“However, if it’s not a headfake, both the stock market and the bond market could be in for quite a rough ride given the extreme complacency and the “belief bubble” that the Fed can do no wrong.”

Mish has one of the best track records calling which-way-rates-are-going over the past 10 years. While virtually all the rest were calling for higher rates (inflation) Mish stuck to his ‘include credit in money supply’ guns and correctly called for lower rates (deflation). Our feeling has been that the artificially low rates have expanded the Fed’s balance sheet to the point where an ‘exit strategy’ becomes impossible (despite Bernanke’s claim that he can exit in 15 minutes if he had to) and that bond chaos is baked into monetary cake: meaning a rate spike and currency collapse (hyperinflation). Mish’s post today points out that rates have moved up again recently – but is it another head fake? Personally, I believe that if this were real deflation we’d have seen less interest in Gold and Silver instead of record breaking interest. If this were not a rigged market we would never have heard of Libor, the ‘London Whale’ or any of the other myriad market rigging scams of Wall St. and the City. But we did, and it’s rigged. And the jig is about up; sooner rather than later in my view.

2 comments on ““However, if it’s not a headfake, both the stock market and the bond market could be in for quite a rough ride given the extreme complacency and the “belief bubble” that the Fed can do no wrong.”
  1. Alden says:

    Watching some guy on Kitco site .. he thinks stocks will continue to advance for the short term .. .before it implodes and gold and silver advance to new levels at the high end. He says not to get nervous .. gold will fluctuate between about 1500 and 1800 before going to the next level. And the stock market .. as far as I am concerned betting on horses is more fun .. the market is a joke and I guess if you like jokes.. go for it. Until SOME modicum of trust comes back into the ‘market’ or government .. we are going to hell in a handbasket on an express train at warp speed.

  2. Anthony says:

    I agree Alden just wanted to add something economist don’t count on…

    The Fiscal Cliff debate should have showed Mish who likes to talk sh*t about my home State’s fiscal problems (California) being from a dead state (Michigan) that this Government will be forced to do something when Europe gets back on track.

    The problem is predicting it. If Japan showed us ANYTHING is that he-who owns the printing press can print as much as they want and there is nothing the White shoes boys club or Economist.

    Wall St controls not as much as you think in Washington. If the Government goes into protection mode, it will push Wall St Fat Cats off the cliff to keep from being voted out of office.

    Trust? C’mon this Economic model as run its course. We can’t grow anymore, Western Countries have serious population issues. Its time to share and protect the planet, Capitalism can not provide that, it creates Winners and Losers and too often the loser is the environment or population (or both). Capitalist are not all bad, but too many of them are and they tend to run/own companies that take, take, take and pay no taxes.

    This system is broken and the rich think they can escape climate change, they won’t. The weather does not pick winners and losers, see the San Diego/Foothill fires, lots of rich people were BURNT OUT.

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