Try looking at a longer range chart... one that goes back to 1994 and before, taking note of the changed inflection in the slope from that point in time. That point back in 1994 is where the turbo kicked in on the CRA, with an artificial stimulus in the shift in the "rules" in mortgage markets... which enables you to connect the dots between fundamental changes in policies and the charting.
I think that means you need to consider two aspects of that chart. First, what it means to the economy now to no longer have the mortgage market functioning the way it was from 1994 until 2008 or 2009, when the Ponzi scheme behind the fraud imposed in the law finally collapsed. It was generating a sort of open ended flow of stimulus money during that time, allowing it to fund... pretty much anything... given liars loans paired with rising home prices and easy access to lines of credit that were tied in to them.
The mortgage fraud has ended... but, the bubble that was inflated by it still hasn't been allowed to deflate. The market for fraudulent mortgage backed securities no long exists, but the government is still holding and buying mortgage securities to prevent a rapid correction in prices, while holding out hoping for a restoration of some functional flow in credit markets, requiring some $ to come from some new source for new uses, that might be able to replace that bit of missing stimulus, and provide longer term support to housing prices... by getting the economy working again. That plan won't work as long as unemployment isn't resolved. Banks still aren't lending... and won't while the government CAN'T raise interest rates... which would put them so far underwater on debt service they'd be forced to go BK, made unable to service the debt. Banks won't lend given that situation... when they can borrow at near zero rates, in effect, and still profit nicely at "zero risk" from lending the free money the government gave them, right back to the government, for 4 or 5%...
Apply a technicians approach to that chart... and it what it seems it says is that the correction required to counter the artificial "pump" that took the market up to the highs... is a move to downside that roughly equals the excess in the opposite direction ?
Of course, there was REAL economic acceleration and growth that resulted from the situation... so, you might need to parse some adjustments to separate out the good bits from the bad... and would still need to figure out what the "real" change in policy is, given that the effect of the elimination of mortgage fraud as the preferred national policy IS being countered by a large range of other policy inputs intended to counter it ???
That is why you see the Fed saying you should still expect to see ZERO interest rates that last for YEARS...
Ever see that before ?
What good does it do... if you can't borrow money anyway at anything that is anywhere near that price ?
The solution is NOT government spending money and more borrowed money to try to fill the gap in what others aren't spending...
The ONLY solution is to restore the now missing stimulus function... to grow the economy at a 6% or better rate, with rules that ensure ECONOMIC uses are made of the money, rather than re-enabling the diversions of it into bank enabled frauds.
Without a plan that can make that happen... which will require opening NEW channels for the money to be able to flow, again, and flow AROUND the banks, to flow directly to entrepreneurial borrowers who will APPLY it economically, to create real value... without the banks imposing filters that ensure the value that results is value that will and can only be transferred to them...
Then, the only other "way out" is either through a proper "correction" like that we saw occur following 1929, only ended with the "stimulus" of WWII... or through a MASSIVE bout of inflation...
IOW, you can't fix it without the banks being held to account, and suffering the natural consequences of their excesses and correction of their policy errors, requiring that what is broken now must be recognized and corrected. If that isn't allowed to happen, you're STILL going to get that sort of a fix, it WILL be imposed as is required to make that happen (the market works)... even if getting it means the collapse of the government and its replacement.
Not saying anything I haven't before... but, half measures and hope, when that enables dithering and fraud postured as reform... isn't solving the problem rather than making it worse.
The fiction that "we fixed it" with a "reform" bill that makes the problem worse... giving even more power to the banks ???
That only means they're not dealing with the reality... at all.
IMO it is FACT that the "powers that be" now care much less about fostering prosperity than they care about power, and the exercise of power, to ensure, whatever level of prosperity there is, that they retain their position and power. That is the opposite of what we expect from our country and our economy, and it is the opposite of the promise of a free market... where competition is enabled, not channeled by corruption to enable only some to take the benefit of others successes. With rules that impose that model, market incentives won't work, and there will be less success, and less wealth... until some form of collapse is all that is left, when unmet expectations meet that limit in reality.
My guess of which of the three potential paths "out" is most likely... ???
I think there will be no real change in policy, no reform, as long as "the system" there is can be enlisted to defend those with a hold on power... at any cost. Genuine political reform... is unlikely. There is unlikely to be any meaningful decision that gets made, until crisis requires it... and then, that will likely occur only with WAY too little change made much too late. I think that means we're likely to see the worst possible result: no meaningful corrections applied, only more of the same, until desperation requires and enables "doing something".
Most likely, that means muddling along wasting time and potential for whatever time can be managed... until some new crisis creates a tipping point... or until the obvious un-sustainability of what has been undertaken now is actually realized, when the rotting foundation proves simply unable to support the structure.
Then, with things getting worse, and people getting more and more unhappy about it... and without other options... hyperinflation will become the only path left open... as more and more printed money thrown at anything and everything will be necessary for lack of any alternative.
Inflation is a form of tax... but it is a form of tax that won't accelerate the deflationary spiral rather than counter it.
Timing ? Who knows... always hard to predict the timing of departures into discontinuous events.
I think your approach to the use of charting tools is likely as useful as anything else in parsing probable timing.
/rant
.JPG)
