The Investment Game is Rigged, So Learn The Riggers’ Cheats and Play Accordingly

Courtesy of Lee Adler of the Wall Street Examiner

I want to set the record straight from the outset. I’m not bullish because economic fundamentals are strong, even though in some respects in the US they look somewhat ok on the surface. It’s all appearances.

Nor am I bullish because of the bullish technical trends, even though they are bullish.

I am bullish because the market is rigged. The central bank has rigged this market to do what it wants, and my observation has been and continues to be that central bank rigging works. I have watched these things very closely since the Fed began its transparency shtick in 2002, publishing its actions in open market operations daily. I saw then and have seen ever since that the Fed gets what it wants until the unintended consequences of its misreadings blow up in its face.

It takes more and more and more printed money for the Fed to get the result it wants, but that’s what the Fed has created, and that’s what the mad scientist Dr. Bernankenstein will experiment with until it becomes too obvious that his monster is out of control. Until events and processes unfold that force Bernanke to unplug the monster, I have to believe that what has appeared to work for them so far will continue to work.

The Fed is a serial blunderer, however. The last market collapse happened following a series of Fed blunders. Fomenting bubbles is a serial blunder, to which the Fed is addicted. The Fed has made the same mistake of attempting to reflate bubbles throughout history. It’s insane, but that’s the nature of those who seek and attain the power to run the game. They will push it to the limit until something blows up in their face.

That something is virtually always a manifestation of inflation, whether an out of control asset bubble, or consumer price inflation. Until one of those things, or something akin to them is sitting on the Fed’s face and farting, the insanity will continue. Under the circumstances, I will follow the rules of their game and play it accordingly until it seems likely that the incipient forces of inflation will force them to stop. At this point, I don’t see that yet.

Macro Liquidity Composite - Click to enlarge

Macro Liquidity Composite – Click to enlarge

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