The value of Casey conference for me is the same as the value of one of the seminars we hold at Peak Prosperity, and that revolves around gathering like-minded people who can speak freely about how they see the world.
Of course, the views here depart significantly from the center mass of our current cultural narrative that asserts we are on a path to recovery and the government and Fed have a workable plan.
In taking the recent Meyers-Briggs personality test, I scored as an introvert because many of the questions merely asked if I found parties and gatherings of people to be filling or depleting. But here at Casey, it occurred to me that I answered the test questions after mentally inserting myself into a typical U.S. social scene.
If, instead, I am around people like those here at Casey, the truth is that I am quite energized by meeting and being around people, so the right way for me to answer the personality test question in the future is “it depends.” To be around people who are curious, engaged, and interested in figuring out the world really is exciting and energizing to me; the opposite is draining.
In some social scenes, I am an introvert, and in other situations I am an extrovert. I suspect others share this trait, and I know that a lot of the people I’ve met here come first for the experience and second for the information.
I will be talking today and do my best to illuminate and educate. My topic is explaining the mechanisms of quantitative easing (QE), something that we’ve heard a lot about here so far, but something I think few people really understand.
My approach is that if you want to know what’s going to happen next, you need to understand what’s happening right now. The punch line is that QE is easily done in one direction, but almost impossible to do in reverse.
Money pushed out to the world is well received, especially when it’s given for assets being bought at a profit for the seller…and that is QE in ‘forward gear.’
Money taken from institutions in exchange for an asset that is, by definition, falling in price, is an impossible task. Well, maybe not literally impossible, but it will break all of the things the Fed has accomplished so far, such as providing markets with liquidity, causing interest rates to spike, and causing institutions to become cautious and skittery.
Knowing that QE is a permanent feature provides a guide of sorts…it simply means the Fed will keep doing what they do until things break for some reason. As always, I do not know what that reason will be, or when it will come along, I can only note that the stresses are building, not falling, and that means the chances of something happening are rising as are the odds of the next financial crisis being much larger than the prior ones.
I talk in a few hours…will let you know how it goes.
