A hard landing is inevitable – history proves the Fed cannot engineer a soft landing

The mainstream financial media is enamored with the idea that the Federal Reserve, after “heroically rescuing us” from the “home mortgage meltdown” can now engineer a “soft landing.” The media believes that a group of economists sitting comfortably in the Eccles Building in Washington, D.C. can “mastermind” the most important economic signals of all: the price and amount of money. In effect, the financial media—e.g., CNBC’s Steve Liesman and his ilk, but not Rick “Tea Party” Santelli—believes that the Federal Reserve can pull and push its economic "levers" and twist its economic dials like the “man behind the curtain” in the Wizard of Oz. They believe that by pulling levers and twisting dials in just the right combination, interest rates will gradually rise, the Fed’s so-called “quantitative easing” program will slowly unwind, and more than $4 trillion in “out of thin air money” created since 2009 will be “retired”—without triggering a recession. Would that it were true. Unfortunately, the Federal Reserve cannot accomplish this feat today. Why is this a certainty? Because never in its 105-year history has the Fed been able to so do, even facing less daunting economic challenges. Indeed, every "tightening" cycle in the Fed’s star-crossed history has been followed by an economic downturn (recession) or even a depression.