Controlled Stock Market Correction?

stock-market-trends-9When the crisis hits, the public will be like deer in headlights. They will have no idea what  hit but it will be terrifying. Government policy of elevating stock prices artificially can only continue until the economy has been destroyed. We are very close to that point now.

The Federal Reserve Open Market Committee makes political decisions. Trying to evaluate them in terms of actually doing things to address real economic issues is a waste of time. QE has no historical precedent. QE is not supported by any academic theory, experiments or empirical evidence.

The Federal reserve is completely independent in every respect other than having to please those in politics who appoint members to their positions. Every member is on the committee out of personal interest. Any notion that the Federal Reserve is in place to aid rank and file Americans is completely false.

The job of the Federal Reserve is to generate wealth and income for the investor class. Hopes are the economy will right itself eventually and economic growth will pick up again. That won’t happen, Fed policy causes the nation’s resources to be allocated so inefficiently that growth starting from here is not possible.

Looking at the economy, investors, corporate insiders, media and the whole lot, it appears now as if a correction is thought to be unavoidable. But that’s not that bad as long as the correction is limited to less than ten percent. That way the “smart people” can say nothing abnormal has happened. After the correction has occurred it will be time to dive back in, of course. Starting about know, it makes sense that the Federal Reserve along with its friends who trade risk free will make an attempt at a controlled correction. For a temporary time span, I am thinking the attempts to inch higher each and every day will give way to a new initiative devoted to letting the market sell off peacefully and less than ten percent.

The Fed has been able to keep interest rates near zero for the longest time. This would not be possible if there was any demand for money. Still, they must feel brilliant and empowered. Of course, they feel like the masters of the universe but they are not. Fed members are lucky because every event so far has gone their way.

Chances are, a correction can be managed in the beginning but from this point any decline in asset prices has a huge potential for snowballing. Without the rich being able to draw on the new wealth the Fed gives them, GDP may very well drop in the red.

The fact that planning has replaced the free market system for determining stock values, any true correction will have to be abrupt. The controlled correction attempt may not work even though they are confident it will.00_logo_1

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
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