Wednesday, September 28, 2016

The fed Losing control

Imagine of the fed pegged the safe rate at 20%
And refused to issue direct loans to firms with a guaranteed roll over

What would happen

Private funds would be drained from corporate et al bond markets
Prices of old bonds plummet
At roll over time
Massive defaults layoffs idled production
A cat after it's tail triggered  Demand collapse

Out put price scrambles
Without coherent direction
As liquidations struggle with still viable self funded or self refunding firms
Even as nominal demand shrinks with falling nominal incomes and revenues
What ?

Chaos ....collapse ..resurrection ...

Say its uncle

Well the dollar soars as outsiders buy them to then buy that fabulous safe debt
Privateers stampede to get
Replacement funds on the euro or yen loan markets from privateer sources
Until the ...

Beyond intuitions narrow vision to know what would happen

But it would never happen

Noah Brains joins the nick Rowe boat oarsmen