Not ‘do what it thinks would be the best course for the European economy’, not ‘choose the path of least resistance in guiding the financial system to recovery’… the ECB will DO WHAT IT MUST.

As I have written til I’m blue in the face for the last 10 years, we are in the age of ‘Inflation onDemand‘©, 24/7 and 365. “…do what it must”… let that sink in for a moment.

Japan is trying to kill the Yen, China is dropping interest rates and the world over we have a rolling inflationary operation that is little more than a game of Whack-a-Mole. BoJ popped up a couple weeks ago and now this one…

Transitioning to the country and policy making establishment that has truly shown ‘em how it’s done over the last 6 years, we view the S&P 500 with its eternal attendant, ZIRP and add a view of the CPI as well. One message that can be interpreted from this chart is that stock markets have been used (controlled) as a mechanism for asset owners to keep up with the reported effects of inflation (CPI). Saving has been disallowed, legislated by policy right out of the equation. Everybody into the pool, if you’ve got the bankroll to play.

Created with SlopeCharts

We have maintained since the post 2012 lift off of the most intense phase of the inflated stock bull market that there is and has been no bubble in stocks (though they have become over valued* even by traditional metrics) but rather, a massive and ongoing bubble in global policy making.

First Alan Greenspan laid the groundwork and the initial blueprint (asset inflation), then his inflation operation was liquidated with extreme decisiveness and now, from the ashes we have a new global asset inflationary operation born not of good intention or rationally sound strategy. It is pure and simple desperation. The ECB will “do what it must”. The US Federal Reserve has done “what it must” since instituting ZIRP nearly 6 full years ago and through QE’s 1-3.

Straw Man

It sure looks like the whole debate about 2015’s coming interest rate hikes are another Straw Man stood up to manage market expectations (see Deflationary Straw Man), to give the impression that Policy Central is still in control and that they have decisions to make. There is no decision folks. The inflationary operation, now gone global, is an all-in, all-or-nothing’ proposition.

Greenspan’s inflation ended up being less than nothing. It was resolved in a sea of debits that assigned negative value to the system. The ongoing effects of inflation feel good to some people now (especially those who get to lap up the silver spoon’s gifts that keep on giving first and foremost as opposed to those savers and paycheck-to-paycheckers who just get to suck on ZIRP-eternity) but inflation is never a lasting benefactor. It is a subtractor over the years and decades as savings and productivity are replaced by money printing.

We will clip this post here and go on managing the market as always, taking what it gives, managing against what it is one day going to take and keep the big picture view in place at all times. That view very simply is that 6 years on from the US financial crisis (ongoing, though that is an unpopular notion at this time) a global cadre of policy makers are playing a transparent game of Whack-a-Mole trying to one-up each other until the whole thing flushes once again.

* Although it is worth asking the question ‘what is value today, anyway?’ when considering the constant inputs and distortions inflicted by policy makers. Anyone care to take a guess on that one?

Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates (including Key ETF charts) and NFTRH+ chart and trade ideas or the free eLetter for an introduction to our work. Or simply keep up to date with plenty of public content at NFTRH.com and Biiwii.com.

By Gary Tanashian

http://biiwii.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.