This page has been archived and commenting is disabled.
Figuring Out The Fed
Since 2008, the Federal Reserve has been trying one program after the other in order to kick-start the US economy. It culminated in currently buying around $1 trillion of bonds a year. But economic growth remains weak. Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much? The people at the Fed are not stupid, so there must be a rational explanation. This is an attempt to figure out their 'game plan'.
Via Lighthouse Investment Management's Alex Gloy,
In a debt-based economy (like ours), GDP grows only if the overall pile of debt is growing. As long debt doesn't grow faster than GDP, the system is stable. You may grow debt faster than GDP for a while (depending on your starting point), but eventually you reach a point where the whole thing becomes unstable. There is no magic number, but anything north of 100% debt-to-GDP probably makes you prone to mayhem. The US is at 100%.
Here's how debt and GDP have been growing over past periods.
From 1950-2000, GDP grew slightly faster than debt, so smooth sailing. In the 13 years since the millennium, debt grew more than twice as fast than nominal GDP. And over the past six years, the fork opened even wider. It doesn't take a genius to see the problem with the current situation.
Two elements make up nominal GDP growth: real growth (volume, green bars) and inflation (price, red bars).
For debt purposes it doesn't matter how the growth is achieved. If real growth is insufficient, you could, theoretically, make up the difference via inflation. We would currently 'need' around 10% inflation. Of course, in that case, yields on 10-year bonds wouldn't remain at under 3%. Unless the Fed declares a 'yield cap'. It could, for example, promise to buy any bonds yielding more than 3% (they have done so in the past). But that would imply a negative real return of 7% for holders of those bonds, and the Chinese and Japanese probably wouldn't keep their trillions of bonds in that case. The Fed would simply have to purchase all outstanding Treasury bonds. So this plan would probably not work.
So...
The Fed tries and tries. It might seem as if it ran out of tricks, but there are a few cards up the sleeve...
Full Lighthouse letter below...
Lighthouse - Letter to investors - 2013-11.pdf by Alexander Gloy
»
- 25008 reads
- Printer-friendly version
- Send to friend
- advertisements -
"Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much?"
Because they are monetizing the debt of the only marginal source of demand left- the federal government.
Are we there yet, Dad? Are we there yet, Dad? Are we there yet, Dad? Shut up! No, we're not there yet. Play with your iPads or something. I'll let you know when we're there.
END. THE. FED.
Seriously. The game plan is obvious: total wealth stripping. And in that context the Fed's endless print policy makes perfect sense. It doesn't matter if they destroy the currency, if in the process everything of value can be purchased and hoarded by the Fed's owners.
The Fed is an asset bubble factory. The end.
Marc Faber: The world is a gigantic asset bubble
http://www.planbeconomics.com/2013/11/marc-faber-world-is-in-gigantic-as...
Something smells Fishy
Many others feel that there are global dealings afoot....go with what your gut is saying!
http://twoshortplanksunplugged.blogspot.com.au/
We could keep tricking the Japanese and Chinese until after they changed their language to english, and that's a long time my friends.
The game plan is obvious: total wealth stripping.
Been working the entire game for 100 years. We're now in the 4th quarter and the two minute warning has sounded.
How long the two minutes is going to last is anyone's guess.
with unlimited timeouts. it is their game and they make the rules-so it seems.
hmmm, getting a little pissed off yet?
Must you pimp your silly blog by posting exactly the same rubbish on every single thread?
simple questions;
why is the misses econ logic repeatedly ignored?
why do we the people put up with the krugmans, bloomberg finance, media control of message?
and most importantly, do nothing to change their system to fuck us?
are they the brokers of fiat money system really that powerfull?
via law that they enforce via force(rad maryjane-thanks)...
so, simply put, we the people, must take back the monetary system via violence,...
"...so, simply put, we the people, must take back the monetary system via violence..."
That's it, in a nutshell. I imagine if it gets serious enough, TPTB will roll out a 'new' monetary system....complete with 'peasant protection' characteristics built-in. Granted, the part they won't reveal is how the 'new' system is still completely captured and under their control.
So yes, unfortunately we've long passed the point where this is resolved without rolling the proverbial guillotines.
Krugman acknowledged that the reason for the weak "recovery" is that the TBTF banks were bailed out.
"growth was fast after 1933 ... specifically because the banking system was allowed to implode."
See it here: http://krugman.blogs.nytimes.com/2012/10/19/1933-and-all-that/?_r=0
Seriously, fuck that guy and the paper he wrote on.
It's ONLY purpose is to create and perpetuate the Wealth Transfer Mechanism par Excellence:
From the many to the Self-Chosen Few.
True.
If they really want some inflation, all they have to do is funnel some of the $85bl/month directly to the tax payers knowing that most of it will be spent immediately
100 year track record will confirm the truth spoken in this thread.
their mandate is to fuck the little guy- g carlin vintage stuff.
so when they have taken it all is that the time to fight?
or fight to keep what you still have?
Let the take it all. It will be easier to figure out who "they" are.
Hoisted by its own pitard...
How do you spell "trapped"?
A petard was a small bomb used to blow up gates and walls when breaching fortifications, of French origin and dating back to the sixteenth century.
If a petard detonated prematurely, the petardier would be lifted by the explosion.
:-D
How do you spell "vol"?
.. there will be an "oops" moment at some time.
If my merory serves me half way,it seems that the petard was a spear that was carried by the Roman legions and was used to mount the heads of captured slaves as they marched into Rome to the applause of the citizens (among other obvious uses)
50 years out of collage dims the memory. Milestones
Perhaps you were thinking codpiece?
Once you drink from the Neo-Keynesian fountain your destiny is sealed, for everyone else there is retribution.
Got lead?
What good will owning all the beach front do when they are decorating street lamps on Wall Street?
amen.
Whatever happened with the Feds 100 year charter, initiated in 1913 that is up this year. I haven't heard a whisper about it. Let's put pressure on our representatives to at least bring up the idea to end the fed. Now is the time, if any to not renew their charter.
That charter has been updated several times since 1913.If I am not mistaken (quite real possibilty)It seems the length of that time3frame was changed. Milestones
Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much?
Because the government is incapable of solving anything so the Fed feels that it has to do something, even though it's the wrong thing.
The Fed is really easy to figure out, they print money, and do with it as they please. Great job if you can stand yourself for it.
"The people at the Fed are not stupid, so there must be a rational explanation."
Rational is most definitely a relative term. All of us residents here in the insane asylum believe ourselves to be rational......a statistical impossibility.
"The people of the Fed ar not stupid".... I challenge that, I think they are stupid. 5 years of repeated QE policy failures is proof they aren't smart.
To print or not to print..........that is the question
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I can assure you, they are not stupid people. Some maybe misguided or misinformed or educated in lala economics, some intentionally evil / psychopathic but stupid they are not.
if they are not of the knowingly pernicious variety, they are highly intelligent ivory tower types with massive egos who have been backed into a intellectual corner. since the only escape is admitting their theories are flawed, if not entirely incorrect, they will continue printing because their economic theory tells them this is what they should do. unfortunately, it's simple human nature; the hardest thing for anyone to do is admit that they are at fault for something. the nefarious ones are just fuckign cocksuckers who use keynesianism and play dumb while they they steal your wealth (buttfuck you). to be entirely honest im not sure how to differentiate between the two but given the opportunity i would kick all of them squarely in the nuts (especially yellen) before letting them dangle from a tree.
I will vote nefarious since any economist is also a historian and history is filled with examples of fiat money experiments. All of which have failed due to the same causes.
Since anyone can open a history book and see the end result we are simply left with the reality that the Fed and Governmant are acting in concert to end our form of society and governance since the end of money leads to that result.
""The people of the Fed ar not stupid".... I challenge that, I think they are stupid. 5 years of repeated QE policy failures is proof they aren't smart."
Maybe it's because you don't realize that every move they make may not be simply an "economic" one .
Personally, I would tend to think that $85 billions/month is what they deem necessary, for the moment, to buy ....... more time .
More time for what ? That is the question I find interesting .
more time to transfere wealth from you and i to them. and time to gather phys via fiat transfere.
they handle the fiat first and get the greatest return, guaranteed. that alone should piss you off.
then we get to loan at "low" rates to give them a lucrative return on levered money. anybody that owes one penny of debt is complicit with these cocks... you are them in essence-simple deduction. so fuck you is the conclusion via logic. you are the enemy!
"more time to transfere wealth from you and i to them."
I agree, but again, I'm not sure it's the only reason. There is probably not simply an "economic" reason behind all this .
The Fed is just a tool of its owners.
You are correct daemon. In addition to stealing all our wealth, the "owners" also want total control over us. They envision a world where we are their feudal slaves, and they are our lord and master.
Here is an overview of their plan from the early 1800s to the present.
http://divinecosmos.com/start-here/davids-blog/1023-financial-tyranny?sh...
They are parasites, and have no power over us without our cooperation. The
way to defeat them is to get out of their system. It will crash without our support.
We must setup a system that does not use their money and methods. It has to
be a grass roots movement. Our leaders can not do this for us.
Kennedy tried. Ten days before he was shot Kennedy signed the Green Hilton
Agreement to withdraw thousands of tons of gold from the Global Collateral
Accounts to back debt free US Treasury dollars.
Here is the evidence: (see attachment at end)
http://www.scribd.com/doc/93652234/Cease-Desist-Order-to-UBS-BIS-Evidence
Additional info:
http://www.writingroom.com/viewwriting/Dakota1955/Gold-Warriors---The-Vu...
http://www.deepblacklies.co.uk/secret_gold_treaty.htm
Thanks for the links AE911Truth .
Failure by what measurement? Are you referring to their stated goals or their never-discussed-in-public goals?
http://www.forbes.com/sites/markmcsherry/2013/11/03/week-ahead-twitter-ipo-and-60-trillion-reasons-central-banks-goose-markets/
The total value of stocks around the world recently rose above $60 trillion for the first time since 2007 – and central banks like the U.S. Federal Reserve have played a big role in that rise by buying bonds and other assets to stimulate economies and provide cheap money.
Market investors are obsessed with the issue of how long this stimulus — much of which is called “quantitative easing” — can continue.
On Friday, U.S. Federal Reserve chairman Ben Bernanke is expected to speak on a panel at the International Monetary Fund, and China’s Communist Party will stage the third plenary session of the central committee on economic policy reforms on Saturday.
Central banks around the world, including the European Central Bank and the Bank of England, are expected to make key announcements on interest rates throughout the coming week and edgy investors will pay forensic attention to the language of their public statements for any clues to future policies.
The role of the central banks in markets has taken on new importance.
In the last five years since the 2008 financial crisis, the total assets of the world’s major central banks are estimated to have more than doubled to roughly $15 trillion. That’s equal to a quarter of the current value of global shares.
World stocks lost roughly $30 trillion in market capitalization after the 2008 crisis — but have bounced back by doubling in value during the past four or five years thanks partly to the stimulus measures of the central banks.
U.S. stocks climbed recently to record highs after the Federal Reserve surprised markets by deciding not to reduce or “taper” its $85 billion-a-month bond buying stimulus measures – for now.
Looking forward, it seems that every economist or financial analyst has a different view on when — or if — the Fed will begin to reduce its stimulus, and investors remain edgy about the prospect of the stimulants being taken away.
It has rarely been so important for the central bankers of the world to mind their language.
$60 trillion of the public’s wealth is riding on those words.
It's not $60 trillion of weath. It's $60 trillion of paper. Most of that paper represents not a god damned fucking thing except faith and bullshit. There is nothing of substance behind it.
It's not wealth, it's a promise made to idiots by thieves.
"But we have to DO SOMETHING!"
No?
It sickens me to see the bankers' useful idiots plead for more.
"It sickens me to see the bankers' useful idiots plead for more."
The banksters will get it. I just went out and purchased some shoes and was surpised to find the price increased 50% for the same shoes (New Balance) that I had previously. Who said there is no inflation?
Go to DSW, bro.
Same store I purchaed at previously. Same exact model.
That sucks, my man. Have you ever considered Shoe Goo? I used it on my wellies and it works! The FED might consider the same.
maybe they see you coming?
bros shop at DSW?
Or when boug Marxist fucks like Amy Goodman quit buying NB & Subarus.
Indeed, velocity and real money is only the interests and profit that are made on that fictional amount of "money"... the big picture (sum in $ of the derivative market) is irrelevant if you understand that this not money. Whatever claculations made by economists of any school should be run on the money extracted not the sum of fictional crap floating somewhere within a network of computers and HDDs.
"Since 2008, the Federal Reserve has been trying one program after the other in order to kick-start the US economy."
This seems like disinfo leader text. Following the money, it should be patently clear that kick-starting the US economy is not the intent of the Fed. Rather, kicking the US economy is their intent; mining every last vestige of capital from the unorganized, unvoiced, middle class, because ..... they can.
The whole meme that "quantitative easing" is "stimulus"; what a phukking lie already.
+1. For anyone wondering about "kick start", "QE" or "stimulus", read this.
I agree without, once you can no longer grow geographically, plundering your way, you have to start eating your-self..,
In US you've been destroyed by at a pretty slow pace, though there are an insane amount of real poor, in Europe it was better, people had some saving and any wealth that the people had is stolen away by ever increasing taxes...
What is happening is Europe is a bit crazy, it is a decay at accelerated pace, I'm not sure how long the people will endure that without the power in charge resorting to authoritain regime...
Anger is raising at a fast pace everywhere here, France is a poster child imho, tension between communities, against the state against other EUropean countries, etc.
You guys smokeum peace pipe? No! OOhhhhhhhh, now I see the problem.
"In US.....there are an insane amount of real poor"
Got to junk you for such an assinine, misinformed post. That you think there is an insane amount of real poor in the US tells me A) that you have never traveled in the US and B) that you have never traveled to places that have real poor.
In the US the "real poor" own cell phones, Nikes, eat well, have the best medical care in the world, attend school (but dont have to learn anything because to be really poor in the USA you get everything you need ot live a middle class existence for free). That middle class existence masquerades as wealthy in most of the rest of the world.
Real Poor in the US? I've traveled to all the places that are suppsoed to be really poor int he US. Appalachia, the desert SW, Upper plains, inner cities... and none of those places compare to the poverty in South Asia, C and S. America. (haven't been to Africa, yet so cannot comment).
As Marc Faber said, the Fed will keep increasing QE. Flood the market with printed money to dramatically elevate inflation. They'll continue doing what their doing. Just drastically more, like Krugman wants.
Even tylers fell for fed koolaid this time.
I would have too except for reading some fed notes and commentary. Wish i had a link. But first some background.
Weak growth is better than the depressionary collapse we would have faced according to the fed. (However I think a collapse every once in a while is healthy, necessary, and cleansing.)
The fed is really in expectations management mode and this is very clever of them. If the fed can get everyone to agree now that fed intervention on a massive scale and QE had little effect, then of course the withdrawal of such stimulus will have little effect either.
They dont want the market to think that the fed saved them from a collapse, and that withdrawal of stimulus may result in collapse because that kind of thinking becomes a self fulfilling prophecy.
The fed and others are now in campaign mode to NOT take credit for saving the economy, to say the fed had LITTLE effect on economic growth. They want people now to think that QE really didnt make a difference. Thus its withdrawal will make little difference either.
This is the only way for the fed to extricate itself from the trap it is in. They are more clever than I realized. I would not have figured it out on my own except a fed commentary, seemingly offhand on this topic outlining the tapering strategy could only succeed thru expectations management.
Sounds about right:
Avoid getting blamed for the decline/collapse, because that's what's already happening despite the impotent efforts.
So, deflect the blame so that the institution (central banking that's privately owned) can live another day in another paradigm to continue to control the medium of exchange.
These weasels don't give a rat's dick about blame.
Blame them until your lips rot off. They've got your stuff and they're going to keep it.
What is scary is that in their opinion what the economy is doing is not important, what people think the economy is doing is all that matters.
Like Carlo Ponzi who insisted that his business plan would never have failed if federal agents hadn't interfered.
Or Herman Melville's original "Confidence Man" (novel) from 1857.
If they can convince people withdrawing of stimulus and accommodation is no big deal then they believe they can avoid a catastrophic reaction when it is withdrawn.
"golly gee everyone. The feds actions have no effect on the economy. I guess we might as well stop QE. It had no effect anyway"
dreamland dude-withdraw the buyer of last resort-huh, tell that to 535 cocksucking pollys that haven't put a budget together for years. think china and japan are going to make up the difference. marc faber has got it right on-they print til it don't work.
there will be no taper, because they will not face the consequences...
Now they just need to announce "Anti-QE" and buy WalMart.
Simply put you are wrong if the Fed lowers the rate at which they are buying rotten equities (whatever they are) the global market collapses, billions people lose their saving, it is a disaster of epic proportion.
Ultimately the will, let down a few banks, scared people of NATO after a short outburst of chaos will accept a new (fiat) currency, and a massive haircut (pretty much losing everything but regaining some stability and secutity) their will be a default on foreign debt (but I guess negociated between NATO and the BRIC), and it will happen later on).
"Everybody" needs a new currency even the BRIC, which are still depending on us buying their goods (even significantly less), nobody wants hard default or crash, I expect the balance to move slowly between NATO on one side and the BRIC on the other. it could take a decades and more, a really grim prospect imho..
But before that TPTB will buy whatever the money they print can buy.
Another thing, economy is not science, calling it a science is a scheme... Economy doesn't exist by self in any complex society... never did (outside of insulate pockets). Military power abroad, and police power inside are the primary back-up for any system that grew for too long on plunder of some form. As well as a moral system intended to gain some acceptance for that matter of fact from the people (of late economics and "human rights" fill that purpose, used to be religions).
Everytime the word "thallasocracy" is not part of an article about currency I feel like someby is writting while looking at his belly buttom. A currency also reflects (one may argue at this point foremost...) the balance in military powers between competiting countries (or groups of).
The first step to understanding is to reject economics as a primary factor... be Keynes, Austrian, Other (like S. Keen), economics laws only exist on top of another layer, pretty much like a football game happens as it does (instead on truning into a mma type of entertainment) because their is underlying order, primary autority. YOu may look at the playbook(s) as long as you want, it won't tell why football is played as it is, the response is outside the rules of the games.
i don't know that i agree with this. i think there is a missing element in these discussions. seems to me we have plenty of supply, plenty of demand (globally). who doesn't need or want lots of stuff? what seems to be missing is means, specifically how to provide people with the ability to create the means to go out and get what they need/want. there was a lot of talk as clinton and bush stripped our country of productive industry of a magical 'service economy' that was going to rise up and replace productivity. without productivity, it's just a tank of fish that over time has less but bigger fish as they eat each other. same with all the hand wringing over automation. just another fairy tale to buy time while they figure out what to do with all the idled ex employed.
Unskilled labor can work in the domestic servant economy if labor laws are reformed. There is no surplus labor merely mispriced labor that won't clear.
In latin countries even the small apartments have a room built for the live-in maid/nanny. The top 20 percent would gladly hire the bittom twenty percent as servants, personal attendants and gardeners etc, at the right price. It doesnt have to be exploitive. Let's juat guarantee their healthcare and give the bottom 20 percent a subsidy such as food stamps and perhaps a small stipend like SSI. We essentially do that anyway. However at least they could be productive for their subsidies with the carrot of earning a bit more.
First let us sort out the mispricing of real estate. Everyone can have a home, the bloody things have already been built. Where's the free market in real estate?
Sadly I am not sure I have ever seen this thing you call free market.
Exactly.
The key is to write off the Fed and its enablers as Sociopaths,
and to rearrange the wasted energy spent on wonderment...
it is embarrassing to see the honest portions of the financial community flailing around,
and wasting your power.
Don't be an enabler.
What if we just paid everyone a dividend?
http://www.youtube.com/watch?v=ymMNAvoWpmc
Isn't that what they are doing?
Uh..."Since 2008, the Federal Reserve has been trying one program after the other in order to kick-start the US economy..."
Yeah, right. I'm not much of a koolaid drinking team player.
They aren't in business to kick start the economy. They know, we know, they know that we know, their mission is total destruction and domination. Full spectrum dominance. That means completely dismantling America and making it into a police state.
We are more creatively destructive than we are creatively productive.
On that note, how about we nuke the Hamptons just to scare the evil bastards' hired help.
If the Fed wanted to generate inflation instantly it would be very easy to do. Just have the treasury mail everyone a $50,000 check.
$10k x 100 million households would simply be $1 T in new debt...though the Fed could stipulate that the money must only be used as a credit card like device and may not be deposited to get maximum velocity (of course some people would simply spend the Fed money and save other sources...but many /most would just spend away).
Still, the Fed has to loan the money and the recipients would be responsible to repay the debt. The Fed cannot simply create money...they create credit with a corresponding debit. The Fed would have to give the Federal Gov who could pass this money to the populace while holding the debt (semantics but whatever).
The simplest path to inflation is drop federal taxes to zero for five or 10 or "x" years, maintain and increase spending (as per normal) and have Fed / PD's monetize all the Federal debt.
Each of us is owed $3 Million tax free, at the least.
If they mailed us money who would clean their sheets and cook their lobster bisque?
Remember the Peter principle? People rise to their level of incompetence in being promoted over their career. So to rise to high levels in a government or banking, organization you keep being promoted until you're too incompetent to be promoted further, or you were in the Fed.
Ever had your wallet or purse stolen while you were being distracted by an accomplice?
Imagine how distorted any single market would become if someone could magically create massive amounts of that product instantaneously. It's ludicrous to even think about. No one can produce anything that way, but we allow this of our MONEY? Not only that, but it's our (or someone's) DEBT....Lol and cry so hard...life is all cycles, right?
Wealth can exist in many forms, but debt is not one.
The FED is 'circling the wagons'!!
Dallas FedHead Richard Fisher just blamed the U.S. Government as the cause of NO RECOVERY!!!
Wait!!! Every media, market, and political hack has been stating "recovery for the previous 3 years"!!!
Fuck them......Fuck You....It is OVER....and the Music has stopped and the Party is just getting started! Act accordingly:)
The recovery is now the unrecovery. "You can keep your recovery if you like it" - President Stoneballs Obama.
How can you have record foodstamp participation in a recovery? You can"t ergo there never was a recovery.
FRAUD is based on unverifiable logical conclusions. Look at the facts.
The facts show the FED is Crime syndicate comprised partially by the TBTF and that they have taken over Washington D.C. The buildup of the TSA, the NSA, the CIA, the DHS and FEMA also show that they are assisting in the planned physical attack on the United States of America.
They are banksters that have isolated the United States of America from the rest of the world and have labeled us and them as a rogue nation run by a regime.
I probably saw this on ZH originally but I just re-google'd what Kyle Bass said about 100% debt-to-gdp:
"when you think about Reinhart and Rogoff’s work, if you’ve read all the white papers that they’ve written prior to writing the book, one of the other conclusions that they draw is when debt gets to be about 100% GDP it becomes problematic. Well, what that means is, typically—and, again, painting the world with a broad brush—central government tax revenues are roughly 20% of GDP. So what they’re telling you is when debt gets to be 5 times your revenue, that’s when you start to have a problem... that number is too low when you’re talking about a developed market economy versus an emerging economy because, in theory, a developed economy can borrow at lower rates than an emerging economy can.
from http://kylebassblog.blogspot.com/2013/10/kyle-bass-fed-wont-raise-intere...
A quick googling of US Federal debt and revenue shows that the ratio between the two peaked in 2012 and has since declined admirably:
Year Debt (Trillion USD) Revenue (Trillion USD) Ratio
FY 2014* 18.2 3.03 6.006601
FY 2013 16.7 2.77 6.028881
FY 2012 16.1 2.45 6.571429
FY 2011 14.8 2.3 6.434783
FY 2010 13.5 2.16 6.25
FY 2009 11.9 2.1 5.666667
from http://www.usgovernmentdebt.us/ and http://www.usgovernmentrevenue.com/
Actually, it would be interesting to correlate that to the price of gold (would mean it's going nowhere but right for the next year).
Certainly with Japan, being 230%+ debt-to-gdp, having not yet collapsed means the US has plenty of road to travel before that measurement has any consequences. But, it's well established that there's no way US Federal gov't revenue growth can keep up with it's debt growth, so it's a waiting game. Maybe if and when Japan collapses we can use that as an indicator for when the US should do the same.
DYJ - correct you are but remember that recessions were cyclical things and for the Fed / CB's to avoid them (as any recession would likely turn depressionary at this point) they will constantly print moar. So, we are done w/ all restocking, done w/ asset inflation (w/in bounds of peoples flat'ish incomes), done w/ the upside. All the rest must simply be Fed pushing on a string where there is no real demand so Fed must not only create the supply but also demand...
Using Japan as your metric for how high debt/GDP can go in U.S. is poor logic.
U.S. has been backing up Japan, Backstopping the Yen. Who Is backstopping the U.S.?
Apples and oranges comes to mind.
so ... hyper-inflation is the only salvation?
Deflation is what we are battling.
"so ... hyper-inflation is the only salvation?"
The only salvation would have been to allow Deflation/Default to clear the destruction caused by the Fed.
Just not Politically Correct, though. So, instead, the Fed will devalue, pushing the destruction of the currency onto someone else's watch.
They are politicians. It's what they do.
It's all a big sham. Banks are insolvent, Governments are insolvent, the whole fucking world is insolvent. Banks hide their unregulated and unaudited problems 'off balance sheet' and governments hide their problems in the bullshit statistics they put out for public consumption (real unemployment rate in the US is over 23%). The Fed & ECB are going to rigorously stress test bank balance sheets. What a joke....all the shit is 'off balance sheet' marked to infinity and should an auditor have the temerity to question those valuations, another will be found who is happy to accept it.
Pretty much nailed it there, moby. And when such truths become mainstream, they'll deem all Fed actions Classified, in the interest of national defense, mind you.
You guys sound alot like 'terrorists'......
Terrorists/Freedom Fighters. Same guys, different news cycle.
I find your statement, and time stamp, ominous
It's not rocketsurgery, the FED is devaluing the currency so it can pay down the debt with devalued dollars. The only hitch is incomes are not rising, so the plan does not work.
there is no point in commenting or complaining anymore , we all know what needs to happen but none of us are ready to act
Not helping very much? It is helping more han if they had left long term rates high.
More than 5 years into this shit, and not one assassination attempt on Wall Street or DC...
Astounding, isn't it?
Can't believe a sniper hasn't taken out Dimon, Corzine, or Hank Paulson yet.
If real growth is insufficient, you could, theoretically, make up the difference via inflation. We would currently 'need' around 10% inflation. Of course, in that case, yields on 10-year bonds wouldn't remain at under 3%. Unless the Fed declares a 'yield cap'. It could, for example, promise to buy any bonds yielding more than 3% (they have done so in the past). But that would imply a negative real return of 7% for holders of those bonds, and the Chinese and Japanese probably wouldn't keep their trillions of bonds in that case. The Fed would simply have to purchase all outstanding Treasury bonds. So this plan would probably not work.
It may not work but it's what is being done. Inflation around 10%, check, bonds capped, check, Fed purchasing any Treasury bonds offered, check.
Try watching the Fed rather than listening to them:
a. Congress is deficit spending +1T/year
b. Treasury has to sell +1T/year of new securities as well as roll the existing debt
c. Fed has to buy them since there aren't any others
d. Some of the existing debt isn't rolling so the Fed has to buy that too...
Taper? Taper in an upward direction?
garth, +100, the one obvious fact: moar debt comes due they gotta cover and roll it out..much like .gov saying it's cutting budgets, but in DC speak that means we predicted 10% y/y growth but decided to only grow it 8%.
we need more Nero's who fiddle while DC burns, but no we got do gooders.
Hey hey, I finally got on Zero Hedge as a new member! I was on the oil drum before they decided they were above ads to pay for the site and went defunct. On peak oil dot com, Automatic Earth, Gail the Actuary's site, Ron Patterson's peak oil site, and have been trying to get on this site for three months now which I like for it's economic angle with a twist of Tyler Durden rebellion/ reality quest.
Absolute pure desperation is why they continue QE because zero interest rates didn't do it like it had in the past, and the need to monetize the debt. They broached the topic of tapering, but when 10yr treasury bond rates started upward they balked. They also held off due to what was then upcoming threatened govt. shutdown, which as we know happened. My guess is Yellin will increase or decrease depending on perception of economic state, but + or - QE is probably here to stay. The most they would do is broach topic of a 5b reduction, but explain they plan to hold fast there to see what happens. They definitely will not risk announcing idea of tapering to zero.
Absolute? No imho.
Though it becomes clear there are fights within the power that be.
Syria was a massive failure if you look at the big picture, some countries are extremely peaced off, USA actually played pretty wise. Some are realizing that absolute power only exists for that long.
Now I think some guys on top in US know that they will have to step back a tad, and try to make the most while doing so, others wants to play all in. Let see how that goes...
Re; Desperation is reason for continued QE.
We have reached that point on event horizon.
QE= continued status quo, Ability to amass wealth.
No QE= Collapse of financial markets, collapse of societal norms and structure.
It is hubris and fear of reality that is keeping this QE ship afloat.
It's hard to squeeze wealth from a population that has desended to canibalism.
Why pursue the policy? Maybe somebody has figured out in an interconnected world of trading no one nation can stray to far from the cost of cheaper nations.
"Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much?"...namely, because your assumption ..."in order to kick-start the US economy"....is wrong, Dumb-ass. It's rape and pillage time, and it has been for 35 years.... The goal is for the 1% to take as much from the "public" sheeple as possible before they actually bleat someting intelligent, like "hey...I didn't order anal rape...with fries..."
"Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much?"...namely, because your assumption ..."in order to kick-start the US economy"....is wrong, Dumb-ass. It's rape and pillage time, and it has been for 35 years.... The goal is for the 1% to take as much from the "public" sheeple as possible before they actually bleat someting intelligent, like "hey...I didn't order anal rape...with fries..."
Agreed, works all out like a charm (for the < 1%-ers)
They are not stupid, like counterfeiters at super scale, they print and buy the whole economy.
What is there not to understand about it?
Give that contestant a freshly printed $100 bill.
Inflation, stagflation, hyperinflation, devaluation of the dollar.
Hyperinflation will flush out precious metals from people wanting to eat and have a roof; after the FED has decimated employment and purchasing power along with making living unaffordable.
Riots and outright collapse will be prevented with subsidized food, housing, healthcare.
Continued stratification of society; more poor, fewer at the top, extinct middle class, police state.
Death by Munchkin.
Keep smiling.
The FED's goal (and sole purpose from the start) is to keep the big banks alive. So far it is working quite well.
If you do not know the motives and if you believe all the fudged numbers your conclusion will be totally off.
The main aim of the political class and the central bankers around the world is to create one bubble after another for the zombie bankers to feed on. The majority of the population who actually work hard to earn their living by engaging in productive work have to pay the price by either loosing a majority of their earnings in the form of taxes, interest on loans or paying the bill for the bailouts.
http://www.marketoracle.co.uk/Article40231.html
It's the Fed's and every other central bank's "dual mandate": Support their shareholder banks & enabling gubbermints, while robbing & crushing working citizens & small business.
Nothing stimulates the fantasies of market operators like rising equity prices. The longer they keep rising, the more confident investors get, that this upward trend will continue. The dearer, the better seems to be the motto.
And acutely dear these equities are, with P/E of the S&P 500 at 19.3 and Shiller P/E at 24.6. But banalities like fundamentals, risk or weak economic data cannot impress such an euphoric market the slightest bit. It is the time to party, and the party's never gonna end, right?
Sure, why not? Who says, that every party has to end eventually? Maybe a completely new era of humanity has begun. A paradisiac age, in which wealth no longer correlates with hard, honest work, but with the magical powers of a Princeton professor, who lead the art of moneyprinting into completely new realms.
At least there have been times, when mankind believed in even more absurd things: E.g. that the earth is flat, or the emperor is god, or Enron is a dynamically growing enterprise. And isn't there a saying, that faith can move mountains?
Be that as it may, it's a fact that market operators are bullish like never before. The cashrate of US-equity funds is with only 3.7% near historic lows. In the past three weeks they experienced an ingress of $ 41 billion. The Rydex-funds bull/bear ratio shows that for every dollar that's bet on falling prices, five dollars are bet on rising prices. Low put/call ratios confirm that.
The atmosphere is as bullish as it was at the 2007 top. And while we are talking about sentiment indicators, it surely couldn't hurt to notice US-securities reaching an ATH in September with roughly $ 401 billion. The high from 2000 has been at $ 278 billion and spectacularly matched the high of the bubble in stocks. It took seven years to reach a new high. That was in July 2007 at the cycles top with around $ 381 billion. In February 2009 the cyclic low was reached at $ 173 billion.
It took until April 2013 to breach the record from 2007, with $ 384 billion. Credit-fueled speculation in September brought new heights, as mentioned above. October's comfortable stock-market as well as other sentiment indicators seem to suggest a further rise.
But, annualized, the MZM money supply (money with zero maturity) has risen a hefty 11.4 % over the last three month. While market operators seem to know no fear at all anymore, central bankers are frightened and they throttle up their printers. One may ask: Why?
Are they getting afraid of their courage? Or do they fear rising interest rates? Or could it be that they are frightened of the devastating end to their breathtaking money experiment, that's on the horizon?
The explanation is probably much more simple: There probably is panic among the masters of the printers, because they slowly realize that the US-economy, despite their giant efforts, is not heading into recovery, but into full blown recession.
And in this crazy modern times, recessions have to be avoided at all costs! So maximum speed for the printers it is. Maybe we get out of this alive.
If there is panic I would bet that is not in the face of US economy not recovering but because on top of troubles abroad (Russia and China are trying hard to bring back a multipolar world) if there is collapse inside it would get pretty hard to manage.
That is why AMericans while complaining still have access to credit to buy crap, it keeps them quiet. In Europe we got to pay more and more taxes.
You guys have to look at the broader pictures, a thalassocracy takes a lot of resources, and the Nato ones starts to be challenged. If you had pretty out control domestic troubles... Even the mighties can only that much.
If stocks collapses, foremost lots of AMericans and Europeans (note that I hate calling my self as such...) will be broke, civil unrest would explode.
As we said in French "on peut pas etre a la fois au four et au moulin" Meaning one can't both cook the bread in the oven and grind the wheat at the the mill.
1) Federal Government spending
2) Funnel moneyto bank balance sheets
3) Underfunded pensions
4) Fck over savers not wanting to take risk with stocks
The only stocks I'm interested in anymore will have congressmen shackled in them and lots of rotted veggies and rocks littering the ground underneath.
How about a bail out for the Fed? They are the biggest "too big to fail" bank after all.
http://www.latimes.com/business/la-fi-fed-assets-20131029,0,5018539.story#axzz2jSQdYiEg
It's about time someone started top actually do a real analysys on fed behavior. reading the fist part it's about the first I have seen attempt to do so, taking what they say at face valie doesn't give you an analysis that'a valid. you don't keep doing a program that so miserabley doesn't meet it's stated goals unless it is meeting unstated goals. hence that is what you look at
The Fed was in absolute panic when Ron Paul ran for the Presidency and said he'd audit the Fed.
An audit means the end of the Fed.
Turned on CNBS for the futures when I got up. Fed guy was on, says they have to get inflation up to 2%. Turned off TV.
Their monetary policy finances mass immigration and their SEIU base, they need MOAR every month just to maintain the herd, let alone expand it, they stop printing they get eaten by their own voter base.
Not even a nuclear war can stop the printing.
"If real growth is insufficient, you could, theoretically, make up the difference via inflation. We would currently 'need' around 10% inflation. Of course, in that case, yields on 10-year bonds wouldn't remain at under 3%. Unless the Fed declares a 'yield cap'."
Could someone explain this to me. How can you sell a 3% bond into 10% inflation? How do you "declare a yield cap"?
rational explanation? game plan? here's my attempt - to manage the largest transfer of wealth tp the banksters in the most painless way possible .. via druga, entertainment, misinformation, and keeping you busy ... you might even be loving it, too
rational explanation? game plan? here's my attempt - to manage the largest transfer of wealth to the banksters in the most painless way possible .. via druga, entertainment, misinformation, and keeping you busy ... you might even be loving it, too
The real objective is intentional "fiscal collapse" (their words, not mine). Just ask Obama's strategic adviser, Peter Dreier, who proposed just such a plan at the Socialist Scholars Conferences (plural) that Obama attended. After seeing his plan, Obama hired him for his campaign staff.
And that, my friends, is what we call a "smoking gun" for Emperor Obama's REAL intentions.
After all, the crowd that believes in the Machiavellian "never let a crisis go to waste", must either FIND -- or CREATE -- a crisis, in order to grab still more power and topple our liberty once and for all!