You know, I don’t know but it sure looks that way. My volatility indicator went wild on Friday and the S&P500 made a huge bearish engulfing candle that ate up the last three week’s gains!
I’m still net long but I’m wondering if all this stealth inflation we’re having is beginning to affect the consumer. This will kill this market recovery (bubble) and force the Fed to cut rates even further. Lower rates = even higher inflation = further erosion of the buying power of the Middle Class. I’m starting to agree with Ron Paul that we should abolish the Fed and go back to the Gold Standard.
Sure the Fed can inject liquidity at the drop of a hat in case an economic shock happens (with a Gold Standard its harder) but being able to print money willy-nilly creates a global economic house of cards!
Printing money is a great thing if you want to bring down a Superpower like the Soviet Union, after all Reagen built up the military by printing loads of money. It’s also a bad thing if an emerging Superpower (China) starts buying all your debt.
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