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1940s Yield Curve Control Review

Courtesy of Read the Ticker

1940s-yield-curve-control-reviewYield curve control was operational during and post World War 2 for a 9 year period.



The US stacked up a huge national war debt. With war comes with higher inflation, this time higher inflation could not be allowed to be followed by higher interest rates as the national income could not pay the interest bill and a sovereign debt default would follow. The response by the Federal reserve was to cap interest rates near 2.5% to contain the interest expense.



The chart below shows this period.



In the chart below while inflation (CPI) is above the 10 year interest rate this is known as ‘negative yield’ and purchasing power destruction of the currency (USD), hence why funds will flow into anti US dollar trades like gold, silver, bitcoin and oil.



The bond holders become the investors holding the short stick as inflation destroyers their capital, stocks do well, commodities do well. The problem for the FED is the bond holders are massive in number and for the FED to contain their selling they would have to buy all which is sold or convince this class of investor that it is best for national interest that they ‘do not sell’ and take the loss for the good of the nation. During World War 2 the bond investors made this patriotic choice, today maybe not so much, hence the FED buying could be exponential.   





Currently the FED is jawboning the idea of yield curve control for a period of 2 years. Get the feeling the DEM’s are targeting mid term elections with the FED help, hmmmm.





POINT: The FED’s choice is to trash the dollar to save the economy, or trash the economy to save the dollar. 





Reminder ..





…”I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.”..



Jesse Livermore




DOW




Divider







Changes in the world is the source of all market moves, to catch and ride the change we believe a combination
of Gann Angles,
Cycles,
Wyckoff and
Ney logic
is the best way to ride the change, after all these methods have been used successfully for 70+ years.
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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



…”There is what I call the behaviour of a stock, actions that enable you to judge whether or not it is going to proceed in accordance with the precedents that your observation has noted. If a stock doesn’t act right don’t touch it, because, being unable to tell precisely what is wrong, you cannot tell which way it is going.”…



Jesse Livermore





…”I always believe that prices move first and fundamentals come second”..



Paul Tudor Jones





..”it is better to have few stocks and to watch them carefully”…



Bernard Burach





..”The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”..



George Soros







..“Investing should be like watching paint dry or watching grass grow. If you want excitement…go to Las Vegas.”…



Paul Samuelson








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