As we are all, no doubt, already sick of hearing, in the press release which accompanied its decision to leave US interest rates unchanged at 40-year lows, the Federal Reserve did not, as it had done before, say this stance would be maintained for a ‘considerable’ period henceforth - but merely that the bank would be ‘patient’ before raising rates. Such is the cabbalistic nonsense with which we have to put up in what Alan Greenspan’s thinks is a world free of government interference that this small change was enough to send markets worldwide into a widespread tizzy.
Such also are the perils of allowing vast speculative positions to be built up and financed with hot money – with no heed to the underlying fundamentals underpinning whatever assets have been bought in this way, For now, thanks to the dynamics of the inherent instability to which lax monetary and fiscal policy have given rise, this most insubstantial of semantic shifts has been enough to cause major upheavals in the pricing of global capital and has introduced yet more ‘brutal moves’ and ‘volatility’ into the prices at which entrepreneurs try to buy and sell their goods and services, thereby seeking to satisfy our ever-pressing needs with the greatest possible degree of economic efficiency. Some help that is!
(For more see today’s Capital Letter at our website)
