by Brandon Smith, Alt Market:
Four years ago the overall sentiment among most alternative and mainstream economists was that the Federal Reserve would NEVER hike interest rates, taper stimulus or reduce their balance sheet into economic weakness. In fact, this was one of the few viewpoints that the mainstream media and independent economists actually agreed on. A few of us had different ideas, though.
The argument is based on a dangerous assumption – That the Fed’s goal is purely to prop up and extend the lifespan of the US economy and stock markets. If you have been tracking equities in the Dow or the Nasdaq for the past decade, then that might seem like a safe bet. For several years the central bank has consistently added stimulus or cut rates whenever stocks started to drop more than 10%, and this is what launched that famous investor mantra “Buy The F’ing Dip.” It was a sure thing; all you had to do was buy stocks after a correction of around 10% and the Fed would come in to save the day with more inflationary QE.