Nomi Prins: Groundhog Day at the Fed

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Photo courtesy Truthdig

 

Author Nomi Prins weighs in on the end of Janet Yellen's reign as chair of the Federal Reserve, and the bloody markets yet to come. There’s a fight going on.

Nomi Prins on Truthdig:

"The decade of cheap money crafted by the Fed, and dispersed through collusion among the world’s major central banks, is more powerful than any new head of any one central bank. More volatility will characterize this year, but these major central and private bankers will have one another’s backs. That means the global status quo of cheap money turboboosting the financial markets will continue, Elon Musk rocket style. It’s all these central bankers know. …

This doesn’t mean a financial crisis of greater magnitude isn’t brewing. It is. But central bankers will fight like hell to avoid it, using the only weapon in their arsenal: an unlimited, unregulated and unchecked ability to fabricate capital for the financial system. ...

Cheap Money Hasn’t Worked for Main Street

The markets (read: big banks) got upset that their flow of cheap money might dare come to an end. Yet the stated goal for this money flow, boosting the overall economy, hasn’t been achieved … except in the eyes of politicians, central and private bankers, and people blind to the correlation and causation of cheap-money policy with asset bubbles. 

This is what’s weird. Rumors last week were that inflation and resulting rate increases were crushing share prices. So are we to believe that suddenly the inflation that was going to happen decided not to occur? Of course not, because it wasn’t the real reason to begin with. There’s a fight going on—between what markets want from central banks and manifestations of true growth in the wider economy.

Companies that hoard cheap cash or debt to buy their own stock look good on paper, and the real economy needs more people with more equitable financial profiles to function in a more stable manner. Current market turbulence represents the reality of central bank collusion to keep a cheap flow of funds to big banks and their corporate clients meeting the lack of true growth or realistic corporate evaluations.

[Read the full article]

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