Tremendous Taper Tuesday - Will she or won't she?

[Dr Bloggood]

So auntie Janet is in the drivers seat now. The question is: Will she taper on tuesday or not?

I personally can absolutely not imagine the Fed to be crazy enough to taper again. When they did it in December, things got a little uncomfortable and treasury selling accelerated. When they did it again in January, the stock markets rolled over and emerging market currencies started a bottomless plunge. I can only imagine the grave consequences ANOTHER taper would have, especially considering the dire situation with Ukraine. Only to true sociopaths would the idea of tapering come now.

On the other hand, that description might exactly fit on central bankers... I have been saying "No taper" since last summer, and was wrong on the last two occasions, so who knows. This is what happened to treasuries last week, btw:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/03/Custody%20Holdings_1.jpg

Then, there is another option: Might she even realize what is happening and raise QE? And if she does so, will it be enough for the markets to realize that finally the bankers have lost all control or not?

I believe we are very close to the edge right now.

 

[1715379074]

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[1715379074]

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[1715379074]

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[CurbsideProphet]

I don't really think the Ukraine will have a major impact in the grand scheme of things.  Russia owns something like 1% of treasuries and it will hurt them more than the US if they were to sell.  What they'll likely do is move the treasuries offshore to prevent the US from freezing their assets.

As for tapering, it might happen but if/when the market reacts badly enough, the Fed will give in as they always have.  The whole economy is addicted to cheap money, it's no longer a stimulus, it's an entitlement.  When we do reach that edge, it will be a bad one, but we're not there yet.  This game can go on for quite a while yet.

[Pente]

If they plan to taper, they (Fed board and their friends) can short some bonds. Regardless, they can make money either way. The point is: they have (actually create) the important information to make money and we don't.

Another reason to stick to cryptocurrencies. Everyone has the same available information.

[Carl Quesadilla]

mark of the beast - BTCitcoin

[lnternet]

Another reason to stick to cryptocurrencies. Everyone has the same available information.

I think cryptsy and alike are in a position of manipulating the market like crazy. Surely this is part of cc space.

[CurbsideProphet]

Another reason to stick to cryptocurrencies. Everyone has the same available information.

This isn't true.  I could be friends with a whale and he could phone me telling me he's about to dump 200k BTC on the market and you would never know until after the fact.  Information is power and it is never equal, never will be.

[Dr Bloggood]

I don't really think the Ukraine will have a major impact in the grand scheme of things.  Russia owns something like 1% of treasuries and it will hurt them more than the US if they were to sell.  What they'll likely do is move the treasuries offshore to prevent the US from freezing their assets.

As for tapering, it might happen but if/when the market reacts badly enough, the Fed will give in as they always have.  The whole economy is addicted to cheap money, it's no longer a stimulus, it's an entitlement.  When we do reach that edge, it will be a bad one, but we're not there yet.  This game can go on for quite a while yet.

Ukraine is not the reason, but it might be a kickstart for the game to fall apart, the match lighting the fuse.

Why do you think selling will hurt Russia more than the US? And do you have a statistic of which country holds what percentage? Would be interesting to see.

I absolutely agree, the world is addicted to cheap money like a heroin addict, and withdrawal symptoms will be BAD. They will be forced to raise QE again at some point, but by then the addiction will be obvious and confidence will go down the drain.

[Lethn]

The Federal Reserve can't taper, it's impossible, because the whole U.S economy relies on nothing but money printing and just like last time the federal reserve will come up with another magical excuse to not do it or they'll find a way to sneak in more printing without calling it Quantitative Easing or money printing. You can expect them to either announce business as usual or they'll find a new word to make up for putting in even more money printing to keep the cycle of hyperinflation going, the last announcement about the fed tapering was a lie, what they did was actually carry on money printing but in smaller amounts, so that they could keep things going on for longer.

They will never fully stop printing the dollar, I guarantee it.

[Dr Bloggood]

or they'll find a way to sneak in more printing without calling it Quantitative Easing or money printing.

That's interesting, I know there are other ways of injecting liquidity into the system, but can you elaborate on how this is done?

[Lethn]

It's like any other form of attempted corporate fraud really, they overcomplicate things so much and make up their own language that people outside of the system have no idea what it does, Quantitative Easing is a classic example because it really is just a made up word for money printing and fixing interest rates.

I'm still learning about it all but this video explains perfectly about government bonds and how money is circulated in our monetary system, not just in the U.S but the whole world - http://www.youtube.com/watch?v=iFDe5kUUyT0

If there's sufficient outrage you can bet they'll come up with something else either similar or exactly the same to try and con people out of their money.

[CurbsideProphet]

I don't really think the Ukraine will have a major impact in the grand scheme of things.  Russia owns something like 1% of treasuries and it will hurt them more than the US if they were to sell.  What they'll likely do is move the treasuries offshore to prevent the US from freezing their assets.

As for tapering, it might happen but if/when the market reacts badly enough, the Fed will give in as they always have.  The whole economy is addicted to cheap money, it's no longer a stimulus, it's an entitlement.  When we do reach that edge, it will be a bad one, but we're not there yet.  This game can go on for quite a while yet.

Ukraine is not the reason, but it might be a kickstart for the game to fall apart, the match lighting the fuse.

Why do you think selling will hurt Russia more than the US? And do you have a statistic of which country holds what percentage? Would be interesting to see.

I absolutely agree, the world is addicted to cheap money like a heroin addict, and withdrawal symptoms will be BAD. They will be forced to raise QE again at some point, but by then the addiction will be obvious and confidence will go down the drain.

Why would it hurt Russia more than the US?  It's simple economics, if you dump treasuries (increase supply) while demand stays constant, price goes down.  So Russia would lose money by dumping their treasures, which would have a nominal impact on the US because they are not major holders of treasuries.  Their holdings are about 1%, you can do a google search if you want links.

Russia has more play in hurting Europe by shutting off the gas (as they've done in the past).  Unfortunately for Russia, most of the EU has now prepared for this disruption since the last time by increasing reserves and once again, shutting off the gas will hurt Russia as well.  Putin has already weighed all of this out, he knows the consequences and is obviously moving forward.  Could this be the start of something major?   Maybe.  Like I said, wake me up when he invades a NATO country, all this is is a tiny peninsula in Ukraine (not even the whole country) that wants to be independent anyway and is majority Russian to begin with.