Friday, September 19, 2008


There are historic changes going on in the markets. The government now is in the business of monetizing bad debt. On top of that the markets can no longer even be considered free with the ban on short selling. This is simply amazing to me.

Now let me tell you that in the end the overall trend of the market can not be manipulated. The Fed has been trying to manipulate the markets since 2000. When the tech bubble burst the FED debased the dollar and lowered rates to 1%. The unintended consequences where the real estate bubble and credit bubble. When the credit bubble burst the attempt to keep the bubble inflated spawned a surge in inflation, most apparent in spiking oil.

Does anyone seriously think that the current meddling will have no long term consequences? Of course the "powers that be" want to bandaid over all of the credit problems prior to the elections.

I've got news for everyone, there is no freebie fix for what ails us. We simply have to take our medicine in the end. Pumping a cancer patient full of morphine may mask the pain but its not going to cure the cancer.

We just had the largest credit bubble in history. The last one spawned the Great Depression. The continued attempts to manipulate the markets is almost sure to guarantee we are now headed down the same path as 1930. The only question is whether it will now be a deflationary depression or a hyper inflationary one.