The minutes from the last Fed meeting were released on Wednesday afternoon. The minutes, along with a squadron of jabbering Fed heads lying about the economy doing great, pretty much locked in the most talked about .25% interest rate increase in world history. Evidently the Wall Street titans of greed have convinced the muppets higher interest rates are great for stocks, as the market soared by 250 points. As institutional money exits the market on these rigged up days, the dumb money retail investor buys into the market with dreams of riches just like they did with Pets.com in 2000, McMansions in 2005, and Bear Stearns in 2007.
The Fed has lost any credibility they ever thought they deserved by delaying this meaningless insignificant interest rate increase for the last three years, so they will make this token increase in December come hell or high water. They want to give themselves some leeway for easing again when this debt saturated global economy implodes in the near future. The Fed is trapped by their own cowardice and capture by the Wall Street cabal. If they raise rates the USD will strengthen even more than it has already. The USD is already at 11 year highs. It has appreciated by 25% in the last year versus the basket of world currencies. The babbling boobs on the entertainment news channels authoritatively expound with a straight face about the rise in the dollar being due to our strong economic performance. It’s beyond laughable, as the economy has been sucking wind since the day the Fed turned off the QE spigot in October 2014.
Anyone with a working brain and an IQ over 100 (eliminates the bimbos and boobs on CNBC) can see the USD isn’t strengthening of its own accord. We’ve had 0% interest rates for the last six years, real median household income is lower than it was in 1989, consumer spending (which accounts for 67% of GDP) has been dreadful for at least a year, Obamacare is destroying the finances of middle class households, small businesses, and the nation, and the percentage of people in the labor market is the lowest since 1978. In other words, the U.S. economy is in recession. The reason the USD has been strengthening is because Europe, China, Japan, Russia, Brazil, and the rest of the world are either in recession or depression, and their “solution” to their woes is to debase their currencies.
The Japanese continue to redefine insanity as they wallow in their second decade of recession while debasing their currency and rolling out QE 9 – because it will surely work this time. The Chinese “miracle” is coming apart at the seams as their debt based mal-investment is revealed by the crash in global trading. Their solution is for the government to buy stocks and bad debt, while executing short sellers. Brazil is on the verge of revolution as their oil/commodity based economy implodes. Russia has been in recession for over a year as $40 oil doesn’t pay the bills. And lastly, the EU continues to crush their citizens with negative interest rates, debasement of the Euro, suicidal immigration schemes, and an ever growing mountain of unpayable debt, in order to prop up their mega-banks and the corrupt political establishment.
When every country in the world debases their currency in order to boost exports, the USD appears strong. It’s like being the best looking horse in the glue factory. The problem for the Fed and the mega-corporations in the S&P 500 is that a strong dollar makes our exports much more expensive to foreigners and reduces their profits from their overseas markets. You won’t see the talking heads on CNBC, Fox, or CNN truthfully analyzing the impact of a 25% increase in the value of the dollar. But it seems the buyback happy CEO’s of the S&P 500 conglomerates have used the strong dollar as their excuse de jour for their profits falling. Good old globalization has not only resulted in millions of good paying jobs being shipped to foreign lands, it has now made the S&P 500 corporations dependent on foreign markets for 30% of their sales and 40% of their profits. The continued appreciation of the dollar will result in lower profits for our mega-corporations, which will prompt the CEOs to fire more Americans and ship their jobs to the Far East, while ramping up the billion dollar buybacks of their stock. It’s the American way.
The Fed has created a dead end street for everyone not in their .1% clientele. They have kept rates too low for far too long and with the 99.9% already experiencing a recession, their desire to raise rates will hit a brick wall of reality. Their easy money schemes to enrich their owners has resulted in the issuance of trillions more in debt by the government, corporations and consumers. The $60 trillion of total credit market debt will implode if rates go up by even 1% or 2%. The corporate titans are now facing huge headwinds, as consumers have nothing left to spend, the strengthening dollar is sapping their profits, and higher interest rates will put an end to the faux housing recovery.
The Fed has destroyed the finances of senior citizens, savers and the pension plans of corporations and local governments with their 0% interest rates. The Wall Street bankers and their Fed puppets can surely see the writing on the wall. They will drive stocks as high as possible so they can cash out before the next collapse. They don’t care about their clients, the middle class, or the future of the country. We’re all muppets to the banking cabal running this morally and financially bankrupt military empire of debt.
“As institutional money exits the market on these rigged up days, the dumb money retail investor buys into the market with dreams of riches just like they did with Pets.com in 2000, McMansions in 2005, and Bear Stearns in 2007.”
The Fed is telegraphing to the Big Boyz that while the days of “easy borrowing” may slowly be ending, the message to trumpet to the Lumpen is “The train to Moneyville is leaving the station! Get on board before it’s gone without you!”
TPB seek to squeeze every last dime they can out of Joe Six-pack before the entire edifice implodes around them. It’s utter bullshit but the sad reality is that there are those, too many in fact, that believe this tripe. And that are more than willing to, “buy into it.”
The last time the markets plummeted (back when a barrel of oil moved for $38/bbl) I crowed to friends/allies/facebook that the cracks were finally starting to show.
The market rallied (as we all knew it would) and I got a lot of “sly” remarks from those who “KNOW” how to invest.
Poor stupid bastards. The value of a company must come from its ability to produce either a good or a service. Right now ours is based on the dreams of fools.
The next time it severely downturns I will be struggling to even feel bad for those who lost everything.
Tumbling Treasury Yields Signal Possible Fed ‘Policy Error’ Being Priced In
Submitted by Tyler Durden on 11/19/2015 09:25 -0500
“If they do hike, watch the long-end,” was the warning in September for clues to a possible policy error by The Fed, and between yesterday’s mainstream narrative confirming the FOMC Minutes practically guarantee a December rate hike; and our discussion of the lower-for-longer ‘natural rate’ QE hints, it appears the bond market is already beginning to price in a “policy error.”
As BofAML previously warned,
If the Fed does raise rates, however, that doesn’t mean the “all clear” signal will have been sounded.
To the extent investors view the hike as a policy error, a flight to quality is likely to follow with the Treasury curve bear-flattening and risk assets selling off. Even if investors don’t overtly seem to believe a rate hike is a policy error, it appears that many investors believe a rate hike will be accompanied by extremely dovish language, possibly to offset the sting of the rate hike.
As such, it is likely that the accompanying language will be dissected syllable by syllable as investors and economists try to quantify whether or not it is dovish enough. The problem with this as we see it, however, is that this line of reasoning appears to be so widely accepted that we worry about how investors will react if the actual accompanying language is interpreted as “not dovish enough.”
There won’t be a collapse until the powers that be are certain there will no resistance to their plans for a cashless economy. Which means a plan destabilize the Western world. We see that plan unfolding before our eyes. It is truly amazing time to be alive if you believe the Bible.
bb – I agree, these would be interesting times if it weren’t so frightening.
I suspect it’s the same characters that created the Weimar republic inflation are now also engaged in the manipulation of the dollar and other world currencies. We all know what resulted under those conditions. America has a totalitarian government in its future.
Article V is the solution. God bless America.
We need to change the narrative regarding the deceptively named Federal Reserve. The Federal Reserve is a privately owned criminal organization established in secrecy at Jekyll Island by a group of banksters, rammed through Congress in violation of the US Constitution over the Christmas break, and designed to plunder Americans and fund endless wars including the current Wars OF Terror. The architects and beneficiaries of this gangster organization must be indicted by a citizens’ court for high treason and those found guilty hanged in the public square for all to see. Then the stolen wealth must be recovered and returned to the people from whom it was stolen and a system of honest money and honest banking re-established. Only then will peoples of the world enjoy peace, prosperity and freedom.
House Passes Fed Transparency Bill; Obama Will Veto
Submitted by Tyler Durden on 11/19/2015 12:14 -0500
Moments ago, the in a 241-185 vote, the House passed passed H.R. 3189, aka Fed Oversight Reform and Modernization Act. The bill would make changes to how the Fed conducts monetary policy and regulatory activities and would direct the Fed to take a rules-based approach to interest rate decisions; require audits of more Fed functions such as monetary policy; and place restrictions on its emergency lending powers. In other words, everything that the banks that are direct and indirect stakeholders in the Fed would fight to the death to prevent.
The new House speaker promptly applauded the passage. From Paul Ryan:
Today, the House passed H.R. 3189, the Fed Oversight Reform and Modernization Act. The bill would require the Federal Reserve to explain publicly its monetary policy, specifically how it sets interests rates and the country’s money supply. In response, House Speaker Paul Ryan (R-WI) issued the following statement:
“If the Federal Reserve explained to the public how it made its decisions, the American people would have greater confidence in them. Families could better plan for the future, invest their money wisely, and create opportunity for all of us. I thank Chairman Hensarling and the Financial Services Committee for offering this commonsense legislation.”
The victory, however, was very hollow: the White House has repeatedly said Obama’s advisers would recommend veto of H.R. 3189, “which seeks to make changes to Fed operations, including how the independent agency conducts monetary policy and regulatory activities.”
The Fed is independent? Interesting: read the following excerpt from the left-leaning NYT and decide just how independent the Fed is:
… in 1965, President Lyndon B. Johnson, who wanted cheap credit to finance the Vietnam War and his Great Society, summoned Fed chairman William McChesney Martin to his Texas ranch. There, after asking other officials to leave the room, Johnson reportedly shoved Martin against the wall as he demanding that the Fed once again hold down interest rates. Martin caved, the Fed printed money, and inflation kept climbing until the early 1980s.
And then this, from Lady Bird Johnson, spoken to William McChesney Martin, on his arrival at the LBJ ranch”: “I hope you have examined your conscience and you’re convinced you’re on the right track.”
And that is just how “independent” the Fed has always been.
But back to the White House which knows that with Congress a joke since the crisis, its only branch of government is the money printer in the Marriner Eccles building: “Subjecting Fed’s “exercise of monetary policy authority to audits based on political whims of members of the Congress, of either party, threatens one of the central pillars of the nation’s financial system and economy,” White House budget office says in statement.
Which brings us to a tangent: every time a standing Fed chairman (or woman) is criticized before Congress their traditional response is that it is Congress that gave the emergency powers it now has to bail out anyone and everyone. Especially Fed member banks.
So what happens when Congress tries to change the law? Well… this:
Rudolf E. Havenstein @RudyHavenstein
Now think about this: A private bank cartel CREATED by Congress doesn’t want Congress to authorize the GAO to audit them.
Admin:
“The Fed has destroyed the finances of senior citizens, savers and the pension plans of corporations and local governments with their 0% interest rates. The Wall Street bankers and their Fed puppets can surely see the writing on the wall. They will drive stocks as high as possible so they can cash out before the next collapse. They don’t care about their clients, the middle class, or the future of the country. We’re all muppets to the banking cabal running this morally and financially bankrupt military empire of debt.”
They cash out, market crashes. When have we seen this before?
Flay em’ and get the money back.
I’m beginning to think our Quinny is losing faith in the omnipotent Janet Yellin and her merry band of Feds. Keep this up and you won’t get your Christmas card this year. You know the one where they replace the snowflakes with $100 bills.
The Federal Reserve, Interest Rates, & Triffin’s Paradox
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
There is no way Fed policy can be win-win-win for all participants.
One result of the global dependence on central bank interventions is a unhealthy fixation on the slightest changes in those interventions, oops I meant policies.
Since the slightest pull-back in central bank inflation of asset bubbles could spell doom for the global economy and everyone holding those assets, the world now hangs on every pronouncement of the Federal Reserve in a state of extreme anxiety.
Why the extreme anxiety? Because any change in Fed intervention creates both winners and losers. There is no way Fed policy can be win-win-win for all participants, and to understand why we turn to Triffin’s Paradox, a.k.a. Triffin’s Dilemma.
The core of Triffin’s Paradox is that the issuer of a reserve currency must serve two quite different sets of users: the domestic economy, and the international economy.
Triffin’s Paradox has two basic parts:
1. Any nation that issues the reserve currency must run a trade deficit to supply the world with surplus currency to hold in reserve and as a result,
2. The issuing nation faces the paradox that the needs of global trading community are generally different from the needs of domestic policy makers.
The global trading community requires that the issuer of the reserve currency run trade deficits large enough to satisfy the demand for reserves, while domestic audiences want a strong export sector, i.e. a trade surplus.
You can’t have it both ways: if you want to issue a reserve currency, you have to run a trade deficit that is commensurate in size with the global demand for your currency.
Since supply and demand set price, this push-pull affects the value of the U.S. dollar: U.S. exporters want a weak dollar to spur foreign demand for their products, while foreign holders of the USD want a strong dollar that holds its value/purchasing power.
It is impossible for any nation to maintain the reserve currency and run trade surpluses. If you run trade surpluses, you cannot supply the global economy with the currency it needs for reserves, payment of debt denominated in the reserve currency and domestic credit expansion.
Were the Fed to raise interest rates, as it has essentially promised to do, it will do so to pursue multiple objectives:
1. It’s attempting to preserve its credibility, which is threatened by a zero-interest-rate forever policy.
2. It’s attempting to maintain its political capital, which is eroding as even the mainstream media has accepted the reality that Fed policy has enriched the already-wealthy at the expense of everyone else.
3. It’s attempting to “normalize” interest rates without killing its favorite child, the stock market.
4. It’s attempting to raise rates without upsetting the fragile global currency/debt cart.
Note the use of the word attempting. The Fed’s success is not pre-ordained (despite its implicit claims to otherworldly powers).
If the Fed raises rates a tiny .25%, the actual impact on debtors is rather modest. But even this tiny increase has the potential to sour carry trades, i.e. speculations based on borrowing U.S. dollars (USD) and investing the money in higher-yielding (but oh-so risky) emerging market gambles.
Those emerging market bets are denominated in the home-country currency, and as those currencies decline against the USD, the carry trade’s gains are offset by foreign exchange (FX) losses.
The losers of any Fed hike in interest rates are already clear: U.S. global corporate profits have already been hit by the stronger dollar, and should interest rates click higher, that will only further strengthen the USD.
As the dollar strengthens, the $7 trillion in dollar-denominated debt in emerging markets increases in value relative to depreciating local currencies.
The Fed can’t please everyone. That’s the dilemma. Some commentators have suggested China seeks a higher USD (i.e. a Fed rate hike) because that lowers the value of China’s currency the RMB (yuan), making it cheaper for Americans to buy more goods from China.
But any increase in yields will push down the value of existing Treasury bonds, so China’s still-vast hoard of Treasuries will lose value should rates rise.
As I have often noted, many people assume a weakening dollar is a good thing because it makes U.S. exports cheaper. But the larger truth is that a strengthening currency raises the global purchasing power of the currency, enriching every owner of the currency and the issuing nation.
I remember buying BIG sugar cookies or chugs of gum for a penny; a coke, a pint of milk or a bottle of good beer for 10 cents; 3 dozen eggs for a dollar; a good time for $1 at a movie or in the back seat of a car; a good gun for 20, a good car for 300, a house for 10,000. What happened? The “Federal Reserve” and their minions printed themselves money from thin air starting about 1972 and loaned some of it to the Federal Treasury which gave it to the Congress which blew it like Halloween candy. Us working slobs didn’t even get any free lubricant with our severe fcking. They bought up all the media, politicians, judges, colleges & Useful Idiots. They sold the factories to Mexico, China etc and downsized (destroyed) the country materially and spiritually. Most of the youts don’t have an education to go with their $100,000 degree, don’t have a clue or an economic “chance in hell”.
Admin, great article. My mom lives on social security. Her rent takes up more than 80% of the check. Because of the fed housing prices are still way too high. Since ordinary people cannot afford to buy , they rent, driving up rental prices.
Mom lives in a shoebox for 1200 bucks a month, if you can believe it. And, were it not for my help, she would be eating dog food for dinner.
There is not enough rope to hang these elites. Do not the elites know how much they are despised? Just in case there is any doubt, yes, you are despised. You are scum.
Thanks Admin. Wish I knew enough about this stuff to properly comment.
I suspect it is the same with many of your monkeys. I really hate it when you put up such great stuff very few comment.
You are da man.
Federal prosecutors are pursuing criminal cases against executives from the Royal Bank of Scotland Group (RBS.L) and JPMorgan Chase & Co (JPM.N) for allegedly selling flawed mortgage securities, the Wall Street Journal reported on Tuesday, citing unnamed sources.
Read more at Reutershttp://www.reuters.com/article/2015/11/18/us-royal-bank-scot-jpmorgan-mortgages-idUSKCN0T62G520151118#dCCYdHI2thJBvu1Y.99