Markets under TAPER impact

After better  than expected retail sales #DJIA  easily broke technically key level 15800 and closed below it which shows market are under immense pressure.

When QE1 ended there was a substantial stock market correction, and when QE2 ended there was a substantial stock market correction.  And if you will remember, the financial markets threw a massive hissy fit a few months ago when Federal Reserve Chairman Ben Bernanke suggested that the Fed may soon start tapering QE3.  Clearly Wall Street does not like it when their supply of monetary heroin is interrupted.  The Federal Reserve has tricked the American people into supporting quantitative easing by insisting that it is about “stimulating the economy”, but that has turned out to be a massive hoax.  In fact, I just wrote an article that contained 37 statistics that prove that things just keep getting even worse for ordinary Americans.  But quantitative easing has been exceptionally good for Wall Street.  During QE1, the S&P 500 rose by about 300 points.  During QE2, the S&P 500 rose by about 200 points.  And during QE3, the S&P 500 has risen by about 400 points.  The S&P 500 is now in unprecedented territory, and stock prices have become completely and totally divorced from reality.  In essence, we are in the midst of the largest financial bubble this nation has ever seen.  So what is going to happen when the Fed starts pulling back the monetary crack and the bubble bursts?

A lot of people out there are claiming that the Federal Reserve will never end this round of quantitative easing.  They are suggesting that the Fed may hint at tapering from time to time, but that when push comes to shove they will just keep printing more money.

There is just one big problem with that theory.

The rest of the world is watching, and they are very troubled by quantitative easing.  Therefore the Fed must end it at some point because they desperately need the rest of the world to keep playing our game.

Our current economic prosperity greatly depends upon the rest of the planet using our dollars as the reserve currency of the world and lending trillions of dollars to us at ultra-low interest rates.  If the rest of the world decides to stop going along with the program, the system would come crashing down very rapidly.

That is why it was so alarming when China recently announced that they are going to quit stockpiling more U.S. dollars.  For a long time China has been warning us to quit recklessly printing money, and now China is starting to make moves that will make them more independent of us financially.

If the Fed does not bring quantitative easing to an end soon, other nations may start doing the same thing.

So the Fed knows that they are on borrowed time.  Faith in the U.S. financial system is declining very fast.

But the Fed also knows that ending QE3 is going to be very tricky for the financial markets.

The other times that the Fed has ended quantitative easing, it has turned out to be very painful for Wall Street.