The New CS Board

[jumanji0881]

The CBs and Inflation -

Credit Bubble Bulletin : Weekly Commentary: Dow 36,000 and Policy Mistakes : http://creditbubblebulletin.blogspot.com/2021/11/weekly-commentary-dow-36000-and-policy.html

My Comment : These excerpts are from Doug Noland's weekly Credit Bubble Bulletin.

Excerpts:
They’re in this mess together; created it together; and are now trapped together. As a group, they will dismiss rapidly mounting inflationary risks, choosing to remain locked in ultra-stimulative monetary policies. And together they will disregard manic markets and precarious financial imbalances.

It’s not difficult to discern why they would adopt such an approach. Global fragilities have turned acute. China’s Bubble is faltering, with contagion spreading to key EM markets. And last week, we observed acute instability afflict developed bond markets, including the UK, Australia, New Zealand, Canada and even U.S. Treasuries. They’re petrified of bursting Bubbles.

The big central banks this week signaled they will push back again rising rate expectations and market yields – essentially intervening in the markets to quash market adjustment to surging inflation risk. I have major issues with this. For one, market discipline is today all we have between reckless fiscal and monetary policies and any hope for a future without financial and economic chaos. Financial conditions must tighten, or inflation will run wild. Secondly, today’s artificially low rates and manipulated market yields are fueling precarious Bubbles and market manias

Do they honestly believe they can print $4.8 TN in 112 weeks without unleashing powerful inflationary dynamics?

The Fed and the global central banking community today inflict great harm as they proceed on the greatest monetary policy blunder the world has ever experienced.

It’s readily apparent what Trillions of monetary inflation do for securities, crypto, and other asset prices – for speculation and feeding a mania. The euphoria of a record equities market run and Dow 36,000.

. And there’ll be a huge price to pay for ongoing aggressive Fed support for manic markets. Perhaps even a larger cost to a bond market that cannot adjust to surging inflation because central banks believe it’s within their mandate to manipulate markets. This week’s market action only solidifies my view that when markets eventually do adjust, it’s bound to be violent.