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Do we not know this already...

The Economy Is Starting To Crash – There Will Be No Rate Hike In September
Posted on August 17, 2015 by The Doc

http://www.silverdoctors.com/the-economy-is-starting-to-crash-there-will-be-no-rate-hike-in-september/#more-56989

Finally, perhaps the best overall indicator that the end to the insanity that has gripped the markets is over is the degree to which the Fed’s intervention in the markets has become so painfully obvious. Everytime the S&P 500 is on the verge of falling off a cliff – like today, for instance – a big bid miraculously appears – a big bid that the hedge fund HFT-driven algos embrace and front-run, driving the stock market away from the edge of that cliff. I know a lot of people who are still highly irritated by this. But I would be more shocked if Yellen and Company didn’t intervene in the stock market on a daily basis.

Even worse is the intervention in the Treasury market. Interest rates are on virtual “lock-down.” In fact, I would argue that, on a de facto basis, the Treasury market for all intents and purposes has been “shut down.” The Fed has become the largest holder by far and, via its network of Wall Street primary dealers and the Bank of Japan, has ensured that a meaningful supply from sellers will never hit the market. To refresh everyone’s memory, recall that the Bank of Japan is buying JGBs from Japan pension funds using printed yen and replacing them with U.S. Treasuries. Indirectly Japan has become the Fed’s warehouse for loose Treasuries – “loose” as in Treasuries being unloaded by Russia and China.

Do not mistake the money that has been “created” by the insane rise of a stock market that has been pushed to its highest valuation level in history. This is not “wealth” – it’s shifting the deck chairs around on the Titanic. The revenues of the S&P 500 companies have been declining for several quarters in a row now. If we were to use the accounting standards that were enforced in 2000 – instead of the highly misleading accounting rules in place now – the p/e ratio, forward p/e ratio and the dubious “Shiller p/e ratio” would show their highest levels ever.

Perhaps the biggest issue I’m grappling with now is what will happen when the Fed loses control? Rather than watch helplessly as the stock market collapse, I am beginning to wonder if they’ll just shut the markets down…

Should one choose, there is more at the link above...