JAN 30, 2018
In this interesting piece, Jim Rickards explains his past days in the financial markets and especially his career in the bond markets. He gives some history here and a lesson on the bond market and what he sees coming down the road. Here are some key highlights of his story.
The Fed is tightening monetary policy not because the economy is robust but because they are desperate to normalize interest rates and their own balance sheet to prepare for the next recession.
If the Fed has to stimulate the economy before rates get to 3.25%, they will run out of room to cut rates before the job is done. That will force the Fed to print money again in a new quantitative easing program, “QE4.”
That’s why the Fed needs to trim its balance sheet — so they can blow it up again.
ORIGINAL SOURCE: This Bond Bull Market Still Has Legs by James Rickards of dailyreckoning.com on 1/29/18