01/15/2016 - Gordon T Long: If You Think QE Was an Experiment, You Haven’t Seen Anything Yet!
Key points & quotes on an interview with Financial Sense .. he sees a “a peak in the credit cycle” & thinks the Federal Reserve may have to reverse course this year in light of a potential liquidity crisis .. “There’s concern (and you’re seeing it in the market from those who understand what’s going on)… that because we have so much collateral pledged to support debt and credit right now that when that collateral falls in price as we’re seeing in oil and commodities, you get margin calls and if you don’t have the liquidity you’re caught and you’re caught in a serious problem.” .. identifies 1820 on the S&P 500 stock market index as the point when central banks will react with new policies – which will cause more adverse risks to investors, savers & retirees from the unintended consequences of financial repression .. “We are going to see negative interest rates potentially…we already have $5 trillion in bonds around the globe trading negative…there are all sorts of things that the central banks could do other than just interest rates and they will do them when the collateral is in jeopardy because it will bring down the entire system.” .. emphasizes how the burdens of debt, the challenges of meeting unfunded pension liabilities & reviving the economy are not just about the U.S. – it’s the same problem in the UK, Europe & Japan .. “The Fed is boxed in—they are trapped right now…they can’t raise rates. We might be able to raise another half (of a percent with) two more twenty-five basis point increases possibly but I think personally a recession is looming… the global slowdown is serious and significant and it’s washing ashore very quickly in America.”
LINK HERE to Financial Sense’s podcast service
