Is it any wonder why owners of wealth are no longer using their money to invest in future production or growth or retooling or building factories or anything. Instead, they're buying back their own shares, issuing fat dividends on droopy earnings, and shrinking their businesses in the relentless pursuit of short-term gain.
This type of destructive behavior didn't just appear out of the ether. Heck, no. The Fed's easy money policies created irresistible incentives for this reckless, suicidal behavior. That means the Fed is 100 percent responsible for the fragile condition of the financial system and the ginormous asset-price bubble that's headed lickety-split for the powerlines.
But now it's all coming to a head. Now all the bigtime global institutions (IMF, BIS, WTO, OECD) are warning that a "Hard Rain's a-gonna Fall" and that the day of reckoning may be at hand. According to a recent report by the Organization for Economic Co-operation and Development (OECD), GDP-per-capita will grow only 1% in 2016, "which is half the average in the two decades preceding the crisis."
As it happens, the OECD report is no more apocalyptic then the others, it's just more explicit in what it expects to transpire. Here's more on the report from Wolf Street:
"Financial instability risks are rising, including from exceptionally low interest rates and their effects on financial assets and real estate prices...""Share prices have risen significantly in recent years in advanced economies, notably in the United States. By contrast, the growth of profits for non-financial companies has recently slowed to a modest pace, following a post-crisis recovery...
"A reassessment in financial markets of interest rates could result in substantial re-pricing of assets and heighten financial volatility even if interest rates were to remain below long-term averages..." ("OECD Warns Fed, BOJ, ECB of Asset Bubbles, "Risks to Financial Stability," Pinpoints US Stocks & Real Estate," Wolf Street)
Okay, let's summarize: The global economy is slowing, corporate profits are tanking, monetary stimulus has lost its mojo, and financial instability risks are rising.
Oh, and did you catch the part about "a substantial re-pricing of assets." That's financial jargon for "a crash," a big, thundering, cataclysmic, earth-shattering CRASH. The author is simply stating the obvious, that Central Banks have brought us to the brink of another gut-wrenching downward spiral followed by another excruciating financial crisis.
And it's all by design, the unavoidable result of the Fed's destabilizing, wealth-shifting policies.
How many times are we going to go through this drill before we disband the Fed and start from scratch?
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