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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Doug Noland
May 1, 2012
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There is the misperception that the Trillions of deposits sitting on the Fed, the ECB, and other global central banks’ balance sheets have yet to cause an inflationary impact.  The truth of the matter is that these Trillions have circulated through global securities markets – and with momentous inflationary effect.  This liquidity has ensured ongoing global Credit and speculative excess, while exacerbating global financial and economic imbalances.  These days, the inflationary effects of “activist” central banking foment only greater systemic fragilities.

From Dr. Taylor:  “The very existence of quantitative easing as a policy tool creates unpredictability, as traders speculate whether and when the Fed will intervene again.”  Again, I don’t necessarily disagree.  Unpredictability and uncertainty are important consequences.  Yet the greater issue is that policy interventions over time have a profound impact on market perceptions, specifically nurturing a view that policymaking reduces unpredictability and ensures relative financial and economic stability.  Importantly, and at this point this should be beyond dispute, “activist” policymaking works to inflate asset prices and fuel asset Bubbles. 

The pricing and availability of derivatives and other forms of market insurance are profoundly impacted by the certainty of policy interventions, along with the various measures that are perceived to ensure market liquidity backstops.  I would argue that the $1.6 TN of reserves is reflective of the massive Fed market interventions that have over the years validated deep flaws in the derivatives marketplace.  The dangerous premise of “liquid and continuous markets” – the bedrock of dynamically-hedged derivative trading strategies – would have long ago been debunked if not for Fed activism.  And there is absolutely no doubt that “activist” policies incentivize speculative leveraging.  I find it astounding that CPI is stilled viewed as a greater systemic risk than historic speculative Bubbles and central banks’ role in fanning a global financial mania.