Suppression to Confiscation

17 Jun

Not content with its massive effort on the financial suppression front, the Federal Reserve has supposedly been discussing an imposition of fees on certain bond funds in an effort to avoid potential market dislocation. This causes us an unlimited amount of consternation for a number of reasons 1) They, and they alone, created the atmosphere whereby investors of all risk tolerances are forced to step out on the risk curve in an effort to earn anything 2) Charging exit fees in an effort to stem basic market forces is one more effort to cement their position as the ultimate arbiter of unforeseen events. We always have to pause in instances like this for fear of sounding like a conspiracy theorist, but one has to believe that this has the potential to open the fee floodgates with respect to any market that suddenly could become illiquid (note: this is every market).While some hard assets are criticized by many as non-yielding and thus unworthy of holding in ones portfolio, at least there is no fee imposed by the powers that be on this allocation decision. Sell Paper, Buy Stuff

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