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The Fed is Now the Fifth Largest Country in the World

Phoenix Capital Research's picture




 

 

With QE 3 and QE 4 firmly in place and the Fed’s balance sheet over $3 trillion, Idecided to go back and count the recap the Fed/Feds’ interventions since the Great Crisis began in 2007.

 

Here’s a recap of some of the larger moves made during the Crisis:

 

  • Cutting interest rates from 5.25-0.25% (Sept ’07-today).
  • The Bear Stearns deal/ taking on $30 billion in junk mortgages (Mar ’08).
  • Opening various lending windows to investment banks (Mar ’08).
  • Hank Paulson spends $400 billion on Fannie/ Freddie (Sept ’08).
  • The Fed takes over insurance company AIG for $85 billion (Sept ’08).
  • The Fed doles out $25 billion for the automakers (Sept ’08)
  • The Feds kick off the $700 billion TARP program (Oct ’08)
  • The Fed buys commercial paper from non-financial firms (Oct ’08)
  • The Fed offers $540 billion to backstop money market funds (Oct ’08)
  • The Fed agrees to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
  • $40 billion more to AIG (Nov ’08)
  • The Fed backstops $140 billion of Bank of America’s liabilities (Jan ’09)
  • Obama’s $787 Billion Stimulus (Jan ’09)
  • QE 1 buys $1.25 trillion in Treasuries and mortgage debt (March ’09)
  • QE lite buys $200-300 billion of Treasuries and mortgage debt (Aug ’10)
  • QE 2 buys $600 billion in Treasuries (Nov ’10)
  • Operation Twist 2 (Nov ’11)
  • QE 3 buys $40 billion in Mortgage Backed Securities every month from now on (Sept. ’12)

 

That’s one heck of a list. And the worst part is I know I’ve left something out somewhere.

And yet, despite all of this…

  1. Median income today is lower than it was during at the end of 2009 (when the recession supposedly ended)
  2. The percentage of Americans on food stamps has increased from 11% to nearly 15%
  3. The average unemployment duration has increased from 30 weeks to nearly 40 weeks
  4. The civilian employment to population ratio hasn’t budged

My question to everyone, especially the political class: at what point do we start calling BS on the Fed’s claims that it has a clue how to improve the economy?

Seriously, how many trillions of Dollars are we going to let the Fed spend? The Fed balance sheet is now over $3 trillion… making it larger than the GDP of France, the UK, or Brazil. Indeed, if the Fed’s balance sheet were a country, it’d be the FIFTH LARGEST COUNTRY IN THE WORLD.

While the Fed has failed miserably to improve the economy in the US, it’s done a bang up job of letting the inflation genie out of the bottle. As Zerohedge recently noted, commodity prices have never been this high at this point in the year before.

So, the Fed has failed to improve the economy… but it has unleashed inflation. This is called STAGFLATION folks. And the fact the Fed thinks the answer to it is printing more money tells us point blank: things are going to be getting a lot worse in the coming months.

Indeed, it is now clear, via QE 3, that the Fed has gone “all in” in its commitment to money printing. QE 2 put food prices to record highs… what to you think QE 3 (which is unlimited) will do to the cost of living?

The time to start preparing is now. The printers are running. The Great Currency Debasement has begun. Some folks will walk out of this mess winners. Most will walk out as losers.

On that note, if you’d like more information on inflation and protecting yourself from it, we feature a FREE Special Report detailing the threat of inflation as well as two investments that will explode higher as it seeps throughout the financial system. You can pick up a FREE copy of this report at:

http://gainspainscapital.com/gpc-inflation/

 

Best Regards,

Graham Summers

 

 

 

 

 

 

 

 

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Fri, 02/22/2013 - 10:34 | 3266650 anolmec
anolmec's picture

of course the deals made in secret, well, thats not to be discussed amoung the unwashed

Fri, 02/22/2013 - 08:55 | 3266441 proLiberty
proLiberty's picture

If anything illustrates the difference between money and wealth this must be it.  By creating money out of thin air, the Fed can become the largest economy in the world and buy up the rest of the world.   But this is pure illusion and nonsense.  The high priests of Keynesian/fiat/socialst nonsense are running the world ecnonomy.   

 

Fri, 02/22/2013 - 04:07 | 3266293 Coldfire
Coldfire's picture

Individuals in the nations mentioned produce goods. All the Fed produces is inflation.

Fri, 02/22/2013 - 00:13 | 3265989 Edward Fiatski
Edward Fiatski's picture

Thank you, Ben. Wow, rates were 5.25% in 2007 - seems like centuries ago.

Fri, 02/22/2013 - 02:22 | 3266216 bunnyswanson
bunnyswanson's picture

Eddie Fascist likes to see the currency reduced to fibers.  Food prices/gas are not going up, the strength of the dollar is falling.  Diversity in nations will ensure an unworthy madman will never in a throne and his people unable to at least dream about escaping his self-serving rules, like a god of some sort.  A man would would think this is an evil man.  Small man.  A man who should be kept far from the head of the line.  This is no leader, but a bloodthirsty CEO with his own army.

Dr. Lawrence Britt, a political scientist, published research on fascism [18] in which he examined the fascist regimes of Hitler, Mussolini, Franco, Suharto and several Latin American regimes. Britt found 14 defining characteristics common to each fascist State:

1. Powerful and Continuing Nationalism - Fascist regimes tend to make constant use of patriotic mottos, slogans, symbols, songs and other paraphernalia. Flags are seen everywhere as are flag symbols on clothing and in public displays. 2. Disdain for the recognition of Human Rights - Because of fear of enemies and the need for security, the people in fascist regimes are persuaded that human rights can be ignored in certain cases because of "need." The people tend to look the other way or even approve of torture, summary executions, assassinations, long incarceration of prisoners, etc. 3. Identification of Enemies/Scapegoats as a Unifying Cause - The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: racial, ethnic or religious minorities; liberals; communists; socialists; terrorists, etc. 4. Supremacy of the Military - Even when there are widespread domestic problems, the military is given a disproportionate amount of government funding, and the domestic agenda is neglected. Soldiers and military are glamorized. 5. Rampant sexism - The government of fascist nations tend to be almost exclusively male-dominated. Under fascist regimes, traditional gender roles are made more rigid. Divorce, abortion and homosexuality are suppressed and the state is represented as the ultimate guardian of the family institution. 6. Controlled Mass Media - Sometimes the media is directly controlled by the government, but in other cases, the media is indirectly controlled by government regulation, or sympathetic media spokespeople and executives. Censorship, especially in war time, is very common. 7. Obsession with National security - Fear is used as a motivational tool by the government over the masses. 8. Religion and Government are intertwined - Government in fascist nations tend to use the most common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology is common from government leaders, even when the major tenets of the religion are diametrically opposed to the government's policies or actions. 9. Corporate Power is Protected - The industrial and business aristocracy of a fascist nation are often the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite. 10. Labor Power is suppressed - Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated, or are severely restricted. 11. Disdain for Intellectuals and the Arts - Fascist nations tend to promote and tolerate open hostility to higher education, and academia. It is not uncommon for professors and other academics to be censored or even arrested. Free expression in the arts and letters is openly attacked. 12. Obsession with Crime and Punishment - Under fascist regimes, the police are given almost limitless power to enforce laws. The people are often willing to overlook police abuses and even forego civil liberties in the name of patriotism. There is often a national police force with virtually unlimited power in fascist nations. 13. Rampant Cronyism and Corruption - Fascist regimes almost always are governed by groups of friends and associates who appoint each other to government positions and use governmental power and authority to protect their friends from accountability. It is not uncommon in fascist regimes for national resources and even treasures to be appropriated or even outright stolen by government leaders. 14. Fraudulent Elections - Sometimes elections in fascist nations are a complete sham. Other times elections are manipulated by smear campaigns against or even assassinations of opposition candidates, use of legislation to control voting numbers or political district boundaries, and manipulation of the media. Fascist nations also typically use their judiciaries to manipulate or control elections

http://www.thirdworldtraveler.com/Fascism/Neo-fascism_America.html

Fri, 02/22/2013 - 02:59 | 3266244 Edward Fiatski
Edward Fiatski's picture

Cool story bro, but you're way out there. Still, never hurts to cull he populations of illiterate peasants, through Conquest or Consent. :)

Fri, 02/22/2013 - 23:00 | 3269090 bunnyswanson
bunnyswanson's picture

No one is worthy of being God. 

Fri, 02/22/2013 - 00:12 | 3265988 NoWayJose
NoWayJose's picture

Elected by no one, accountable to no one, and totally out of control... What a country the Fed is.

Fri, 02/22/2013 - 02:05 | 3266194 fourchan
fourchan's picture

stealing silently from savers one billion notes at a time.  for 98 years.

Thu, 02/21/2013 - 23:04 | 3265771 davebrik99
davebrik99's picture

Good article with a LOT of truth, but I always take with a grain of salt any article by someone trying to sell something!!

Thu, 02/21/2013 - 22:31 | 3265688 f16hoser
f16hoser's picture

Put all the worlds debt on to the FED's balance sheet. Then let it go Bye-Bye (Bankrupt). They're the cause of all the worlds debt anyway. Damn NAZI's..... Let's all say goodbye to the 4th Reich!

Thu, 02/21/2013 - 22:23 | 3265665 lasvegaspersona
lasvegaspersona's picture

The Great Currency Debasement has begun

 

that's acurate if spoken in August 1971

Thu, 02/21/2013 - 21:59 | 3265594 Ban KKiller
Ban KKiller's picture

I share with people that "things" don't cost more, your "money" is worth less. They get that. What they don't get is the reason for the inflation. Reason? They are just trying to get by and feeling helpless. The Federal Reserve has failed in its stated goal. They are just corrupt and obese. I opt out as much as I can. 

Thu, 02/21/2013 - 21:38 | 3265542 Mr. Hudson
Mr. Hudson's picture

: "My question to everyone, especially the political class: at what point do we start calling BS on the Fed’s claims that it has a clue how to improve the economy?"

 

When Americans are no longer afraid of being called "antisemitic".

Thu, 02/21/2013 - 23:05 | 3265774 davebrik99
davebrik99's picture

VERY TRUE!!

Thu, 02/21/2013 - 21:25 | 3265512 otto skorzeny
otto skorzeny's picture

I hope we stop getting weather events like this midwest snowstorm so CNBC doesn't have weather to blame for shitty economic numbers. also-no storm name(I like Winter Storm Buzz Lightyear)-I guess us assholes in flyover country don't rate-only the upper east coast really matters

Thu, 02/21/2013 - 21:14 | 3265488 Hulk
Hulk's picture

Interesting because the FED has no productive capacity. But then, thats the problem these days...

Thu, 02/21/2013 - 21:07 | 3265474 Buck Johnson
Buck Johnson's picture

"To successfully avoid stagflation during a recession, Fed economists need to accurately predict both the short- and long-term performance of the economy. They have the difficult job of identifying the turning point -- when the country emerges from recession -- and slowly pulling money out of circulation. This requires impeccable timing. If the Fed raises interest rates too soon, it could kick the legs out from under the restarting economy. If it waits too long, the economy can become overheated with extra cash, causing prices to rise and inflation to soar ". 

They can't predict well because there predictions are based on politics.  And so they will predict bad at times when there isn't an election and no policy to undercut and good when the opposite.  Even if they start to raise rates, it won't solve the problem because it will put us into a severe recession that will last for years, remember the 80's.

Thu, 02/21/2013 - 21:19 | 3265502 El Hosel
El Hosel's picture

But the Bankers are doing fine. Heinz Ceo gets a 100 Million Dollar "parting" gift while other insiders feast on the deal with call options. God bless America, land of the Free and home of the Corrupt.

Thu, 02/21/2013 - 21:02 | 3265456 Benjamin Glutton
Benjamin Glutton's picture

what do you think QE 3 (which is unlimited) will do to the cost of living?

 

it will 'increase' GDP thereby 'proving' we are not in recession/depression...pay attention dopy.lol

Thu, 02/21/2013 - 21:51 | 3265575 economics9698
economics9698's picture

Scumbag squids.

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