Zero Interest Rates & The pumping of cash into the system creates BUBBLES

Marc Faber : “continuous government interventions in the free markets through mostly monetary and fiscal policies have actually, instead of smoothing out the business cycle, led to more economic and total financial volatility, and have numerous unintended and unfavorable consequences." “When you drop the dollar bills into the system you don’t know where they go, and this time around they went to the housing market. The destructive nature of dropping dollar bills is you create bubbles in one sector of the economy.” - in Edmonton journal

Ben Bernanke Press Conference - 25 Jan 2012

Federal Reserve Chair Ben Bernanke Press Conference . The Fed expects modest pace of economic growth in coming quarters, says Fed Chairman Ben Bernanke. The housing sector is still depressed, "as indicated in the statement released earlier this afternoon to support a stronger economic recovery and to help ensure that inflation over time is at levels consistent with our statutory mandate, the committee expects to maintain a highly accommodative stance for monetary policy. in particular, the committee decided to keep the target range for the federal funds rate at zero to .25% and currently anticipates that economic conditions are likely to warrant exceptionally low levels for the federal fund's rate at least until late 2014" says Ben Bernanke

Marc Faber on the derivatives bubble

Marc Faber was asked about the risk of seeing another flash crash in the market : " Well I do not think it is regulated , my concern is no so much about the stock market going down one day by 500 points , the real crash would be like on October 1987 when the market dropped by 21 percent in one day , my concern is more , we have essentially an economic system where the financial sector has grown disproportionally large than the real economy so in other words the economy may be a square mile and on top of that you pile up derivatives and all kind of instruments that are thousands of square miles and one day this whole derivatives bubble will burst - in This Week in Money
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