Gloom, Boom and Doom editor Marc Faber says big banks are the freakish offspring of easy Fed money.
"The baleful reality is that big banks, the freakish offspring of the Fed's easy money, are dangerous institutions, deeply embedded in a bull market culture of entitlement and greed," Faber says.
During the recent quarter, the preponderance of Goldman Sachs' revenues came from trading in bonds, currencies and commodities, Faber tells the Financial Times.
“But these profits were no evidence of Mr Market doing God's work, greasing the wheels of commerce and trade by facilitating productive financial transactions," Faber says.
Instead, they represented “the fruits of hyperactive gambling in the Fed’s monetary casino — a place where the inside players obtain their chips at no cost from the Fed-controlled money markets, and are warned well in advance, by obscure wording changes in the Fed’s policy statements, about any pending shift in the gambling odds.”
The most direct way to cure banking system ills would be “to return to a rational monetary policy based on sensible interest rates, and an end to frantic monetization of federal debt and a stable exchange value for the dollar,” Faber says.
The Federal Reserve left its target interest rate near zero and will continue winding down its unconventional programs, the central bank said recently, though there were new signs of internal disagreement about how much longer to continue its extreme efforts to support the economy, The Washington Post reports.
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