Which Means Wednesday – Fed Minutes and Fed Converse to Maintain Us Up

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What are they so afraid of? 

Gravity, I assume, because the S&P 500 is at 4,063 and the Dow is at 33,333, Nasdaq 13,561 and Russell 2,256.  This is not simply excessive, that is insanely excessive.  14,000 on the Nasdaq is 6,000 factors greater than 8,000, which wasn’t even the March low however it’s the place Billions of Transactions valued the Nasdaq shares between late 2018 and early 2020 – two years value of merchants did not need to pay greater than 8,000 for these Nasdaq shares but now, after a yr of a International Pandemic – they’re racing to pay 75% extra money?

Yesterday we talked concerning the Fed and the way they’re manipulating the bond market to make it look like there’s demand for bonds and a side-effect of that’s they’re flooding the system with cash.  How?  Properly, within the previous days, individuals used to EARN cash and they’d generally use it to purchase bonds and the cash would exit of circulation and be tied up in a T-Invoice for 10 years – reducing the free cash provide.  The Authorities, in fact, would spend the cash but it surely’s cash they have been going to spend anyway, whether or not you lent it to them or not – the cash you set into the bond simply helped to stability the funds.

Now that is out the window and the Authorities spends and also you spend and Firms spend and nobody appears to fret about paying debt again and, since nobody is actually shopping for US bonds, the Fed merely prints cash and makes use of that new cash to purchase bonds.   That lowers the quantities of bonds in circulation, conserving their “worth” up – which interprets into low yields.  For the reason that Fed buys bonds successfully from people who find themselves rolling it over, the cash goes into circulation, changing the bonds and, since buyers aren’t too eager on bonds – the place does the cash go?  Shares!  See how straightforward economics is?  

Some goes to Housing, some goes to Commodities and a few really goes into the Financial system however principally cash is in search of a return and we’re certain not getting it within the banks or from bonds, so shares win!  The cash going into the economic system additionally causes inflation, of…
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