Maggie's Farm

After the housing bubble burst in 2008 and crashed the economy the FED kept lowering interest rates in an attempt to stem the crash and get us back to a normal economy. But here it is 2021 and the interest rates have stayed low to almost zero. Why is that? The obvious answer is that the economy never actually came back. The FED has over the last 13 years been buying debt at a rate that is simply extraordinary and that too seems to imply that the economy never fully recovered.

But now Biden has broken all records and brought us run away inflation in a mere 10 months in office and the FED has only one choice to fight this inflation and that is to raise interest rates quickly to get ahead of this historic rate of inflation. But the FED has indicated that they don't intend to raise rates until sometime in 2021. Why is that? The obvious answer is that they are afraid to raise interest rates because the economy has not recovered after 2008 and the FED has been propping up the economy with low interest rates, buying up debt, printing money a record amount of printing press dollars and bailing out businesses.

The stock market is skyrocketing which should be a good thing but it appears to be a case of "Irrational exuberance" and cannot be sustained. In other words the stock market is in a bubble of biblical proportions. But intelligent well informed people continue to buy even though they must know it is irrational. Why is that? Because just as in the housing bubble of 2008, there is huge profit to be had and investors are generally aware of the risks but think they can still profit before that inevitable bubble burst.

So those are three of the swords of Damocles hanging over us waiting for that "event" that triggers the next crash. It will happen of course, simply look at history and you will see booms and busts are cyclical and our present cycle is already over long. But this time is different from most crashes because the FED propped everything up for so long that literally everything is up in the stratosphere supported on skinny wobbling stilts. If the FED had allowed a complete crash in 2008-9-10 instead of their band aid approach and if they had not printed money and become the lender to the world our economy wouldn't have expanded so much and our impending crash wouldn't be so gigantic.

It's going to happen, sooner or later a trigger event will crash the market and our economy and kick of a great depression from hell. There is no way out of it, now it is just a question of when and how bad.