in the last couple of days and see whether that is a harbinger of inflationary times ahead. I've said this before, the only way the Fed can get out of the pickle they are in is to inflate everything once again.

I will also check out the dollar and what it's doing, along with the major indices.

Be sure to leave a comment below this post and share with fellow members what you think of the Fed or the markets in general.

Every success with MarketClub,
Adam Hewison
Co-Creator, MarketClub

4 thoughts on “There Is Not Much Difference Between The Fed And Greece

  1. Adam, I agree. The only way out is to slowly free up the interest rate/money market. Fed should create interest rate limits above and below which they cannot trade. (Doesn't FED have this now ?)
    Then on weekly or monthly basis those limits would be gradually widened. Until money market is truly free.
    As for bond purchases (fiat money generation), FED should gradually pare back on that with 'help' of Congress paring back on deficit spending. Voters can help by sending conservatives to Congress. Big corporations should pitch in too and stop supporting the campaigns of the big spenders in Congress. Big corporations could help even more by supporting and sending conservatives to Congress.

  2. Actually they know exactly what they are doing, making Buffett, Soros and Wall Street richer and everyone else poorer.

  3. I'm not sure how a country inflates itself out of the trillions of dollars that we owe. I suspect that we are in for a significant deflationary period and a financial crises similar to that of 1929. Its not a question of "if" but "when", and a lot of people who don't deserve it, will be hit hard, including my children and grandchildren.

  4. I agree, 6 years and they still don't know what they are doing or when we will finally get out of recession.

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