Will the Fed take the Drunkbowl Away?

Since the economic collapse a few years ago, the primary policy initiative for the Federal Reserve and central banks all over the world has been to print, reduce interest rates to near zero and provide cheap money to stock markets. It’s a recipe for disaster, says many contrarian investors and Fed critics, including Jim Rogers, chairman of Rogers Holdings and author of “Hot Commodities.”

Speaking in an interview with Reuters, Rogers warned that the astronomical amount of printing will lead to a lot of pain for everyone. He added that when the printing finally ceases then we will see the true results of the central banks’ monetary policy: destruction.

“The central banks have been printing staggering amounts of artificial liquidity. It’s going to come to an end. I don’t know if it’s coming to an end now. When it does end, we’re all going to pay a terrible price,” said Rogers.

Rogers went onto purport that the markets would eventually drop between 10 and 20 percent, leading the central banks to once again ramp up the printing press. This would allow the markets to experience a boost and produce another series of bubbles.

The United States dollar won’t have much long-term strength, says Rogers, who noted that he does own it because in times of turmoil investors seek out the greenback as a safe haven from all of the chaos. “It’s not actually a safe haven, but they think it is.”

Rogers has been lambasting the Fed, European Central Bank (ECB) and other central banks for a few years now. He has regularly criticized their actions because he, much like his comments here have depicted, understands this type of inflation and easing will generate vast unpleasantness, particularly for the U.S.

Fed Chair Janet Yellen is expected to finally take the punch bowl away during this week’s Federal Open Market Committee (FOMC) meeting. This year, the U.S. central bank has tapered its third round of quantitative easing, but some expect the Fed to introduce a fourth edition of QE because the markets have been staggering in recent weeks, likely due to the paucity of cheap money and monthly injections.

The data has shown there has been a slowdown in moneyprinting this year.

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About the Author: Lew Rockwell