Why Sequestering The "Brent Vigilantes" Means Much More QE

Perhaps there is a reason why Bernanke has not been completely hysterical about the sequester crashing his free-money induced party. The following chart shows the relatively strong correlation between US military spending and oil prices over the past 25 years. As we have discussed in depth, there is only one thing that can stop an over-confident central banker – the Brent Vigilantes – but should the sequester kick in with all its defense-spending slashing might, perhaps – just perhaps – that will weigh on the price of oil at the margin and provide just enough cushion for Bernanke et al. to do moar to maintain their key policy tool – the equity index.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.