World Braces For End Of Feds 'Easy Money'

International community can’t handle surging dollar, new rise in interest rates

WND

JEROME R. CORSI

NEW YORK – With the Obama administration issuing rosy economic reports that WND has reported are based on manipulated statistics designed to show GDP growth at 5 percent and unemployment at under 6 percent, economists worry about the impact of the end of the Federal Reserve’s Quantitative Easing, the buying of U.S. Treasury debt.

“America’s closed economy can handle a surging dollar and a fresh cycle of rising interest rates. Large parts of the world cannot. That in a nutshell is the story of 2015,” warned Ambrose Evans-Pritchard, the well-respected International Business Editor of the Telegraph in London.

“Tightening by the U.S. Federal Reserve will have turbo-charged effects on a global financial system addicted to zero rates and dollar liquidity.”

Supporting his concern, yields on 2-year U.S. Treasuries have surged from 0.31pc to 0.74pc since October, and this is the driver of currency markets.

Under the leadership of Federal Reserve chair Janet Yellen, the Fed has engaged in a “pivot,” shifting concern from stimulating job growth to worrying about inflation, with the concern that without a tightening in Federal Reserve monetary policy, the U.S. economy could experience inflation as high as 5 percent in the next two years, a level not experienced in the U.S. economy since 2005.

In October 2014, the Fed under Yellen’s direction ended the policy of Quantitative Easing under which the Federal Reserve had purchased $85 billion in Treasury bonds every month in 2013, the culmination of what turned out to be 37 consecutive months in a row during which the Federal Reserve bought Treasury debt in an effort to stimulate the economy by keeping interest rates at or near zero.

Under the QE bond-buying spree, the Federal Reserve balance sheet ballooned to a record $4.48 trillion accumulated since announcing the first round of QE purchases in November 2008 just as outgoing President George W. Bush tried to deal with a systemic financial markets collapse.

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