FACTA – A New Twist

BarroMetrics Views:  FACTA – A New Twist

When I first read about FACTA, I told a close friend that FACTA was probably the event that would bring about the end of QE.  I said that the damage that FACTA would cause the US economy would force  the Fed to stop paying interest on the deposits at the St Louis Fed. In turn, this would force US banks to lend the trillions of dollars sitting at the St Louis Fed to Main Street. The result of this would be the Fed decision of raising rates or facing rampant inflation. Either route would cause market turmoil.

His response  was the banks have known about FACTA for some time and they are not worried (his wife is the head of compliance of a major bank).

I said, let’s see what the future brings.

Each day now someone reveals yet another  ‘unforeseen consequence’. The latest one I read about was in the article (attached), Collateral Damage, Larry Elkin raises a point I had not foreseen: American mutual fund companies are refusing to serve American living outside the USA for fear of retaliation by foreign governments.

The article is well worth reading. In the meantime, US stocks continue their upward climb. My strategy is still, ‘long or out

collateral-damage-2014-07-10.pdf

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