The Fed COMPLETELY Missed the Boat on Deflation/Inflation

Phoenix Capital Research's picture

The great liquidity tsunami of the post Crash era is coming to an end. But the inflationary aftereffects are only just beginning.


The Fed is now actively tapering its QE programs.  The $85 billion per month QE 3 and QE 4 programs have been reduced to $45 in asset purchases billion per month.


While this still comes to an annualized rate of $540 billion in purchases per year, it marks a significant shift in Fed policy.


Let’s be blunt here. The Fed has engaged in the single largest monetary experiment in history, betting the US economy and banking system on misguided theories that have little to no evidence of success.


The 1970s proved that the Phillips curve (the idea that high inflation cannot coincide with high unemployment) was a bogus idea. And both Japan and the UK have proven that QE does not generate sustainable growth: both countries have engaged in QE efforts equal to over 25% of their GDPs… neither have seen sustained economic growth.


Finally, and this is the single most important item to note… the Fed is fighting the wrong fight. And it has been for well over a decade.


In the early 2000s, Alan Greenspan was worried about deflation. So he hired Ben Bernanke, the self-proclaimed expert on the Great Depression from Princeton. The idea was that with Bernanke as his right hand man, Greenspan could put off deflation from hitting the US. Indeed, one of Bernanke’s first speeches as a Fed President was titled “Deflation: Making Sure It Doesn't Happen Here"


The entire reason Bernanke was hired was to ward off deflation. Now take a look at the following charts.


Here’s what happened to home prices during the Greenspan/Bernanke tenure.



This looks an awful like inflation, not deflation.


Here’s what happened to food prices.


Here’s what happened to oil prices.



And here’s what happened to stocks.


All of the above items indicate intense IN-flation, not DE-flation. The Fed literally hired a deflation expert who helped manufacture one of the greatest periods of inflation in history!


My point with this is that the Fed is typically way behind the curve when it comes to economic forecasts and subsequent monetary policy. By worrying about deflation, the Fed blew bubbles in most asset classes resulting in the 2008 Crisis.


This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at


This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.


Best Regards


Phoenix Capital Research


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truth serum's picture

GET out of US BONDS, and hurry!

Comte d'herblay's picture

The FED is nominally concerned about about inflation/deflation/noflation.  

It's unstated 'mission possible', is to ensure the Jewish Mafia on Wall Street and its Gentile accomplices remain in the top 1%.  

And nothing else matters. 

The inflation brought about in Volcker's reign and which he subdued with fantastic interest rates for savers (and equally disastrous for debtors) is nowhere with wages rising insubstantially. THAT is what is missing in this rhyming scenario of history.  Wages are in fact, falling. 

When you start seeing 10-20% above current salaries for desirable worker bees, THEN maybe we can worry about Real inflation which is the pass through of more money chasing more services, and goods. 

There are significant lies being foisted off on to the human beans vis a vis what's really occurring in inflationary price rises for essentials, AND have you seen what new and used cars and trucks are selling for???? Outrageously priced vehicles are not selling too badly with the 'mortgages' that are now offered. 

What the FED learned in Volcker's time was to strip out those essentials that made up inflation in those days. Viola!!  No worries, mate. 




AdvancingTime's picture

After much thought I have come to the conclusion that while inflation appears tame and is not showing up in a big way the seeds have been planted, and the number of them is somewhat shocking.

Inflation lurks beneath the surface and is hidden away in the dark corners of our future. Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. Several things to consider when trying to understand inflation come to mind, first competition tends to keep price increases in check, and our slow growth economy is helping the consumer in many areas, but the monster when unleashed will take a very large toll! More on this subject in the article below.

orangegeek's picture

We are in a depression and deflation is here.  There is no velocity out there.  There is only a bunch of gewbermint hacks creating more debt to pump markets and push spending programs.


The three largest growth markets - healthcare, education and social programs.


There's innovation for you.

jballz's picture

This post is punkedamonious bullshit. To the stupid pole smoking crack whore who wore it let me remind you who is the bitch in this equation. You, bitchez. They are so dumb and so behind the curve they stole your land your house your park and your life savings without ever getting a dirty write up in a shitty tabloid op-ed.

They aren't stupid. They just know you are.

Illya Kuryakin's picture

I didn't realize the Bernanke era ended in 2008 until I read this informative post.

litemine's picture

The tail wagged the DOG, right into the darkest time in History. The Fed , those who with their Bosses the Bankers may have gone way over the Line. That line now should be defined, the money flow inspected and any criminals brought to Justise. Soon the statement will be the Fed is Too big to Prosecute. The Fed  has been the fox guarding the Hen House with the Crony Politicians keeping eyes deverted.  America will go down in (every except USA's) History Books as a FAIL where the Snake ate itself. There will be WAR, everyone will have to decide which way to point their weapon, humanity has lost.

Duc888's picture



yellowsub:So exactly what qualifies these economists to run the monetary system as theories are never as they are in real world scenarios...


Your consent.  Nothing more.

gregga777's picture

Not our consent. It's by consent of the politicians controlling all of the officers and men with guns.

Frilton Miedman's picture




The amount of money you have to spend on them.

Bribery is free speech.


gregga777's picture

When will Americans wake up and realize that the Federal Reserve Bamk is a completely Unconstitutional owned by the too big to prosecute banks who in turn buy and own both political parties!

We need President Andrew Jackson to come back to demolish the Federal Reserve Bank and then break up the big TBTP banks. Then we need an honest Attorney General to prosecute all of the gangsters in the banks and all of the corrupt politicians.

The poster child for corrupt politicians is Senate Majority Leader Harry Reid.

The poster child for Muslim sleeper radicals in our midst is Soe Bar Kah of Indonesia.


President Andrew Jackson was a pretty cool American IMHO and I'm Canadian. Jackson characterized the Banksters as vipers

and theives if I recall correctly. What is more apt a characterization

for the Bankster antics we have witnessed since 2008? In brief,

I hear you loud and clear when you start talking Andrew Jackson, my neighbour to the south.

JRobby's picture

He was not "characterizing" them. He was describing them in plain, easy to understand language the meanig of which was meant to span generations.

If we do not rid the world of this vermin forever and move forward, this cycle will repeat over and over. 

AdvancingTime's picture

Modern Monetary Theory often referred to as MMT to its many believers removes much of the risk ahead and guarantees that we will always be able to muddle forward. MMT also known as neochartalism is a economic theory that details the procedures and consequences of using government-issued tokens and our current units of fiat money.  Newly acquired tools like derivatives and currency swaps  allow us to print and  manipulate away problems.

While reading an article about the growth of debt in China's non-financial sector I was forced to reflect on how debt is effected by the interest rates. In Europe the ECB had to step in to halt the economic collapse of Spain, Italy and several other countries that were on the brink. What you pay in interest on debt does matter accept in the manipulated land of MMT. Have we been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years? This is a key question we must face. More on this subject in the article below.


yellowsub's picture

So exactly what qualifies these economists to run the monetary system as theories are never as they are in real world scenarios...

AdvancingTime's picture

During the "boom times" when asset values are going up lots of people think they are getting rich. In inflationary times government also does well as tax revenues grow. Not only does government get to spend the money they print, the side effects of inflation on taxes are good for government, though bad for their subjects.

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. said John Maynard Keynes. As the central banks print like crazy to control interest rates on bonds they devalue the currency.

While there are not many Bond Vigilantes there are many Currency Vigilantes. Changes in the value of a currency directly affect "buying power" and the value of assets. Inflation, deflation, what is something worth? More on this subject in the article below.

Notsobadwlad's picture

I get tired of people making the assumption that the Fed, with all of it money creating power, brain power and political might, just was too stupid and screwed up.

Nothing happing by chance in politics and economics.

My assumption has always been that the Fed's actions are required to accomplish "The Great Work". Maybe at one time it was thought that the world could be united under the banner of the US. They put the UN here, the US dollar is used for global trading and the US has the largest military and owns "space". However, I think, as O'bumblepuke said "we gave capitalism a try and it failed". (of course he is wrong because capitalism was undermined from day 1), and now they are trying something else. So, the US, the great hope, must die and be replaced... so that is what they are intentionally doing.

JimmyRainbow's picture

according to herman news iraqis seized(?) 120 usb sticks belonging to isis.

in tv the amount if money tthey own was mentioned, 2.4 billion dollares.

looking at the pictre: all brand new cars same type.

some interesting facts about the seizure

wonder when the "hint" about russia doing all this will appear

Duc888's picture



"The Fed COMPLETELY Missed the Boat on Deflation/Inflation"








Ferrchrissakes, when will you people realize the FED is in business to keep it's member banks AFLOAT.





So the Fed has been a resounding sucess.

Would you consider a farmer who fattens up his family with hog meat doing something wrong?


Phuck no.


They're only doing something wrong from the Hog's POV.


Like the old saying goes.... when your at the Poker table and you're trying unsucessfully to spot the Mark.  Guess what, YOU'RE the mark.

Duc888's picture

oops, double-donged a post.

therearetoomanyidiots's picture

"The Fed is now actively tapering its QE programs.  The $85 billion per month QE 3 and QE 4 programs have been reduced to $45 in asset purchases billion per month."

Umm, wasn't there something about Belgium *snicker* buying all our debt?  

honestann's picture

Read my keystrokes.....

Gold Dog's picture

Tyler, how many times do we have to read Chicken Little telling us to buy puts?

Any asshole who listened to this asshole can come mow my lawn for some food money----he started crying wolf when the S+P hit 1,100!

And Dats Dat!

Your friend,


TradingTroll's picture

all your charts end in 2008!


learn how to read and write, you might have a career as an advisor :)

SAT 800's picture

"Phoenix Capital" ---Making froth out of Ignorance since 2007-- In the desperate hope someone will actually buy this useless crap newsletter.

mcgoverntm's picture

Re: "misguided theories that have little to no evidence of success."

I do not intend this comment to be a linguistic trifle.  Using words improperly results in poor communication and in debasement of the langugage.

Keynesianism does not deserve to be called a theory.  A theory is a hypothesis that has been rigorously tested and has not been invalidated by any of the tests.  By this definition, which was put forth by Karl Popper, Keynesianism is a discredited hypothesis.  However, Keynesianism provides the intellectual cover that collectivists need to justify their interference with the free market.  It is needed by government policymakers and the public intellectuals, e.g., Paul Krugman, who support them.

Quantum mechanics has been rigorously tested and the theoretically-predicted results agree with the experimentally-observed results to the 12th decimal place.  QM is a proper theory.


Quantum Mechanical Engineering is hard science while

Economics is anything but hard science, I agree. Keynesian

Economics is purely theoretical with a slightly different bent

on the epistemology that you seem to think exists for all disciplines. Keynes was a masterful thinker and his theories

are indeed applicable in the sense that big government is the only arbiter to direct economic market outcomes if, and when, markets deteriorate. March 10 2008 @ 11:00am Bear Stearns time was just such a moment in history when Keynesianism was bound to manifest after laying dormant for decades. Scientific revolutions and paradigm shifts require thinkers and theorists

to build the foundations that we happen to be talking about.

If one reverse engineers economics one is bound to find Keynes hard at work.

mcgoverntm's picture

Would " March 10 2008 @ 11:00am Bear Stearns time" have come without the US having a central bank that creates fiat currency and is managed by Keynesians?  I don't think so.

The beauty of Keynesianism, from the perspective of policy makers, is that it always advocates some kind of central bank and/or government intervention in the economy.  Every Keynesian screwup has another Keynesian policy idea as a fix.  If a trillion of new money doesn't do the job, it's because two trillion should have been used, blah, blah, blah.  But the rubes never catch on to the game so the Keynesians keep it going.

TVP's picture

Written like a true Keynsian troll.  

What was that saying Keynsians live by?


Oh yeah, that's right, the words of John Maynard Keynes himself, when asked about HOW this cycle of endless debt can possibly be perpetuated...

"We're all dead in the end, anyway".

Alananda's picture

Those smart people did not miss the boat.  To assume otherwise is asinine, in my opinion.  When the ship sails, you and all the rest of us "not in the club" will wave them goodbye from the shore of sore losers.  Good riddance, as history does best predict the future.  Picking up pieces, eating crumbs, however, is one hell of a way to celebrate such a victory.  Pyrrhicly yours, A

Herodotus's picture

I thought that most of them would be leaving on a train like they did the last time.

carbonmutant's picture

What if the FED knew this was going to happen but this was its best option given the current condions? In order to pull it off all they needed was a bit of media driven misdirection to justify printing $Billions to keep the Markets from falling.

JRobby's picture

"Let’s be blunt here. The Fed has engaged in the single largest monetary experiment in history, betting the US economy and banking system on misguided theories that have little to no evidence of success."


Desparate people trying to do the impossible when the only course of action is to admit the game is over.

spinone's picture

The fed has 2 tools:  print money and buy assets, and regulate the banking industry.  That the tools they used.


kchrisc's picture

It is not an "experiment," it is theft.

And they know what is going to happen. They only care that they will have a seat at the table when the music stops.


"My guillotine always seems to win at musical chairs."

mcgoverntm's picture

Precisely!  Theft via inflation has always been the game of the Fed.  A dollar today buys what four cents could buy in 1913, the year that the Fed came into existence.  A debasement of 96% cannot be anything except intentional.

The Fed has increased the pace of debasement as we head toward the endgame, which will be a great deflationary depression.  Just as in the last Great Depression, ownership of assets will pass from those financially-ruined by the crash to those ready to buy those assets for pennies on the dollar.  In the last Great Depression, real wealth, e.g., farms, factories, homes, businesses, was not destroyed.  Ownership of those assets passed to those who had the ready cash to buy them.

Isn't this clear?  The American people are more indebted than they ever have been.  Student loan debt, which is not dischargeable in a bankruptcy, is over $1 trillion.  Household debt is increasing as people use credit, rather than income or savings, to buy what they want.  All of this is happening while interest rates are the lowest in history.  What will happen to the interest burden of these borrowers when the rates go up?  It will crush them.

dizzyfingers's picture

"What will happen to the interest burden of these borrowers when the rates go up?"

They'll default and keep the stuff.

Frilton Miedman's picture




My above comment on MBA mortgage applications bottoming due to refi saturation, and that the bulk of refi's are fixed rate.

Households are going to feel some pain as rates increase, but not like 2008, place your hedges, but don't wager on armaggedon.


neidermeyer's picture

Extend and pretend continues unabated in the commercial real estate biz ,,, deflation will kill the majority of borrowers who own office and retail properties...

Kprime's picture

The bigger fool.  The Fed controls nothing.  Simply because you can generate an action that creates a reaction, of sorts, does not add up to control.

Kinda like saying that we can manipulate a magnetic field therefore we can control magnetism, or the earths magnetic shield, or the suns magnetic explosions. yah right.

Frilton Miedman's picture



In terms of "the bigger fool" (magnetic fields aside), I say now is a good time to start hedging RE gains.

Unless you believe wages will increase, home values aren't sustainable @ ~4X median wages, and, it looks like households are tightening the belt on excess credit....nobody wants to be "the bigger fool" this time around.


Pee Wee's picture

Now we know who the bigger fool is.

Perhaps you should actually look behind the curtain of the Fed.

Frilton Miedman's picture




I agree with the Fed's awful track record in predictions.

I also agree with the negative observations of Fed policy/QE and the probability of latent excess inflation, and the reality that it has unequally benefitted the net worth of the top 1%.

However, Fed policy has dramatically reduced mortgage rates and household debt service costs, which, in spite of diminishing median wages, has kept the economy from falling off a cliff.

It's also noteworthy that households have managed to reduce debt from 120% of income to 105% since 2007.

The true solution to our problem is wage growth, monetary policy has been a bandaid in the interim..


OldPhart's picture

I'm going to go sit in the tub and blow a few bubbles myself.

TeethVillage88s's picture

FED Sequestered Inflation in major asset Classes in their always "Lagging" analysis, just as IMF, WB, OECD always lag behind any important economic trend and always "Fail" to protect the most important parts of the Economy.

We can go back and forth on what are the most important parts of the economy, but will agree that Main Street will probably pull out the Pitch Forks over stuff the Fed ignores.

We know Janet Yellen said we are missing a normal tail wind in our Economy, Housing (since the 2005 Housing Bubble started collapsing, we can't enjoy an economic boost from housing sales)

And I tend to have very broad approach to Inflation since normally every year federal budgets get an inflation factor added on to increase funding (standard budgeting). My interpretation of federal budgets since after 9-11 is mostly increases across the board except for job training and HUD. This was doubled down under all continuing resolution actions since 2009.

All kinds of things have inflated, but our banking culture has sequestered them from much scrutiny under the term "Inflation". It is perhaps no coincidence that these areas of inflation also appear to be part of "Economic Looting"

- Exploding Public & Private Compensation for Executives
- Exploding Tuition
- Exploding Health Care costs
- Systemically high Drug Costs
- Stock market
- Debt & Credit
- Foreign Owned Assets in the USA
- Federal Budget (Looks like 40% Increase from June 2007 - Mar 2014, is that the right way to interpret this?)

Sure we have bailouts & bankruptcy after the Fed is blind for 10 years to Housing, Financial Markets, Private banking, Derivatives, possible systemic fraud sold to pension or other funds, oh and high risks from non-standard accounting practices & Financial Ratings rife with conflicts of interest.

Late Add: Didn't James West & Artemus Gordon serve the US President as US Secret Service to Protect the Currency?

Herodotus's picture

Ain't gonna be no wage growth as long as it is the policy of the federal government to keep increasing the size of the labor force.

Frilton Miedman's picture



I'm all in when it comes to blaming responsible parties, but this one isn't on the Fed.

I'll readily entertain the idea that Greenspan's Fed ignored promiscuous mortgage practices, and knowingly allowed the CDO market to crumble after the fact, but labor participation rates resulting from Free Trade and retiring baby-boomers is misdirected, that falls on Congress & POTUS.