We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
A thank-you to all American vets, living and dead, from the potato-peelers to the Generals, for their service.
Photo of one vet (discovered while cleaning out my parents' house this fall) is my recently-deceased Dad (died in July), with me as a young lad. 2nd Lieut. He was a US Army Vet of WW2 and of Korea, drafted out of Harvard College after 1 1/2 years and never went back but, after the wars, had a distinguished career as a Prof at Yale. Dad learned to hate war and military aggression with a passion after seeing so many fine youth ripped apart for no good reason (in his view). As far as I could tell, he built exactly the life he wanted.
I've had the pleasure of working with/listening to Ray Dalio many years ago ago when he managed assets for many clients of our firm. I still consider him one of the smartest investors I've ever met and one that bases his projections on sound analysis and rigorous research. And, he tends to be right. Ray was the first to frame the current malaise as a "deleveraging" that could take nearly a decade of recovery when the conventional wisdom was that the economy would be back to a strong growth mode following the recent recession.
That is a huge worry of mine as well but something else I've wondered about is how the Fed will unwind this fiasco. They will taper or reduce purchases as the economy gets better. At some point, I assume they will sell some of the longer term bonds they've acquired but if things play out like they plan (or even if they don't), interest rates will be much higher then. No doubt the Fed expects them to be at more normal levels which would be the best case scenario. The prices of their bonds will have tanked and they will take a huge loss. What does that mean to us? To the Fed? To the Treasury? - Given that the Fed is actually a private institution but has huge governmental impact?
Or do they plan on keeping all their bonds to maturity? And what impact would that have?
I ask because I don't know but I'm worried. Actually, I'm worried about what happens before the Fed has to contemplate taking a loss.
I am not a fan of the Fed. But if we must have one, I don't want it to be a policy arm of the govt. (though I think we're too late for that. I think at least part of their motivation for QE is to make our massive debt a bit easier to service). I don't think this will end well.
I don't believe the Fed has a plan for an end game. I do think they have hopes. They hope something will happen that would either: A. crash the economy thus getting them off the hook, or B. Revive the economy thus getting them off the hook. Of the two I think scenario "A" is most likely. The trigger could be almost anything. It could be a false rumor crashing the stock market or a oil embargo in the Middle East, etc. But the underlying problems of inflation, an artificially low interest rate, over regulation by the government, insurmountable national debt, out of control federal spending, cities and states in actual or ignored bankruptcy, etc. will be what destroys the economy. Arguably we are already in a great depression that began in 2009. It started as a recession but the congress and the president saw it as an opportunity to spend and bring home the pork so they followed their Keynesian beliefs into the depression. Now the food lines are SNAP, the homeless are section 8, the unemployed are on extended and perpetual unemployment. So we don't have the visual of long lines waiting for handouts but they are there being hidden by borrowing $1.5 trillion a year and printing another $1 trillion. The Fed had the tiger by the tail, they can neither let go nor hold on for much longer. They are desperately hoping that the tiger is distracted by something out of left field so they can avoid blame for what will happen. But the U.S. cannot avoid it's fate. The economy will crash. When, exactly what triggers it and how bad will it all be are yet to be decided.