Wednesday, October 30, 2013

Fed Says No Taper

The Federal Reserve kept its QE policy in place, at its just ended FOMC meeting. The US stock market is off a bit, as traders fear an eventual tapering of the QE policy.

Language in the October statement mirrored the "moderate pace" of economic improvement that the Fed saw at its last meeting in September.

The statement, though, did omit a reference from last month that fiscal tightening could slow growth in jobs and the broader economy.

That said, most money growth is now the result of an expanding money multiplier, rather than a result of QE3.

Watch money supply growth, which is accelerating right now, rather than Fed speak. The Fed statement is here.


  1. Another piece of indirection.
    A Constant obtaining of Debt in an accelerating Inflationary Environment is a Taper by any other means. Which means that the "Reverse Repo and etc." that was a "Test" a month ago, is probably the next major manipulation to be used.

    Or something else. It's a matter now of "Who's gonna get the bag" (Besides the Taxpayer). Some of the Elites are gonna get Squeezed and Squeezed Big. "But it wasn't supposed to happen to me. I'm connected!"

    Not anymore.


  2. Ohhh the irony...

    Definition of TAPER : one that applies or dispenses tape

    abate, decline, de-escalate, die (away or down or out), diminish, drain (away), drop (off), dwindle, ease, ebb, fall, fall away, lessen, let up, lower, moderate, pall, phase down, ratchet (down) also rachet (down), recede, relent, remit, shrink, subside, decrease, taper off, wane

    Related Words
    compress, condense, constrict, contract; evaporate, fade (away), fritter (away), give out, melt (away), peter (out), tail (off), vanish; slacken, slow (down); alleviate, relax; flag, sink, weaken; cave (in), collapse, deflate


    "If a nation values anything more than freedom, it will lose its freedom, and the irony of it is that if it is comfort or money that it values more, it will lose that too."
    W. Somerset Maugham

  3. Most likely there will never be a taper. Ever. The crony capitalist economy is kept alive now by artificial means, like a heart patient who has to take nitroglycerin tablets for the rest of his life. The only reason the Fed will ever attempt to taper would be to tank the economy and destroy the political career of some hapless libertarian President like Ron Paul. Of course this isn't likely since libertarians are a powerless and politically marginal group.

  4. Stocks have peaked out inasmuch as they traded slightly lower after the Fed communicated that on Wednesday October 30, 2013, that it intends to continue debt purchases at $85 billion a month.

    The investment rally that began June 24, 2013, has run its course not only for Nation Investment, EFA, and Global Financials, IXG, on October 22, 2013, but also for World Stocks, VT, and Global Industrial Producers, FXR, on October 30, 2013.

    The June 2013 through October 2013 rally, specifically the PBOC Monetary Stimulus, the US Fed No Taper, and the ECB Bank Supervision Rally, has produced liberalism’s peak investment, economic and political experience. The rally was a fantastic debt trade and currency trade, that produced stunning gains for those invested in Greeece, GREK, German Small Caps, GERJ, Italy, EWI, Spain, EWP, Ireland, EIRL, and the European Financials, EUFN. This investment enthusiasm was built on confidence in the ability of the world central bank’s ability to stimulate global growth and trade, as well as to produce ongoing corporate profitability; but both of these goals are now faltering.

    The world central banks’ monetary policies and monetary tools, now have the effect of turning “money good” investments bad. And the European Parliament and ECB announcement of banking oversight of European Banks, has pivoted the world from liberalism’s age of investment choice into the authoritarianism’s age of diktat.

    The world central banks are developing new monetary policies and new monetary tools. First to integrate banks into government, this seen in the European Parliament and ECB announcement of banking oversight of European Banks, as well as the US Federal Reserve Fixed Rate Full Allotment Reverse Repo Facility. And, second to introduce the antifragile financial system, an Alberto Mingardi Econolog Econolib term, this seen in the Bank of England Revised Sterling Monetary Framework, and the US Fed Liquidity Coverage Ratio.

    Liberalism’s two spigots of investment liquidity, the first being carry trade investing, and the second being credit liquidity, are both starting to run dry, and are no longer able to provide investment funding. The Telegraph notes JP Morgan Sees Most Extreme Excess Of Global Liquidity Ever.

    The first spigot, carry trade investing is topping out and turning over. The chart of the EUR/JPY showed a close at 135.44, with the Euro, FXE, closing at 136.84, and the Japanese Yen, FXY, closing at 99.10. And The chart of the AUD/JPY showed a close at 93.45, with the Australian Dollar, FXA, closing at 94.84.

    The second spigot, credit liquidity is topping out and turning over as well. The chart of Short Term Bonds, FLOT, showed no change on the day; these are trading consistently below their October 22, 2013, high.

    The US Dollar, $USD, UUP, traded somewhat higher to close at 79.70, it is now trading consistently higher from its October 22, 2013, low. Monetary debasement, a key factor in fiat asset inflation, is history. A sell of the US Dollar no longer serves to support carry trade investment in risk assets, such as Vice Stocks, VICEX, and no longer serves to float currencies.

    Inflationism is turning into destructionism as all the Major World Currencies, DBV, and Emerging Market Currencies, CEW, will be sinking, as faith wanes in the ability of debtors to repay lenders. Liberalism’s debt trade and the currency carry trade is over, through, finished and done. The US Dollar can’t and won’t serve as the world’s reserve currency. Regional framework agreements will provide undollar bartering resources for regional integration, security, stability, and sustainability.