“Activist” Fed Will Repeat Its QE Cycle to Prop Up the Market (Video)

Rick Santelli and Charlies Biderman, CEO of TrimTabs Investment Research, discussed the slowing economic engine of the United States. The root of the problem? As Santelli put it: “We used to lead the rest of the world, thinking free markets do it. Now, all of a sudden, we’ve joined the rest of the world thinking only governments can do it.”

Biderman agreed, and pointed out that Obama’s background as a community activist has only exacerbated this dangerous economic mindset, which the Fed has increasingly embraced. He has the same forecast as Peter Schiff – a new round of stimulus will be the Fed’s next significant action:

The only thing the Federal Reserve can do is keep interest rates low. And as a matter of fact, as I’ve been saying on your show for the last year and a half, no interest rate hikes are possible given that we’re now entering into a global recession. I actually think the next move by the Fed will be some sort of stimulus.”

Highlights from the interview:

Santelli: Here’s what I heard [from Ben Bernanke]: “We’re not sure exactly what’s wrong with the engine, but keep giving it more gas!” And what’s wrong with the engine he’s not sure of is productivity. I think you have a lot of ways to address why our economy – all of a sudden, out of left field – after the crisis has become less productive. What do you think it is, Charles?

Biderman: I think there’s too many headwinds from government regulations, from taxes, from existing businesses not wanting new competition… healthcare costs… Instead of making headwinds to growth globally… We’re entering a global recession due to excess production, excess capacity, caused by zero interest rates. How about we use that excess capacity [to] create a global growth initiative? Let’s make it easier for businesses around the world to start up and grow. Let’s reduce taxes, reduce regulation, reduce anti-competitive rules by existing businesses to squelch newcomers…

Santelli: We used to lead the rest of the world, thinking free markets do it. Now, all of a sudden, we’ve joined the rest of the world thinking only governments can do it. Build on that thought if you agree with it.

Biderman: We have a community activist as president, and community activists believe that government can solve all problems for all people…

Santelli: And so we have an activist Federal Reserve, don’t we? By that definition, we have an activist Federal Reserve as well.

Biderman: The only thing the Federal Reserve can do is keep interest rates low. And as a matter of fact, as I’ve been saying on your show for the last year and a half, no interest rate hikes are possible given that we’re now entering into a global recession. I actually think the next move by the Fed will be some sort of stimulus. They’re not going to call it QE. That’s got a bad name now. They’re going to call it something else. Four years ago, October 11… the Fed and the economists and the newscasters who parrot the Fed said that we’re getting out of this [economic slump], we’re sustainably growing. When that didn’t happen, they launched a new round of a QE… The market took off from there. It looks like it’s repeating that same cycle…

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