The US Fed Is Creating the Mother of All Bubbles

Posted by: : Paul EbelingPosted on: November 11, 2013 The US Fed Is Creating the Mother of All Bubbles

The US Fed Is Creating the Mother of All Bubbles


Americans should be preparing for the explosion of a “Mother of all Bubbles” brought about by the US Fed and its irresponsible manipulation of interest rates, says David Stockman, the Supply-Side economist and director of the Office of Management and Budget (OMB) under US President Ronald Reagan.

The US Fed  has created a false prosperity that shows up in the overpriced US stock market, Mr. Stockman said in an interview Sunday.

The US Fed has pumped  massive liquidity into the economy since Y 2008 it is “the greatest gift to speculators, to the leveraged traders, to the carry trade ever.” he said. This money has for the most part not made it to “main street.”

“Now we have the Mother’s  Mother of all bubbles. And there is nobody left in the stock market today except manic day traders and robots who are being mainlined by the daily injections of liquidity from the Fed. This is utterly irrational,” Mr. Stockman.

The United States is at the mercy of the same group of central bankers who brought the nation the “dot-com” crash and the housing bubble, according to Mr. Stockman,  not a track record of success.

Now long time US Fed banker Janet Yellen has been nominated to be the next US Fed Chair, he added.

“It tells you the “Clear and Present Danger” in America is that the US Fed is run by people who are in some medieval castle somewhere, and they lost track of the real world.”

Mr. Stockman said US Fed artificially low bond rates have forced stock prices skyward, and essentially “are part of the same bubble.”

He said retail investors are hearing the same perilous “Siren Call”  from retail stock analysts that they heard at the Y 2007 peak before the US financial meltdown: “Come on in, the water’s fine, we are just getting started.”

Both Shayne Heffernan and I have been voicing this same POV for the last several months, a distribution market and not  for mom and pop retail investors. A major correction of 22 to 35% is coming, some analysts are saying up to 40%.


Veteran investor and financial author Jim Rogers, told Reuters TV that the US Fed is only one of several central banks around the world that are all printing money in pursuit of economic growth.

“The world is floating around on a huge artificial sea of liquidity,” Mr. Rogers declared. “It’s going to dry up and when it dries up we’re all going to pay the price for this madness.”

Mr. Rogers predicted it could be Y 2015 before the Fed begins to reduce its huge monetary stimulus, but there will be no avoiding the harm to an inflated stock market when the paring begins.

“These are not very smart people,” he said of US central bankers such as outgoing US Fed Chair Ben Bernanke and Ms. Yellen. “They are government bureaucrats and they think like government bureaucrats.”

This is an ongoing story, stay tuned…


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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