Thursday, December 1, 2011

Still confusing liquidity with solvency

Here the Fed goes again!  Flood the world with money.  We will take it as it comes, who doesn't love a Santa rally?  But the root cause of all ills in the financial system is solvency, no liquidity is going to eliminate it.  Besides, when the market finally disciplines the bad decisions made in the past, the Fed can't trust the market anymore.  Think about it for a minute, a group of unelected technocrats hiding behind a facade of "central bank independence" repeatedly postpones and disables the reckoning of market, while the riots are starting to build in the street.  What bigger enemy do we need to destroy our democracy?

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