Tag Archives: federal reserve

Dawn J. Bennett Discusses Central Bank-Driven Monetary Policy & Market Manipulation

Summer sunlight and soap bubbles

Are you familiar with the classic song “I’m Forever Blowing Bubbles”? One verse reads, “I’m forever blowing bubbles, Pretty bubbles in the air, They fly so high, Nearly reach the sky, Then like my dreams, They fade and die.” In a recent article by financial expert Dawn J. Bennett, she explains that this song could well be the theme song for central bank-driven monetary policy and market manipulation. However, unlike the bubbles in the song, asset bubbles won’t fade. Instead, they’ll explode, causing a significant amount of collateral damage, according to Bennett, who says there have been numerous warning signs indicating this will occur soon.

Bennett notes that Mark Spitznagel, billionaire hedge fund manager, told the Financial Times that “markets don’t have a purpose any more — they just reflect whatever central planners want them to.” He then continued to say, “This is the greatest monetary experiment in history. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable.”

Spitznagel isn’t the only one with this perception. In her article, Bennett explains,”The Bank of Japan, acknowledging the violence being done to the yen by years of quantitative easing, said recently that they are setting aside money to prepare for losses on their huge holdings of Japanese government bonds which were put together and purchased through their printing of fiat currency once they are finally forced to stop monetary easing. Easing is a vortex that has sucked in the central banks over the last eight years, forcing them to continue blowing bubbles to follow bubbles to follow bubbles.”

She continued, “There have been calls even for our own Federal Reserve to go beyond QE to ‘helicopter money’, essentially going beyond interest rate manipulation and money printing by injecting ‘permanent’ money directly into private sector. Could this be why China is establishing a yuan-denominated gold benchmark for trading, in order to start backing their currency with real assets instead of academic theories?”

The U.S. derivatives market the largest bubble in history, says Bennett. It’s worth more than $1 quadrillion dollars in total by some accounts— approximately 20x the value of the whole world economy.

“It’s sheer gambling, including not just equities but physical commodities. The legality is questionable in many cases, but the problem is definitely real and indisputable.”

 

Dawn J. Bennett Says the U.S. Economy is Not on Solid Ground

In a recent article, financial specialist Dawn J. Bennett challenged Janet Yellen of the Federal Reserve’s notion that the U.S. economy is on “solid ground”. In a conversation with CNN’s Fareed Zakaria, Yellen claimed the economy was not a bubble economy, but rather on solid course.

Yellen said, “We try carefully to look at evidence of potential financial instability that might be brewing, and some of the hallmarks of that are clearly overvalued asset prices, high leverage, rising leverage, and rapid credit growth. We certainly don’t see those imbalances.”

Dawn Bennett questions how she and the Federal Reserve are not seeing these things and can assert that the economy is on solid ground despite clear indications. Bennett notes that U.S. factory orders have been on a year-over-year decline for 16 straight months, which we haven’t seen in 60 years without a recession. Not to mention, first quarter corporate earnings are expected to be down 8.5 percent over last year’s, resulting in the fourth quarter in a row with year-over-year declines; S&P 500 earnings are down 18.5 percent from their 2014 high; corporate debt defaults have risen to the highest level since 2009; and U.S. oil rig count is at a 41-year low.

Additionally, American consumers have amassed more new credit card debit during the last quarter of 2015 than during all of 2009, 2010, and 2011. The country has $19 trillion in national debt, which has grown $100 million every hour of Obama’s presidency.

It’s in this environment that America finds itself in an all-out war on cash, claims Bennett.

According to Bennett, “Interest rates are negative in Japan and several European countries, and we seem to be trending toward that possibility in the United States. Central banks keep printing more and more money, but that money isn’t tied to any real value. The assumption is that these negative rates will force banks to lend their reserves, and that lending will boost aggregate demand and help struggling economies, but it just isn’t happening. No one’s buying into it. Meddling with interest rates creates an increasing disconnect between supply and demand over time, and the wider that disconnect gets, the more risk there is when things eventually and inevitably realign to reality.”

The U.S. government and financial institutions continue trying to convince Americans that gold is not currency, though it has always been a reliable source of wealth. Meanwhile, Chinese and other governments are encouraging their citizens to acquire and hold gold. While U.S. central banks, including the Federal Reserve, are discouraging Americans from holding gold, they themselves are keeping it as an asset on their accounting ledgers..

“The system runs to benefit the system, and the notion that the government is going to protect us in the next crisis is groundlessly optimistic,” says Bennett.