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Fed Admits It Is Caught In A Reflexive Catch 22
Here are the only key sections from the Minutes that matters, because they show clearly that the Fed is now fully aware of the Catch 22 quagmire it has caught itself in: suggest tapering due to an "strengthening economy" and watch "financial conditions tighten" (i.e., stock tumble, rates soar, refis plunge, housing market stalls, temp workers explode, etc) crashing the "economy"... or do nothing.
... the announcement of a reduction in asset purchases at this meeting might trigger an additional, unwarranted tightening of financial conditions, perhaps because markets would read such an announcement as signaling the Committee’s willingness, notwithstanding mixed recent data, to take an initial step toward exit from its highly accommodative policy...the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market... it was noted that if the Committee did not pare back its purchases in these circumstances, it might be difficult to explain a cut in coming months, absent clearly stronger data on the economy and a swift resolution of federal fiscal uncertainties.... postponing the reduction in the pace of asset purchases would also allow time for the Committee to further discuss and to implement a clarification or strengthening of its forward guidance for the federal funds rate, which could temper the risk that a future downward adjustment in asset purchases would cause an undesirable tightening of financial conditions.
Curious that the Fed decided to say the tightening of financial conditions was "unwarranted" - is there a "warranted" market crush and rate surge? Oh wait, Lehman. Never mind.
As for reflexivity: it's a bitch.
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We need a FED Chair named Major Major Major.
No...I've got a better idea...END THE FED !
The labour market
Instead we're changing Dr. Dumbass for Major Asshole.
Fat stupid progressive ugly MAJOR ASSHOLE - fixed
Fed's printing visualized in physical $100 bills:
http://demonocracy.info/infographics/usa/federal_reserve-qe3/money_print...
whipsaw:
1. treasury selective defaults on debt or "default" is redefined
2. republicans in house are replaced with democrats
3. debt ceiling raised or eradicated
4. shovel-ready green shoots happy days
5. whipsaw
Instead of $85B per month, they should say they are lowering their purchases to $70T per month. Do you think anyone would notice?
Well, it took me a second.
whooooooaaaaaa there...don't go off the rails now...better raise it up to 100B per month now just for even thinking of dropping it to 70B. ;-)
OK, so what did they mean?
I don't know Knuks?
Well, neither do I.
Guess that leaves us in the same fucking boat where we arlreday were, right?
Right?
Nobody knows.
Well, we do.
Know what?
Confusion.
Oh yeah, confusion.
Which puts credibility at risk, right?
Right.
Good, Knuks.
Yeah, sure.
Well you know where we are, no?
No, I'm confused.
Oh, OK
Are we there yet?
no.
Don't you dare fucking short treasuries. Don't you dare fucking front run us and buy treasuries. Just fucking stand there while we buy them all.
- The fed.
"postponing the reduction in the pace of asset purchases would also allow time for the Committee to further discuss and to implement a clarification or strengthening of its forward guidance for the federal funds rate"
Translated means they will lower the UE target and raise the inflation target.
That kind of language can only be delivered over TV, radio or the internet. If that was in person, they would get bitchslapped.
Shoe throwing would be more popular than cornhole.
OT: With the explosion in popularity of the game "cornhole," does anyone else giggle when you hear someone say it?
If it is a chick saying it, I am always obliged to reply to anything about that game with:
"You like cornhole? Nice."
pods
In other werdz the Fed is gonna have a "Print Party!" P, A, R, T, and why? Because they GOTTA!
Damned if they do and damned if they don't.......damn Fed.
Coffin Corner.
I used ta do a little but a little wouldn't do it
So the little got more and more
I just keep trying' ta get a little better
Said a little better than before
I used ta do a little but a little wouldn't do it
So the little got more and more
I just keep trying' ta get a little better
Said a little better than before
GnR...
"The Wheel"
Words by Robert Hunter; music by Jerry Garcia and Bill Kreutzmann
Copyright Ice Nine Publishing; used by permission.
The wheel is turning
and you can't slow down
You can't let go
and you can't hold on
You can't go back
and you can't stand still
If the thunder don't get you
then the lightning will
Won't you try just a little bit harder?
Couldn't you try just a little bit more?
Won't you try just a little bit harder?
Couldn't you try just a little bit more?
Round round robin run around
Gotta get back where you belong
Little bit harder, just a little bit more
Little bit farther than you than you've gone before
The wheel is turning
and you can't slow down
You can't let go
and you can't hold on
You can't go back
and you can't stand still
If the thunder don't get you
then the lightning will
Small wheel turn by the fire and rod
Big wheel turn by the grace of God
Everytime that wheel turn round
bound to cover just a little more ground
The wheel is turning
and you can't slow down
You can't let go
and you can't hold on
You can't go back
and you can't stand still
If the thunder don't get you
then the lightning will
Won't you try just a little bit harder
Couldn't you try just a little bit more?
Won't you try just a little bit harder?
Couldn't you try just a little bit more?
Ample proof of just who is driving the indices. Why have an "analyst"on the payroll, when the level already is set by "algos" run by fed money.
Tyler - too slow, Hilsenrath comes out within 15 second of the release
Janet Yellen's first speech after nomination should be interesting...
He certainly has his work cut out for him!
pods
It's going to be an interpretive dance number while she raps and beat boxes the entire tax code. The best part of it is when she busts out the break out moves and starts grinding and twerking on Boeher and thong slapping his face.
After Boeher cleans the puke from his shoes, they twerk together and start a new dance craze called the Pork Slide. For three weeks CNN will have one embarrassing clip after another to improve the acceptance of the pork slide. Youtube clips fill the internet of conspiracy, addendum's, instructional methods and rants again the new dance craze nobody has ever seen happen outside of the nomination.
Shit's so cash...best nomination evar!
How long will it take for Ole Yellen to grow a beard as long as Meechell's? Only the FED knows.
Just watch gold bleed lower none the less because thats the easy thing to do, sell paper gold.
Someone find Bernanke and ask him why the greatest student of the Depression is leaving us at this crucial point in time ????
Another self proclaimed messiah bites the dust. Ben, do the right thing and make a big bowl of Jimmy Jones punch and share it with all of your believers.
I'd like for him to .357 his grey matter all over the wall and let Yellen try and read it to see where to take our system.
pods
Sorry, he's busy right now dropping a few more bars in his "grab bag" ....
There's no place like home! There's no place like home! There's no place like home!
LOL
That is funny. "A mere three bagger" (I have one of those and can think of many others) is not enough. I think my "crazy bet on treasuries" (as. I called it back in January) is turning out to be just that..."too contrarian." The entire yield curve has now sold off...there is no panic, there is no material slowing in the recovery, the commodity space has been annihilated. Syria is off the table, the Affordable Care Act is on, the recovery has not stalled and if it ain't all about the inflation then certainly we're talking "flation." All my favorite names (save FB) have been annihilated this past week. For the record I own none and have access to very few. I look forward to owning a Tesla though.
The FED has a gang of drunken footballers at the bar and they are scared to flick the lights signalling last call.
Yellen sure has his work cut out for him!
He better call Dr. Scholls and get gellin.
pods
Not sure if you are aware, but some media outlets are reporting that Yellen was once a female human.
I'll take your word for it. Won't risk tuning in to that orgasmic celebration.
pods
Ole Yellen caused Liesman to jizz his shorts...all of them
In other words, after 5 years of support, the markets have atrophied and cannot maintain current valuation levels without the continuation of free money. If we stop, prices will drop back to market clearing levels and we don't want that. God forbid we allow people to buy stocks, bonds and houses at lower and more reasonable price levels.
Beautiful rhetoric. Carefully worded to have a hypnotic, soporific effect. The feeling of leadership by wise intellectuals with humanity's well being is presented. Unfortunately, delving more deeply, one realizes the need for verbosity. It's to cloak the succinct real fact were totally fucked and the truth is not if,but when this fucker is going down. They are so transparent. People have got to wake up.
Miffed;-)
John Tamny, a Forbes staffer who “covers the intersection of economics and politics,” says central bankers are egotists who want control and adulation, that Bagehot could have predicted 100 years ago that Bernanke wouldn’t stop printing, nor will Yellen. She’s going to follow her predecessors; that's the way they are. Here's Tamny:
Obama's Nomination Of Janet Yellen Is A Blow To Recovery-Starved Americans
When the Fed announced in September that it would postpone indefinitely the cessation of the economic vandalism that is Quantitative Easing (QE), investors and pundits expressed surprise. They shouldn’t have. Walter Bagehot brightly telegraphed Fed Chairman Ben Bernanke’s QE audible well over 100 years ago.
In his 19th century classic, Lombard Street, Bagehot described the individuals who aspire to central banking positions as ‘vain’ and ‘grasping,’ and in doing so, he easily foretold what Bernanke would do. For Bernanke to have ‘tapered’ would have been for the man who so publicly lusted for and politicked for the Fed Chair to voluntarily remove himself from the limelight. Not on your life.
Central bankers live for the attention of people infinitely wiser and more accomplished than they are, and clearly relish the fact that true achievers hang on their every word. Alan Greenspan was a less than prescient Wall Street forecaster before he had reverential books (Maestro) written about him, and CNBC breathlessly reporting on the size of his briefcase ahead of interest rate decisions. This charitably average seer was made a somebody by virtue of serving as Fed Chair, and his service filled his vain and positively Herculean desire for adulation.
Having surely witnessed the lionization of Greenspan, Bernanke similarly lusted for a position that would catapult him to notoriety exponentially greater than his often obtuse musings about the economy had so far boosted him. To presume a ‘tapering’ from Fed Chairman Bernanke would be to totally misunderstand how he came to be Fed Chairman Bernanke. These aren’t people who run from the spotlight, rather it’s their unquenchable thirst for the spotlight that brings them to central banks to begin with.
Notable is that Bagehot, contrary to what is broadly assumed, was not a fan of central banks. He instead tolerated them, and felt they should eagerly fill their role as lender of last resort for solvent banks short on cash, not five times Fed bailout recipients like Citigroup. This is worth bringing up when we think about senior Fed officials, including President Obama’s nominee to replace Bernanke, Janet Yellen. These people not only tolerate central banks, but as evidenced by their professional choices in life, actually think them necessary.
They think them necessary despite the certain truth that absent crony creations like the Fed, long on cash businesses like Walmart and Microsoft would readily lend to solvent banks needful of short-term operating funds at a profitable, penalty rate. Since penalty lending to banks would come from private, for-profit businesses, it’s fair to say that they would lend to them much more carefully. And with the banking system operating under a market-driven lender of last resort, it would be much healthier for its weakest actors regularly being swallowed by its betters, as opposed to being bailed out.
Yellen’s nomination will bring up lots of questions to a verbally incontinent punditry about the good or bad of her policies, but that’s realistically to miss the point. Yellen wanted to be the Fed Chairman, Yellen, like Bernanke and Greenspan before her, politicked to be the Fed Chairman. Policies and beliefs matter, but the citizenry should fear Yellen simply because she wanted to run the Fed. She wanted to run an entity that’s always been wrong, that according to the wildly successful former head of BB&T Bank (John Allison) had “a 100 percent error rate in predicting and reacting to important economic turns” during his time running the bank.
Implicit in Yellen wanting to run the Fed is a belief that the cost of credit, easily the most important price in the world after the dollar, should be manipulated by her and other supposedly wise individuals laboring alongside her. Think about the stunning arrogance that underpins such a belief..
http://www.forbes.com/sites/johntamny/2013/10/08/obamas-nomination-of-janet-yellen-is-a-blow-to-recovery-starved-americans/print/
Tamny’s final line: “Like Bernanke, her hunger for adulation will cause her to continue ‘helping’ the economy stay afloat, and in doing so, she’ll cruelly rob us of the recovery we so desperately desire.”
I don't know if I could have predicted it 100 years ago, but certianly not all that recently.
The proof of your prescience (Bagehot's) is the 20th century. Tamny lays it out:
“The 20th century was in a sick-inducing way a gift to humanity for showing in murderously brutal fashion the horrors of central planning, yet Yellen honestly believes that she can divine the cost of credit better than can the infinite actions and decisions taking place every millisecond among billions of humans in the private markets.
“And while even the mildly sentient among us well know that money isn’t wealth as much as it’s a facilitator of the exchange of wealth, Yellen, like Bernanke before her, believes that the creation of money for the sake of doing so is the path to growth. The obtuse theorizing which informs this kind of thinking can’t be underestimated, and merits worried thought.”
Probably what would surprise Bagehot most is that American’s have allowed the Fed to continue for 100 years to use its boom and bust mechanisms – to issue and destroy the money - to suck out the very heart of the economy using its monopolization of all credit – the source of the cloud of America’s unhappiness, of her loss of economic security and liberty.
The whirlybird flies in ever-decreasing concentric circles eventually to fly up it's own asshole and disappear... end of the Fed!
"the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market... "
The improvement is based on a fraud.
As noted in the debt ceiling debate, balancing the budget will result in a recession. In other words, there has been no recovery from the 2008 recession. Government debt is papering over the truth about the economy.
It's almost happening. How much time is left in this paradigm? Months? Weeks? Days?
According to CIBC World Markets:
https://app.box.com/s/1hz07yh07pze8p6awmhi
Enter Yellen: What a New Fed Chair Could Mean for Policy
The nomination of Janet Yellen as Fed Chair, to be announced today according to the White House, and likely to be approved early in 2014, does not usher in a new era of more dovish policy for the Fed as some in markets may fear. Yellen’s FOMC voting record has matched Bernanke’s and her speeches have largely echoed the themes of her predecessor. Bonds may see a temporary boost on the appointment of Yellen to the helm (pending Senate confirmation), given her support of the Fed’s overall dovish stance. However, assuming an amicable passing of the current debt ceiling and budgetary deadlock, we see longer-term risks of a sell-off as the drag from fiscal policy eases in 2014, giving even a Yellen-led Fed justification to scale back bond-buying by early next year.
Profile: Vice Chair of the Federal Reserve, formerly Chair of the White House Council of Economic Advisers under Clinton and President of the Federal Reserve Bank of San Francisco.
No Perma-Dove: A look at Yellen’s speeches may lead some to believe that the next Fed Chair is a staunch monetary policy dove. Her emphasis on the destructive nature of long-term unemployment and the cyclical drivers of higher joblessness has highlighted the need for continued easy policy. She has also stated that the Fed’s growing balance sheet is not a roadblock to an eventual smooth exit from QE, and that there is no evidence that asset
purchases are harming financial market functioning. And as Chair the FOMC Subcommittee on Communications, she has been a driving force in formulating tools, including threshold guidance, which have been used to reinforce the Fed’s easing.
But Yellen is no easy-money ideologue. With the Fed facing the greatest downturn since the Great Depression, Yellen’s dovish views and speeches have simply hewn closely to the Fed’s overall dovish stance. A look at her voting record shows votes cast in line with the FOMC majority, including Ben Bernanke, with not a single dovish dissent since the onset of the crisis. Her lack of concern about inflation has been vindicated by the facts, with annual CPI trending below the 2% mark. And she hasn’t always been the voice for more monetary policy accommodation on the Fed. There have been episodes in her career when she has taken a more hawkish tilt, including the May 1996 FOMC meeting where she pointed to the “…need to be nervous about rising inflation”, later that year describing labour markets as “undeniably tight”.
Yellen’s Preferred Employment Indicators: One factor explaining Yellen’s support of the Fed’s easy policy is the continued stagnation in the jobs market. In a March 2013 speech, Janet Yellen identified her preferred indicators for gauging whether there has been a substantial improvement in the labour market outlook justifying a tapering in Quantitative Easing.
- Hiring as a share of employment (Chart 1, left)
- Job quits as a share of employment (Chart 1, right)
- Nonfarm payrolls (Chart 2, left)
- The pace of spending growth (Chart 2, right)
Only the quit rate, which could signal that workers are more optimistic about finding new jobs, has been trending stronger in recent months, with the remaining measures of job market health either flat-lining or softening relative to earlier in the year. So rather than a hawkish/dovish ideological slant, the cold hard fact that the US jobs market has yet to show signs of measurable improvement is likely the key factor motivating Yellen’s support for continued QE bond buying.
For now, fiscal uncertainty continues to cloud the outlook for US economic growth. But if policymakers in Washington are able to extend the debt ceiling and agree on a fiscal deal without new cuts to 2014 spending, an easing fiscal drag could see a 3%-plus pace of US growth next year. That substantial improvement in the outlook for economic activity and hiring could see the Fed begin to scale back the pace of its asset purchases by early 2014, to the surprise of many in markets who may be erroneously expecting more caution from a Yellen-led Fed.
Enough with all the convoluted double speak.
Just tell me what price Kevin is going to bid AAPL up to by COB Friday.
What if the Fed just started the taper without announcing it? Sure they would take some heat for not telegraphing their every bowel movement. But the actual taper will have less impact then all of the speculators & frontrunners.
TOLD YOU SO!!!
Wait for the bond market to tighten and the PUT (shorting treasuries) becomes irresistible. This way you can protect your Gold position. Fed stops printing Bonds fall you cover, the Fed is forced to print again, music to the ears of your PMs.
COME ON GUYS, LET´S BRING THE FED DOWN.
According to BMO Capital Markets:
Yellen Gets The Nod….Business As Usual
Bottom Line: It should be business as usual under new Chair Janet Yellen in 2014, with the Fed focused on returning the economy to full health. When the time comes to mop up the stimulus, however, we would expect her to be as equally determined to restrain inflation as Bernanke would have been.
The President’s nomination of Vice Chair Janet Yellen as head of the Fed was widely anticipated, and there was only a muted market response. She is widely expected to pass the Senate’s confirmation hearings, allowing her to step into Bernanke’s shoes on February 1. The news removes one source of uncertainty for investors buffeted by the fiscal impasse. Though sporting dovish credentials, Yellen is considered a pragmatic policy maker with an above average record in forecasting the economy. This should come in handy during these particularly uncertain times. Brian Belski, our Chief Investment Strategist, believes the Yellen appointment will be viewed as a seamless transition, one that should provide stability to equity markets.
While Yellen hasn’t spoken publicly about policy in months, it is widely believed she is still a strong supporter of the Fed’s QE program and forward guidance. The unprecedented stimulus is aimed at keeping long-term rates down until the economy strengthens and is closer to full employment, provided that inflation doesn’t rise much above the 2% target. Like Bernanke, her near-term focus is to reduce unemployment. However, this doesn’t preclude slowing asset purchases as the economy strengthens. Assuming the fiscal impasse ends in the next couple of weeks, we still lean towards a December tapering. (Bernanke will chair one more meeting after that on January 28/29.) Still, the Fed is unlikely to stop purchasing assets until next summer and probably won’t begin raising the funds rate until the second half of 2015.
We don’t believe Yellen’s dovish reputation is entirely deserved. She led the push to establish an inflation target in 2011. Her support for aggressive stimulus in recent years was likely warranted by the economy’s lackluster performance since emerging from the Great Recession, and by the equally subdued behavior of inflation. In other words, being “dovish” in the past four years has been the same as being “right”. When the economy eventually normalizes, she will likely refocus her attention on defending both sides of the Fed’s mandate of full employment and low inflation. As a supporter of open communication and transparency, Yellen will need to “lean toward the center” as a leader, to ensure that a solid majority of the other 18 policy makers support her views. This will be especially important when the time is ripe to unwind the unprecedented stimulus, as underscored by the rout in Treasuries ahead of the September meeting amid growing expectations of a mere slowing in stimulus.
Should the fiscal impasse continue and lead to prolonged economic disruptions, the new Chair may consider different tactics to offset the shock. This might include lowering the unemployment rate threshold that would trigger a potential rate hike (currently at 6.5%), or establishing an inflation threshold that would preclude tightening so long as inflation remained below it. Although expanding the size of asset purchases (from the current $85 billion monthly rate) could also be considered, this option seems to be losing favor, even among several Governors on the Federal Open Market Committee who are worried about longer-term risks to inflation and financial stability.
As one of the few policymakers to ring the alarm bells before the 2008 financial crisis, Yellen will likely take the Fed’s expanded regulatory role to heart. The last thing she wants is a credit crisis/asset bubble under her watch.
It's all Kabuki
The world can see the US is now Zimbabwe. Death spiral coming to you guys as revulsion takes hold. Good Luck!
Sorry, but I'm all out of patience for their "Word Salad". Translation? Or shall I guess? /s