Devil Christian,
The FED is short for the U.S. Central Bank. Stop being a camera nerd. LOL.
The Washington Post just released a great report of how there was a 72 hour scramble to prevent another 2008 Financial Crisis. Pretty much we sidestepped and dodged a bullet, but if you read through the links Austin supplied we still remain in a minefield.
All we did is avoid an explosion, and like the metaphor we still remain in a minefield. One analyst suggests this is the “Enron-Moment” and the “World Com” moment has yet to come. Others are saying, “This is the canary in the coal mine.” Ray Dalio, also is in this camp, suggests the only way to remove the booby traps is for the FED to go into a loosening cycle.
This suggests that “Austin’s” links have good data that suggest that many banks still have too much exposure to U.S. long-term bonds. Raising rates further would yield similar results like applying pressure to a pimple: perhaps causing breakout of pimples where any could explode.
The FED is likely to keep March interest rates flat, pretty much too afraid to make any move, meanwhile this allows inflation to get further entrenched with the possibility of some acceleration in the rate of inflation since the last hike was only a quarter point.
So the analogy I will use for this is driving my A4 Audi on what is known as “The Goat Trail,” a cliff like road blasted into a granite mountain overlooking the Hudson River.
It seems those clever German engineers specifically designed the car around a Pirelli P-7 low profile tire that runs at high pressures: 36 PSI front; and 38 PSI rear. These tires have very low rolling resistance because not only are the sidewalls small; the high pressure stiffens them further; and there is no loss of energy through squiggle.
The net effect is with out power the force of gravity alone can easily accelerate the Audi.
So we are on a road that is not just hilly, it is a mountain, there are mucho turns as the road hugs the mountain on man made cliffs.
Then there are chutes where from 30 MPH where acceleration to 80 MPH happens rapidly without any application of the gas: pretty much “coasting” and letting gravity take over. Very akin the feeling of being on a bicycle, but you are in a car.
There are lots of blind turns, and before entering the turn is when braking should be performed. Braking in a turn is just plain wrong and if you understand centrifugal force and how acceleration increases the footprint of a tire, and therefore provides more traction to a point, where too much acceleration could cause a loss of traction.
My Audi has a 7-speed automatic, and I kinda love more a manual tranny for its golf cart like direct drive where speed can be modulated with just one pedal using the engine for acceleration as well as braking. Know the Audi is AWD, it has oversized 4-wheel disc brakes; and really does well on a road like the “Goat Trail.”
Imagine now the FED is in an American SUV without the careful German engineering, and it tries to negotiate the Goat Trail in a vehicle that is less nimble than an Audi A4, but now the FED has no brakes, and the FED still has to still keep moving as fast as possible as if a graceful Audi.
The FED pretty much will avoid a crash as long as possible, but the road ahead is rather fraught. Somehow these images I draw out make it appear like a merge of two types of video games.
Cal
