The FOMC will conclude its 2-day policy meeting tomorrow as markets await new signals from the Federal Reserve. However, if monitoring the mainstream financial news media – the term, yield curve control (YCC), is being thrown around quite a bit. Is this because the Fed has already lost control? With trillions in spending and balance sheet expansion, and the resurrection of several emergency “facilities” not seen since the GFC, coupled with a stock market nearing and/or making new all-time highs, depending on the index – then why would the Fed need to do more? And why would they need to “control” the yield curve?
Could it be that the markets are waking up to the fact that Uncle Sam is broke? Or that a $26 trillion national debt with a $4 trillion deficit for this fiscal year alone, paints a picture of financial ugliness? Pick your poison, but understand that if the market has its way with the bond market – implying that yields are too low, because default risk is real, then look out below, as yields spike! Now it is true that the Fed can print money to technically avoid a “default,” but if we’re printing money to pay our debts, then here’s a newsflash for you – we’ve DEFAULTED! If the market brings higher yields, which is where they should be headed – to force the righteous deleveraging of the economy, increase savings, and to actually create a hurdle rate for investment – then short-term there will be pain, but this would start to lay the foundation of a stronger recovery. Higher yields alone will not correct everything, but it is a necessary ingredient. Pay very close attention to any mention of yield curve control. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #EndTheFed #Bailouts #Debt #USA #Depression #Gold