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The Fed Has Failed (And Will Continue to Fail), Part 1
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The Fed's policies have been an unqualified success for financiers and an abject failure for the bottom 99.5% who have to work for a living.
After five long years of politicos and the financial media glorifying the Federal Reserve's policies as god-like in their power and efficacy, let's take a quick look at the results of these vaunted policies: ZIRP (zero interest rates), (QE) quantitative easing, both of which are ways of shoving nearly limitless, nearly-free money (a.k.a. liquidity) into the banking sector, where all this free money is supposed to filter into the global economy, working miracles of prosperity.
Let's start with a chart of the Fed's balance sheet, which reflects just how much money the Fed has created and pumped into the financial system. $4 trillion is larger than the entire GDP of Germany, and roughly 25% of U.S. GDP.
Next, let's look at the effect of the much-glorified Fed policies on full-time employment: If you call a return to the levels of 2005 (despite a 7.5% increase in population) a success, then what would you consider a failure?
Let's recall that the Fed's policies are unprecedented. Keeping interest rates near-zero for five years and pumping $4 trillion into the system are both completely off the scale of central bank policy in the U.S.
Next, let's look at the participation rate--how many people of working age who are actively in the workforce. The trend is ugly; the percentage of the civilian population who are working or actively seeking work is plummeting.
Next: real median household income: this is household income adjusted for inflation.Another ugly chart, as real median household income is back to the levels of 1990. Once again: if you reckon this a success, then what would you consider a failure?
How about the annual change in disposable income? we can assume that "prosperity" and "recovery" mean disposable income are rising at a healthy clip, right? Alas, the rate of disposable income growth is sinking toward zero. The Fed's policies of bailing out "too big to fail" banks and QE/ZIRP have correlated to the most stunning drop in disposable income growth in decades.
How about financial sector profits? Hey, now we're finally getting somewhere-- these are through the roof. We finally found something with a positive correlation to Fed policies--financial profits are hitting all-time highs. Yee-haw, we have a winner.
Last but not least, how about the stock market? Here is a chart of the Fed balance sheet and the S&P 500 since 2009. Ding-ding, we have another winner--stocks are also hitting all-time highs.
Source: Zero Hedge
The most charitable assessment we can make of Fed policy is that the "prosperity" it created is at best, ahem, grossly concentrated in the most parasitic and politically powerful sector: finance. Why should we be surprised that the Fed, itself a servant of the banking sector, should devise policies that enrich the bankers and financiers?
Let's be clear about one thing (to quote the president): the Fed's policies have been an unqualified success for financiers and an abject failure for everyone who has to work for a living. The Fed has not just failed to rectify the nation's obscene inequality in wealth and income; it has actively widened it by handing guaranteed returns to the banks and financiers while stripmining what's left of the middle and working classes' non-labor income, i.e. interest on savings.
Just as a refresher:
Tomorrow: how the Fed rewards imprudent parasites and punishes the prudently productive.
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the Fed's plan is working exactly as they hoped it would...
Yeah,
If you understand that the real purpose of the Fed was to milk the US economy for every cent it is worth and to skim the cream for a relatively small cadre of bankers, industrialists and politicians, then the Fed has been a spectacular success.
"relatively small cadre of bankers, [lapdog] industrialists and [sellout] politicians, then the Fed has been a spectacular success..."
~~~
You're talking, like, 2% [that SHALL NOT be named]... right?
So, this article is Part 1 of how many? I'm hoping 8. At least 8.
And it can only get worse from hereonout. The US economy comprises 70% consumption. Ergo, to grow it needs moar consumption. With declining real disposable incomes and declining participation, where is said groth going to come from? It's that simple that the Fed and all the other superstar economists can't see the wood for the trees.
Precisely. People like CHS are contributing to the Fed's diversionary tactics (look, a squirrel) by making statements and posting graphs with titles like "Distribution of Financial Wealth". Earth to CHS, its Private Property! It is not some pool of wealth that CHS of even the goverment decides is "unfair". If its not private then we are slaves to the socialists, no matter what our slice is.
It's the greatest intergenerational theft in human history. Trillions stolen from your kids and grandkids to line the pockets of banksters. Bankster bonus season is almost done. Time to really fuck with the markets.
Bad ambiguous, faceless, raceless, 'NEVER' to be identified 'BANKSTERS'!... Shame on them [& their Indiana quarried limestone buildings that print money all by themselves]!
another way of putting it would be to say that your children and grandchildren have been sold into slavery.
I'm confused, look at that pie-chart, you call that a FAILURE ?!
Everything moving according to plan, and more Ukraine wheat to Europe.
The Fed's policies have been an unqualified success for financiers
...don't forget to include those on welfare
Don't be obtuse. The fed does not give a flying FUCK about unemployment or little people at FUCKING ALL.
Why these people think the FED failed is testament to the ignorance of what the FED's true mission is.
And in that, their true mission, not the stated one that spews forth from the mouths of last two and the current Jewish bankers, they are an unmitigated, phenomenal spectacular success.
Hear hear now... They're doing 'GOD's WORK' [they said so themselves]...
~~~
Evidently ~ GOD is a 2 bit thief...
That god is not God. That god is a liar, a murderer and a thief, from the beginning. Implicitly Lloyd expressed his devotion to that god.
So, that is one dual mandate burger to go...hold the cheese.
Would you to try our extra crispy bullshit wedges, Sir?
Too much debt weighing down the economy? No problem, more debt will fix all that...
This is intentional. Just like in the UK, banks are being allowed (if not encouraged) to break the law in order to stay solvent. The DoJ looks the other way.
This has always been the plan. Buy time and let them steal money for long enough until they become solvent. It's not about staying solvent, they haven't been solvent for a long time.
1238 days of profits for 1 day of losses.
"Two men enter, one man leaves!" And when they're finally exposed, they'll have to "spin the wheel."
It won't work because the banks will just lever up 40:1 on anything you give them. It's like giving a drug addict rent money: you won't see them for a while and then they turn up homeless.
Break the law, pay the little fine, collect the 25 million dollar bonus and get out of jail free card. Good thing nobody is paying attention.
That disposable income chart is why retail is in the shitter.
Great time for China, Russia, India, the Saudis and the rest to send all of the printed fiat back to the US. Refuse the US dollar as a viable currency. Crash the US dollar time as this escalates.
"There's a big difference between kneeling down and bending over" Frank Zappa
The meek shall inherit nothing. (FZ)
Haven't you figured out why the big story book keep instructing the goy to follow this very lie?
Put another way,
"Those who get ass-raped, well that's all they have to show for it." (WHY)
Dumb all over, a little ugly on the side.
Dumb all over, a little ugly on the side.
Nice article.......
Nobody seems to notice nobody seems to care. George Carlin.
The economic princeples and the policy used on their behalf in the 20th Century into the 21st will likely be one of the greatest wrongs ever instituted on people by the behest of the governments.
Think how history will see the 20th Century:
The solution is simple stop accepting their PAPER!!!
Stop using the system. I use cash for my daily expenses, but my savings are in gold and silver. I don't pay taxes - because the income tax is unaportioned - and I use my bank account and debit/credit cards only when forced to.
I don't own a house, I don't drive except when I have to, basically I live outside the system as much as possible while still living in this culture - as bastardized as it is I still love certain things about it - for the 6 months of the year I am not farming.
Move outside the system. It is a happier place for the soul.
History will be rewritten to suit their narrative. Not a chance your typical slug in the future will know a damn thing about what really happened.
Whose history? The books that the Rockefellers commission? Sure, but there are plenty of other books that will paint the picture. Just because there is a large amount of idiots weilding history books that are written inaccurately does not mean there won't be real historians keeping better notes.
Dear Federal Reserve,
You need to stop trying to control how people spend, save, and live. As more of the population stops believing your evil lies, the more we will resist your efforts, socially, economically, and physically.
Signed,
The American citizens.
PS - You need to learn this and stop before enough of the population catches on, then calls for your death. In one great cry of DEATH TO THE MONEYCHANGERS!
Charles, you're looking at this the wrong way - only the top .5% matter to the FED, so by the criteria that matters to them they've been hugely successful, probably successful beyond their dreams.
They're bankers. All their friends are bankers. All their business associates are bankers. Everyone they went to school with is a banker.
Who do you think they talk to when they want to gague "how they're doing"?
Before you answer such a question, you really need to understand exactly who the Fed is working for.
I'd argue that the Fed has been tremendously successful for their owners.
Roll out the guillotines, we'll have a barrel of heads....
To be fair, the Fed's been pretty good to anyone who bought a house with lots of leverage after the Fed-created housing crash, then refinanced under 4% in the Fed-created bond bubble, then rode the next Fed-created housing bubble to big profits.
Fed and the top 1% and the large banks have robbed the US people just maduro and chavez has stolen all the assets in Venezuela- It is the same shit all over.
Worst of all we the people allow them to do so in hope of one day become rich ourselves - shame on us and fuck them
The Fed (i.e. govt, regardless of its supposed "private" status) are the people with the guns and are really the ones running the show. Banks don't run them. It's the other way around. There are crooked bankers who support this crooked system, but there are honest ones too.
The Fed has not just failed to rectify the nation's obscene inequality in wealth and income; it has actively widened it by handing guaranteed returns to the banks and financiers while stripmining what's left of the middle and working classes' non-labor income, i.e. interest on savings.
It is not their job to make it better but certainly not their job to make it worse.
Their argument has to be that if they didn't do what they did everyone would have lost 90% so the middle and working (and hey, who said the middle isn't working?) classes would be much worse off than now. And this may be true, I'm pretty sure I would have lost more and all in 2008. Instead I've been bled slowly for six years now, if you say 5% a year that's 30%. So, where's the crossover? Do they really think they have that much more time to keep on with this and still come out "ahead"?
Anyhow, wouldn't it be politically, morally, and ethically better if the 1% were *also* losing 5% per year instead of coming out ahead? Maybe it would have been better if everyone *had* simply taken their lumps in 2008 - and by now had a 30% recovery. Maybe not numerically, but societally. I wonder where's the crossover on that.
The greed in human nature has been recognized for a very long time. After all, the fable of the goose that laid the golden eggs is one of Aesop's tales and comes to us from antiquity. We, as a race, can always be counted on to take something that works well and push it a little further. Its like an addiction. I'm sure they understand intellectually that something is going to give, but people always bet that it won't be yet. They can squeeze a little more out of it; they'll get out in plenty of time; and so they will kill the goose, every single time. We're the goose.
US debt held by the Federal Reserve since 1940
Make your own conclusions
http://failedevolution.blogspot.gr/2014/02/us-debt-held-by-federal-reser...
Death to the Moochers
The Fed prefers slow water torture instead of actually letting capital markets perform normally. If the Fed hadn't meddled so much since 2001 we would probably be in a REAL recovery by now.
They have not failed at all they have completed their objective.
Pretend to do things in public interest, cover up their crimes, enhance the thievery and their powers, alter the rules and now perpetually cement the same policies that led to the near collapse. Spin the plates with rheotric and the promise of drawing down measures while simply awaiting an excuse to increase them..transder the money of savers and rotate out of the "Public" sector to collect their payouts with speaking schedules and board positions..maybe a book deal or two.
Repeat and install new crony who will take their payout a few years later down the line when the flak comes. Seperate rule of law...legalizing insider trading for the ACTUAL insiders.
There is no out..ONLY FURTHER IN.
Because otherwise it ends in Nuremberg like trials for hundreds of them for the crims they commmited against the republic.
Anyone or anything of value escaped the trials.
Not by a long shot! They can still move the discount rate down to 0.00000000000001% (before taxes).
Did I miss something? ZIRP and QE also bankroll western governments. And what happened to the trillions in loans the Fed made to domestic and foreign banks? Didn't a lot of that go right into sovereign bonds?
The official and unofficial governments are joined at the hip. The political class doesn't want to be limited to taxation. The confiscation/cost shifting games have become more convoluted and complex.
Isn't the point of the ZeroHero site greater sophistication?
Everyone, there is a really simple solution:
Make your money outside of the law. Easy-peasy lemon squeazy. Been doin it for years. And having suitcases full of cash is a nice perk.
Plus, when things get really bad (and they will, lack of potable water in 1st world countries will be the first major culture shock) its nice to be with the 99%.
When money is worthless, you cant 'run' from the 99%.
Yo!
"Black" market will be biggest market, worldwide, by 2020, thanks to you...and others.
Can anyone spell: CRIMINAL CONFLICT OF INTEREST?
(1) The TBTF banking crime syndicate owns the Federal Reserve Bank.
(2) The Federal Reserve Bank's policies exclusively benefit the TBTF banking crime syndicate.
Why should anyone be surprised? The column inches of reportage about surprise should be that the bottom 99.5% of Americans permits this situation to persist—for more than a century!
The sole duty of the Federal Reserve Bank is to strip wealth from Americans for transfer to the TBTF banking crime syndicate.
By the way, the Federal Reserve Bank and their Federal Reserve Notes are grossly UNCONSTITUTIONAL!
Dear Mr. Hugh-Smith, the Fed has not failed. Not by a long shot. Instead, It has succeeded beyond its wildest imagination. You are obviously viewing this from the wrong perspective as to why the Fed was created in the first place. Get with the program Sir.
all you really had to say, Mr. CHS, when refering to the Fed's 'stated' (if not true) objectives is $2 Trillion (assuming 7 more months of QE) dollars for 1.9% growth. if the goal of QE was stimulate anything, it certainly didn't stimulate the economy. we can play devil's advocate and say 'it prevented a recession' but even then all we could say is it pushed it into 2014. the question then becomes: at what cost? unless the countries that are reeling from the tapering of QE stabilize, or the Fed untapers immediately (unintended consequences are piling up, no?), this QE experiment is fixin' to be the biggest disaster in the Federal Reserve's history. Bernanke jumped out of the plane w/ his golden parachute just in time, didn't he?