Janus Yellen and the Great Transition from Risk-On to Risk-Off

The end of risk-on cannot be prettily managed.
In ancient Roman religion and myth, Janus is the god of transitions–beginnings and endings of conflict, war and peace, journeys, trades and eras. Janus has two faces, as befits a god that looks both to the future and to the past. In our era of omnipotent central banks worshipped by the Status Quo, we have a goddess of financial transitions–Janus Yellen, the two-faced chair/deity of the Federal Reserve–to usher in the Great Transition from risk-on to risk-off. What is risk-on? Speculative bets directly enabled by central bank issued free money for financiers–also known by the bland technocrat perception management labels stimulus and quantitative easing (QE). The primary risk-on policies are: 1. ZIRP–zero interest rate policy. This enables financiers (but not J. Q. Citizen) to borrow money for next to nothing and then use this free money to buy assets that pay dividends or interest. This is effectively a gift to banks and financiers. The goal is straightforward: transfer great wealth from the peasants who once earned interest on their savings to the banks, who have rebuilt their bad-bet-shattered balance sheets on the backs of tax donkeys and savers.

This post was published at Charles Hugh Smith on MONDAY, SEPTEMBER 15, 2014.