Fed's Economic Projections - Myth Vs. Reality (Dec 2013)

Tyler Durden's picture

Submitted by Lance Roberts of STA Wealth Management,


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takeaction's picture

When does this all play out?  Your guess? Is it next year, 3 years 5 years, this can not keep going like this...or can it?  Man, I am just going to keep stacking.

FieldingMellish's picture

It can go on for many, many, many years. They can take gold and silver down to lows not seen since the 70s. They can bankrupt the whole mining industry. We have all been dupped.

LawsofPhysics's picture

You are correct as long as no one demands delivery of physical.

Skateboarder's picture

A gold run, kind of like a bank run, would set the prices right. Or one would hope.

FieldingMellish's picture

Why would you want delivery if the price keeps collapsing? Forecasts now pointing to sub $1000 gold by the end of 2014. Rinse. Repeat.

LawsofPhysics's picture

"sub $1000 gold by the end of 2014." - optimist.

I'll hold you to that call.

let's hope the dollar (that's what you are making the call in) is still around.

I don't think I would predict the end of bullion or bullion banks.

Bold call, time will tell.

SMG's picture

What would happen to gold if say the dollar would lose reserve currency status?  What would happen if there were a sudden 30% devaluation due to that loss of status?

Good luck with that forecast.

I could see a time where you can't get delivery.

I could see a time when hyperinflation kicks in from a 4 trillion dollar collapsed derivative complex and gold is $100,000 an ounce.

I think that time is closer than you think.

insanelysane's picture

It's different this time because all major central banks are doing the same thing so it can go on for a long time.  It won't go on forever because sooner or later one of the central banks will get the idea to do something else to get ahead and then boom.

LawsofPhysics's picture

exponential equations are a bitch.  One CB doing it, and the fraud can continue for a while, all of them and the eventual trade war gets started much sooner.  When real goods and services (mostly oil, coal, etc.) stop crossing boarders, then the bombs start dropping, not before.

same as it ever was.

Exponere Mendaces's picture

My guess is the entire yield curve is rigged, which is why they can keep a "lid" on all of this crap. Honestly, is there any other reason the 10-Year isn't above 3% right now, that actually makes sense?

If so, please share.

whatsinaname's picture

What will happen when the Fed owns 100 % of the bond market ?

Has that scenario been reached in Japan ? Does the Japanese Central Bank now own close to 100 % of its bond market and how has it affected the JGB trading market there ? 

Ham-bone's picture

Japanese debt held by Japanese institutional buyers (insurers, pensions, etc.)

As per the Fed owning it all, not likely to happen...of the $10 T 1yr plus publicly owned Treasury market...Fed "only" owns $2 T (20%'ish).  Fed will have to substantially increase QE (like double or triple it's $540 B annual Treasury purchases while Treasury maintains or slows it's issuance).  Plus SS trust fund ($5 T intra gov Treasury holdings) is starting to sell significant holdings putting even more debt on market...

Fed will now be buying $480 B annually (unless they taper further and reduce even more)...

LMAOLORI's picture

"What will happen when the Fed owns 100 % of the bond market ?"


The best way to rob a bank is to own it they say so they can just stop remittances to the treasury - perfect set up actually since the banks are earning billions a year in interest paid on excess reserves


Fed May Stop Remittances to Treasury for Years



Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress



QE: The greatest subsidy to the rich ever?




Headbanger's picture

The Fed is just trying to paint over the dirty deed they did yesterday by saying "It'll be just fine, trust us!"

But as I've been saying, there's no longer any need for the Fed to support Obama now that he's lost all political power.

And it should not be surprising that the big banks controlled Fed is starting to play along with the Repubs in seeing they're

going to win the White House next.  So all the better to taper so Obama looks even worse over the next three years to

be sure the Repubs win.  The elites are going along with the path of least resistance as they always do.

ZH Snob's picture

their employment figures are pure fantasy.  I guess they just don't get that most people don't work in financial services.

VD's picture

THIS FOLLOWING: "Reminiscent of the choices of Goldilocks - the reality is that the Fed's estimates for economic growth in 2013 was too hot, employment was too cold and inflation estimates were just about right. The real unspoken concern should be the continued threat of deflation and what actions will be available when the next recession eventually comes." ASSUMES THAT ANY OF THE DATA AND METRICS ARE LEGIT, which we all know are...

rlouis's picture

"The problem for the Federal Reserve currently is that there are very few policy tools left"

Do you mean when the policy of lying no longer works...?

CrashisOptimistic's picture

Reminder.  These GDP numbers include the +0.6% revision of measurement method imposed in June of this year.

2% is really 1.4%.


As pointed out now and then, here is the chart that is the definitive statement about the US economy:


That's 1960s levels with 50 million more people walking around.

gjp's picture

"an asset bubble in the making"?  "continued threat of deflation"?

you're kidding right?  We are in year 30 of the most egregious financial bubble in history and going out in a final inflationary blaze of glory.  And you're worried about the makings of an asset bubble and deflation?  Whatever.

JamesBond's picture

1% inflation bitchez


FreeNewEnergy's picture

My advice to myself is to not try to time anything, just do what I do best: run my business (without employees), stiff the government every chance i get, save, stack, farm (just acquired 3 1/2 acres), stay fit (farming is great for that for work and by eating nutritious foods), buy useful assets (tools, equipment, vehicles), drink and smoke heavily, get laid as often as possible, improve my culinary talents (I've become a great cook and love to eat).

When I was younger, I always said I didn't care who was in office, Dems or Repubs, made little difference to me. I just worked hard at my business and was successful. It's a little different now that I've become more aware, but, really, not much. I find the less I dwell on financial matters, the more work I get done and the better off I am financially.

Like Nike says, just do it. Forget all the fancy footwork and falderall of the Fed and the government. Treat it like the background noise it should be and maybe it will go away.

Happy Holidays and best of luck to all.

Edit: Must not forget: STAY OUT OF DEBT or, if in debt, GET OUT OF DEBT. Borrow only the smallest amount, at a low, fixed rate, for arable land or a useful residence or a combination of the two.

Grow your own, be your own boss.

q99x2's picture

Everyone's dumping the electronic circuit board commodity, that barbaric yellow relic metal, gold, for the uniquer than atomic elements and transparently transferable store of wealth BitCoin.

from 522 to 715 within 24 hours.

No wonder the FED sold all the world's gold to the stupid Chinese.

FieldingMellish's picture

Exactly. Its over. There will be no financial reset. We were duped.

FieldingMellish's picture

Keep clicking on those ZH links and making money for ZH and Google. I am sure there will plenty more consipracy stories coming over the next decade or two.

LawsofPhysics's picture

Tell us again how gold will be "under $1,000 soon.  Can't wait.

FieldingMellish's picture

Less than $200 away. One wee hour dump into a thin bid stack, like about 5 times this year alone, and we could easily see a collapse even before month end.

LawsofPhysics's picture

Sounds great to me.  I hope you are correct.

FieldingMellish's picture

Looks like its getting walked down to $1180 support in preparation for overnight dumping. Sub $1125 at the very least by the weekend if they pull off another thin market smackdown.

Skateboarder's picture

a) It's totally anonymous
b) It's totally fair (hey, it's only 927 people who own more than half of the stuff. That's a good number, right?)
c) It's totally cool. It's hip, motherfuckers... get with the times ja bunch of electricity-hatin neanderthals.

adr's picture

The Fedheads all talk of inflation being transitory, that the inflation which has doubled the cost of living over the past ten years will transition into a growth period because that is what happened before. Incomes rose along with costs to eventually equal out.

Problem is this time incomes are falling while the cost of living is increasing. The transition is to oblivion becuase the USA is an import driven society. Previosly inflation led to increase in income because goods were being produced by the workers who consume them. Once all labor was outsourced, the cost of manufacturing was no longer tied to the price of consumption. Once manufacturers no longer had to pay workers, the top could keep all the profit.

There is no way out of this downward spiral. Unless you break the mold holding the water in. You destroy the Fed and Wall Street, you set the economy free.

New American Revolution's picture

Blah blah blah, more economist bullshit as if it all means something.   Economics means NOTHING, not a fucking thing.  What counts is what daily operating model of government is being used.  Is it one where the government rules the people, or where the people rule the government, because the answer to that question will tell you what kind of economic system you are living under.   Obviously, in America today the government rules the people, providing for factions to buy the government so that they can rule the economy.  This is called TYRANNY.

Conversely, the rule of the people over their government is called the daily operating model of LIBERTY.  Under this regime, you will end up with an Austrian styled school of economics.  Suffice to say, you can't have a tyrannical economic system operating in a Liberty based government, nor can you have an Austrian economic system in a tyrannically based government.  Either or is IMPOSSIBLE.

The simple truth is that economics means nothing, because it determines nothing but only reflects its environment.  Ergo, any formula's or postulations on economic thought is woefully incomplete if it does not include the impact of government in its models: And when was the last time you heard an economist quote a political scientist to support any of his (her) bullshit formula's or theories?   Right, exactly my point.


Serfs Up America!

SweetDoug's picture




Financial Amateur here…


inflation has fallen well below target levels of 2% which is weighing on economic growth.


Why does inflation play any factor in 'growth', "REAL" growth? It should be subtracted from to show 'real' growth.


If we have inflation, and we're spending because our savings are going to be eaten up by inflation (psychological aware of what's going on) or just spending more of our dollars that are now worth 'less' than they were, this doesn't seem to be the kind of 'growth' that we would want, now would it?


Growth, backed by inflation, is no growth at all, because it's all relative, is it not? I'm spending twice as much as I used to, but the dollars I'm NOW forced to spend, are the preinflationary ones, which means I'm losing more of my purchasing power if I don't spend them now.


Why are we constanly being feed this bullshit?