Fed Policy Creates Wall Street Shenanigans

Least Favored in 2013: Featuring the year's shockers from Wall Street to Washington. Read Fed Policy shenanigans; Tech spies; SeaWorld tragedy; Caterpillar-China scandal; Bud Beer scandal; Bill Ackman's Herbalife; LIBOR rigging; Forex Scandal; and check out this video CEO Walk of Shame.
 


NEW YORK (TheStreet) -- Wednesday's Federal Open Market Committee meeting celebrates the fifth anniversary of the 0.0% to 0.25% federal funds rate, which has been bailing out the big money center and regional banks but has not trickled down to help to consumers and small businesses on Main Street.

The statement from Wednesday's FOMC meeting implied that we will likely celebrate a sixth anniversary a year from now. The Federal Reserve did decide to begin to taper its quantitative easing programs in January lowering monthly purchases of mortgage-backed securities by $5 billion to $35 billion per month and purchases of U.S. Treasuries by $5 billion to $40 billion.

Fed policy has been designed to lower long-term interest rates but instead longer-term yields are on the rise. The yield on the U.S. Treasury 10-Year note was as low as 1.614% on May 1 and traded as high as 2.929% after the Federal Reserve's statement. This puts upward pressure on mortgage rates while refueling speculation in commodities and the stock markets.

Ben Bernanke's monetary policy has resulted in Wall Street shenanigans that allow professional investors and traders to speculate in commodities and the stock market resulting in bubbles that always pop. The housing bubble popped between mid-2005 and mid-2006 and is now re-inflating. The crude oil bubble popped in mid-2008 and the gold bubble popped in the third quarter of 2011.

The easy money and Wall Street shenanigans had the major equity averages to peak in late-2007 with a quick bear market into March 2009 when the S&P 500 test the devilish 666 handle. The rally since than is creating the biggest stock market bubbles ever.

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