Peter Schiff states:
“The Fed’s failure yesterday to announce some sort of tapering of its QE program, despite the consensus of an overwhelming percentage of economists who expected action, once again reveals the degree to which mainstream analysts have overestimated the strength of our current economy. The Fed understands, as the market seems not to, that the current “recovery” could not survive without continuation of massive monetary stimulus. Mainstream economists have mistaken the symptoms of the Fed’s monetary expansion, most notably rising stock and real estate prices, as signs of real and sustainable growth. But the current asset price bubbles have nothing to do with the real economy. To the contrary, they are setting up for a painful correction that will likely be worse than the one we experienced five years ago. Following this playbook, the Fed will likely maintain the pretense that tapering is a near term possibility and that it has a credible plan on the shelf to bring an end to QE. In reality the Fed is stalling for time and hoping that the economy will inexplicably roar back to life. Unfortunately, hope is not a strategy.”
Stanley Druckenmiller (from Zero Hedge) states:
“A stock market at an all-time high would suggest we don’t have a problem with financial conditions.” In fact, Druckenmiller continues, the Fed “blew it… they had a freebie,” they could have started the process to “get us off the dope.” This action, or inaction, he warns “is going to make it so much harder for the next Chairman to start the process.” In fact, he concludes, that from beginning to end – once markets adjust from these subsidized prices – that the wealth effect of QE will have been negative not positive…this has forced us to buy securities at subsidized prices and when they adjust, at whatever point in the future, they will adjust immediately and on no volume.”
I don’t know the timing of when their wisdom will unfold, they don’t either.
But it will.
And what will you do?
Do you have a plan beyond trusting daddy government to tuck you in at night?