Well, Fed meeting week is upon us yet again.Â It seems like only yesterday that these people got toÂgether for two days to accomplish absolutely nothing.Â And it will take another two days for them to accomplish even MORE nothing.Â Our tax dollars hard at work.
We are rapidly approaching time for some action, though.Â As the global economy catches tread and things start to financially heat up again, the onus will be on the Fed to implement an exit strategy that will soak up all the excess capital in the markets without triggering a panic-hoarding effect amongst the investment community.
It’s kind of like pulling unemployment benefits from someone who was hurt but has since recovered.Â The original reason for the benefits was justified, but now they’re just happily sitting in the La-Z-Boy scarfing down Cheetos and watching Jerry Springer.Â Time to pull the plug and have Chester Cheetah go get a job.
Same goes for our economy.Â Stimulus, ridiculously low benchmark rates, bailouts and quantitative easing (printing money like crazy) was all necessary and justified at the time.Â But that time may soon be over, and pulling all that fun stuff out of the economy can be an unpleasant and politically suicidal thing to do.
But it must be done.Â Baby cannot have his bottle indefinitely.
Enter the conflict: what if we pull out the support structure before the economic recovery has fully cemented?Â A lack of stimulus is what turned the 1929 crash into the Great Depression, so we certainly don’t want to do that.Â But if we leave all that cash sloshing around in the global markets, we can darn sure expect some pretty stiff inflation just around the corner.Â And, I don’t know about you, but the thought of spending ten bucks for a loaf of bread doesn’t exactly Rodger my Hammerstein.
I went to great lengths for that reference, so I hope someone out there appreciated it.
So, between a see-sawing housing market, massive sums of debt with more on the horizon, healthcare debates causing people to act like they are possessed at town hall meetings, more troops needed in Afghanistan, the proposition for an uber-financial regulator to oversee everything involving money and lots more, I am exceedingly curious as to how many balls this government is capable of juggling before things start dropping.Â Let’s hope the answer is “a lot”.Â Because if not… yikes.