iBankCoin
Joined Nov 11, 2007
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Economist: Fed Taper Will Create Recession and Destroy the Wealth Effect

“The Federal Reserve’s move to eliminate its monthly asset purchasing program will cause a “collapse in asset prices and a severe recession,” according to economist Michael Pento.

It will be all part of the end of the so-called wealth effect touted by former central bank Chairman Ben Bernanke, who asserted that rising asset prices in the stock market and elsewhere would help boost confidence and generate economic activity, Pento charged in a blog post Monday.

The longtime Fed critic said the withdrawal of quantitative easing will cause a sharp decrease in housing prices and stocks despite consensus predictions that the effects will be minimal.

Very soon the amount of QE will be close to, if not exactly at zero. And without banks supporting asset prices by consistently creating new money at the behest of the Fed, stocks and home prices have nowhere to go but down…..”

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2 comments

  1. drummerboy

    who’s fooling who anymore. denile is not a river in egypt. the u.s fell in to a depression in march of 2007,and has lunged even deeper since then.anyone who thinks we are not, better take a real hard look at shit,because this ain’t kansas toto.the fed got us into this mess.now they think that if they “yank” the bandaid from the wound they caused,will somehow cause the patient to go back into toxic shock of which they caused in the first place?and whose wealth effect gets destroyed in all this shit?

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    • CRONKITE

      the wealth effedt that will get hurt is all the companies trying to get cheap financing…
      The feds think they are the wizzard of oz….lol

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