“To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.”
-Economist FREDERICH HAYEK, as relayed by William White in his Adam Smith prize acceptance speech last month.
How much does the stock market have left in the tank?
“But we are restricted from investing in that wider range of assets…it could be useful (at a later date) to be able to intervene directly in assets where the prices have a more direct link to spending.”
-JANET YELLEN, responding earlier this week as to whether the Fed had the authority to purchase stocks and corporate bonds.
When the spread isn’t the thing.
“Central banks are the largest blind buyers in the world, accumulating trillions of dollars worth of assets with no thought of price, valuation, or exit strategy.”
-Jones Trading’s MIKE O’ROURKE
INTRODUCTION
This week’s EVA brings the second edition of our new Random Thoughts format.
FROM THE NEW NORMAL TO THE NEW CRAZY
“Monetary policy is not a panacea…Most of the policies that support robust economic growth in the long run are outside the province of the central bank.”
-Former Fed chairman, BEN BERNANKE (in the days before he went all-in on Quantitative Easing—QE)
INTRODUCTION
This month’s Guest EVA is,
Thermonuclear blast from the past.
“One way to make sure crime doesn’t pay would be to let the government run it.”
-RONALD REAGAN
SUMMARY
-This Labor Day is bringing back haunting memories of the same holiday weekend eight years ago.
-Back then, former Treasury Secretary Hank Paulson made the decision to place Fannie Mae and Freddie Mac in “conservatorship”.
