Thankfully, I do not try to trade the fundamental news. Yesterday was an example of a lot of volatility – in both directions. It seems that traders in futures and FOREX are so hyped up that they bounce off the wall in all directions when major news releases occur. The FED did not change a thing – well, maybe they changed a word or so in their report following the FOMC meeting. Seems that the word “modest”- with respect to projected economic growth – as opposed to “moderate”, is a really big deal to some. For me it is just six of one or half a dozen of the other. But the market – driven by mass psychology – seemed to go temporarily insane over then change in words. Whether we get modest growth or moderate growth – the problem remains the same. A recovery is going to be a long time coming.

I will be celebrating (or bemoaning, depending on one’s perspective) my seventy-sixth birthday later this month. I am beginning to have serious doubts about a true recovery happening in my lifetime. Oh, I do not expect the economy to totally go bust any time soon – it’s just that there are so many problems out there what will likely impede a return to a truly dynamic economy in the near future. Not the least of which is the Fed’s FOMC dilemma – how to stop QE without killing what little growth there is in our anemic economy. Personally, I think what the FED is doing is basically wrong but now that they have started it, they have a tiger by the tail – and letting it go without being eaten alive is a problem without an apparent solution.

I grew up in the country – where common sense was valued more than a Phd – and expecting to get something of value for nothing was considered defying common sense. And printing money, without the underlying economic growth to justify it seems to defy common sense – no matter what kind of fancy name you conjure up to describe it. The Fed’s balance sheet now holds 3.5 TRILLION dollars of so called assets. My common sense description of an asset is something that you can sell if need be – and it is worth only what someone else is willing to pay for it. When the Fed is ready to “sell’ is assets I wonder who will step forward with all those Trillions of dollars.

Personally, I think that the only solution to the debt problem in the USA is either print the funny money to pay it off – or renounce the debt. Either way, it does not bode well for our financial future in this country – once the richest nation in the world (and I was a young adult at that time). Common sense says that spending more than you take in (true for individuals or nations) is an inherently limited means of dealing with a problem – not a permanent solution.

 

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