Every Single Asset Class Correlates 1:1 With The Fed’s Balance Sheet

Chairman Mao’s minions have done an excellent job turning what was once a free market capitalist society into a centrally planned cesspool of economic destruction.

Get your food, gold, silver, guns, ammunition, and survival necessities ready for the coming economic Apocalypse.

Zero Hedge reports:

The chart which we presented a few weeks ago courtesy of Sean Corrigan sees a few additional components added to it. Whereas before the chart focused on the Adjusted Austrian money supply and commodity prices, it now sees the addition of the S&P and Junk spreads. In a word: every single asset class correlates 1:1 with the Fed’s balance sheet. If the Fed is really planning on ending QE2 on June 30, the market collapse will be epic. And, yes, this should not come as a surprise to anyone.

[atsimg]http://files.abovetopsecret.com/images/member/96fa6a761042.jpg[/atsimg]

I'm sorry, it's not obvious to me.

* I don't understand the dip in most of the indices in July 2010.
* I don't understand the attached article (and reponses) saying that QE2 has to be continued for the foreseeable future. (Isn't that creating a currency bubble?)
* I haven't heard much news lately on China's currency moves. As a younger friend says ("What's up with that?)

reply to post by charles1952


The dip in the middle of 2010 correlates exactly to the period when the Fed ceased expanding the balance sheet.

When the Fed began contracting its balance sheet in July of 2010, there was an immediate major sell-off, which was subsequently followed by a rise as soon as it became clear that the Fed would begin expanding it once again.

Please explain to me why this is scarey -- it would also be best if you tried not to use hysterical allusions and hyperbole. kthx

Correct me if I am wrong, but this basically means that we are damned if we do and damned if we don't. In other words, if the Fed stops QE then we will have an epic crash. If the Fed continues QE then we will have epic inflation.

Pick your poison.
(Again, if I am wrong please correct me because I am a novice on these economic things...)

Originally posted by nydsdan
Correct me if I am wrong, but this basically means that we are damned if we do and damned if we don't. In other words, if the Fed stops QE then we will have an epic crash. If the Fed continues QE then we will have epic inflation.

Pick your poison.
(Again, if I am wrong please correct me because I am a novice on these economic things...)

Yes, that's basically it.

However we are more damned if we let the fed blow up the dollar.

The monetary system needs to be restructured back to a free banking gold standard, which can only happen if the Fed is abolished.