The Fed Has Killed the Capital Markets

Phoenix Capital Research's picture


The Federal Reserve has effectively killed the capital markets.


This statement may seem rather extreme. But to understand our meaning, you first have to assess the purpose of the capital markets.


The purpose of the capital markets is to connect capital with business to create value.  Investors want returns, businesses want growth. The capital markets are meant to be the mechanism through which these two groups interact. And the markets, representing the collective wisdom of investors, dictate the risk of each transaction.


So what has the Fed done?


Long before the 2008 Crisis hit, the Fed was already actively screwing up the markets and capitalism by stepping in to hold the markets up anytime a crisis developed. Long-Term Capital Management, Chrysler, the Asian Crisis, etc.… the list goes on and on.


We are not suggesting that intervention on some level is not warranted. However, as anyone with even a remote understanding of human nature knows, if you continually enable certain behaviors, they will only increase in intensity and frequency.


Indeed, the unintended consequence of the Fed’s actions was that an entire generation of investors came to believe that anytime something terrible emerged in the Financial System, the Fed would step in. Faith in capitalism and the markets was replaced by faith in the Fed.


The 2008 crisis can be directly linked to this thinking. Investment banks made trillions of dollars in bad bets leading up to the Crash. They would not have done this if they had not been


A)   allowed to increase leverage levels (a failure on the part of regulators of which the Fed is one)

B)   under the impression that the Fed would help them should the proverbial stuff ever hit the fan.


Then 2008 happens and the Fed becomes involved in ways never before dreamt of. Since 2008, the Fed has actively pumped money into the financial system over 90% of the time.


Reconsider that last sentence. Going back to 2008, if you go on a month-by-month basis, the Fed has been putting money into the system over 90% of the time… for FIVE YEARS. This adds up to nearly $4 trillion.


From a secondary perspective, the Fed has become so involved in the markets that the single biggest focus for investor research today is what the Fed intends to do or what it means.


Earnings, balance sheets, value… all of that stuff is secondary to the utterances of a group of academics most of whom have never run a business. That’s how screwed up the system has become, courtesy of the Fed’s incessant intervening in the markets.


Does the Fed actually have a clue what it’s doing? Its forecasting and modeling track record doesn’t suggest it. You have to truly dig deep to find anything in the post-Volcker Fed era in which the Feds accurately predicted anything of significance.


After all, if the Fed is wrong about something, what is the consequence? No one at the Fed gets fired. No one gets demoted. The Fed simply intervenes again and the world moves on.


If you’ve spent any time in the corporate world, you’ll recognize that a business’s culture can ultimately be traced back to leadership and old habits.


The Fed is, for all intensive purposes, the leading monetary authority for the capital markets. And the Fed is anything but a capitalist institution. It doesn’t operate according to the basic tenants of capitalism.


Just look at Ben Bernanke. He was wrong about everything leading up to the 2008 collapse. On top of this, his policies in the post-2008 era:


1)   Punished millions of Americans who rely on savings and interest rates for income.

2)   Sparked widespread inflation particularly in food prices, which fomented civil unrest (the Arab Spring), and even starvation.

3)   Provided insider information behind closed doors to select groups of hedge funds and institutions well before the making public statements about policy.


Was he fired? Nope. He earned roughly $200K per year as Fed Chairman. Since retiring he now makes $250,000 per speaking engagement. His failure as Fed Chairman (easily the reason why he chose to stay only two terms) actually benefitted him tremendously.


The Fed and its policies have warped the culture of capitalism to the point that we now exist in a Centrally-Planned nightmare in which a handful of academics influence the economy and world reserve currency with every speech and verbal statement.


Worst of all, if they’re wrong, none of them have anything to lose. The losers are the 7+ billion people in the world who end up losing money, starving, or working twice as hard to make ends meet as a result of the Fed’s policies.


The Fed has killed the capital markets.


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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kurt's picture

Seems like posts are getting angrier and angrier


MGA_1's picture

Oh... Graham has been calling for economic armegeddon since the stock market was 6600 - ummm.... how's that track record for you?

Tall Tom's picture

We are currently in Economic Armageddon.


At ZH we know that the Government figures are INCREDIBLE.


We know that the "Recovery" is a mirage.


You waste both your boss' money and your time, troll.


Give my regards to your boss.


Not one thin dime of my Capital will be invested in US Markets ever again.


Looking forward to the collapse of the corrupted system. I will help it along.

MGA_1's picture

Shoot, I *wish* my boss was the US govt - they pay well and you get a pension !  No.. 6600 to 17000 is nothing to sneeze at - it's just been a better asset than gold since 2011.

Are you really so sure you want economic armagedon?  I truly wonder if people would really have been ready for the type of collapse that would have happened with without the fed interventions.

Comte d'herblay's picture

Whoa.....I was with you till you exonerated the Ben Bernank, Allie G, and  J Yell and their surrogates at Treasury, Lew and Geithner, and Paulson.

The FED and Treasury could have intervened not just for the .01 and done some genuine good for the rest of human beans.

What harm could it have done for CONgress to give Paulson his 1 trillion TARP, AND demand that all that money be used only to begin the repair for all the damage the Investment banksters did for nearly 10 yrs in the MBA markets and 100x derivatives, and not one single Sou used to pay out unconscionable billions in bonuses for abysmal failure.

To take tax money and give Lord Blankfein the protection of the banking industry, at the last second, likely illegally, and allow him to pay himself billions in bonuses is one of the most blatant in your face ripoffs the american people have ever endured.

In China or Japan if that had been allowed to happen would have seen several high level officials with their blood, guts and bile oozing all over the floor.

The fact that the FED has printed a quadrillion dollars and not two decent jobs have been created is an horrific indictment of their only goal to protect the .01.

Without FED intervention, and instead an Attorney General Just Us department intervention into the shenanigans pulled by the Jewish mafia on Wall Street, might have led to some real positive change to avoid these bubbles and  the chief architects of them getting buttfucked at Lewistown, Sing Sing, and Folsom.


Tapeworm's picture

oH WELL, sANTELLI WAS talking up the same notion that the FED has destroyed the price mechanism of the capital markets.


blindman's picture

the fed has destroyed the concept of money, accounting,
integrity, democracy, representative government, civics,
banking, ecology and economics. beside that they have a
nice building with nice offices, a good vault and landscaping.
to a certain taste they dress well and probably shower regularly,
so that is good too.

AdvancingTime's picture

 The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system. In postponing this collapse the Fed has created a whole slew of new problems. More on this subject in the article below.


ramacers's picture

nothing that a few firing squads can't solve.

Pee Wee's picture

Who the hell cares about markets when the Fascist-Fed has undermined the Republic and rule of law itself!?

Horseshit money runs Congress, buys elections, judges and voters.  No one within a country mile of money goes to jail, or so much as facess a criminal indictment.  The poor atone for sins of the rich, while creative destruction was quietly removed by the Fed.

The USA dream itself has been undermined and aborted by the Federal Reserve.

Heads back in the sand, fools.

TheRideNeverEnds's picture

for all intensive purposes

stopped reading there.

Tall Tom's picture

There is nothing better than a closed mind.


If all that you can do is criticize is a grammatical mistake then your opinion is VALUELESS. It is as if it were coming from a child as a Fourth Grader can do that.


Your loss...NOT MINE.

disabledvet's picture

The "best" (you can get) Fed says the same thing over and over again...and then follows through.

Janet "gellin" Yellin is off to a great start.
Simply put "phuck the market."

Their money is what has moonshot the recovery thesis. Let us hope that the recovery appears "con gusto"...but let us not forget that this is their money...not the money in the Soical Security trust fund.

All those securities firms are now inside the Bank...if those operations blow up the Banks (again) then clearly we're going to need fewer Banks.

This disengagement from the Middle East is as ugly as it gets. "But there is always Moar War" folks...especially from all those "God fearing types."

(I never saw any of them Behind Enemy Lines btw. Let alone with nothing more than a pair of flip flops.) My view is that people came to this country to build a New Jerusalem and I fail to see how any God...of any Faith...can look approvingly at what is going on in any and all of this.

"Peace is hard." No one can say the USA hasn't sacrificed going on since Camp David for "accords." If we are now on the side of Iran and the Mullahs be it.

Let those who only wish to make war with Islam...make war with Islam.

America...and certainly not fight these things.

If the media wishes to yammer on about how Americans still support Gitmo and all that entails...hey, if the Supreme Court finds that is Constitutional then there is no need to appeal that.

If the regime has trouble with "the baddest of the bad" going free...TRY THEM IN AN AMERICAN COURT WITH AMERICAN'S WATCHING.

New York City never received the Justice of OBL's capture...and this is indeed just as great in my view as the enormous financial destruction reaped by nothing more than zealots with a genocidal hate.

orangegeek's picture

timing is good


fed claims to do all these things, but they only can when they print $85B per month and have liquid and cooperating corps


energy tanked today - too much supply and economy is shit - we don't bathe in it, so who needs oil when the car has been parked in the garage for the last two weeks


USD getting slammed again today - helps push markets up and keep commodities from collapsing


when we see more banks fail in Europe, this will end abruptly - USD will be the flight to safety

ebear's picture

Misconstruction of “for all intents and purposes

I try not to be a grammar nazi around here (if I were I'd need an entire Panzer division) but that one jumped right out at me.  Sorry.

J S Bach's picture

I noticed that, too, eBear.  Did a double take on the "intensive purposes".  Thanks for clarifying.


Otherwise, and excellent article which exposes the nefarious "Fed" for what it is.


Abolish it... hang the criminals responsible... institute debt-free money... and we're on our way back.

ajax's picture



Nice one 'ebear'. + 1000

falak pema's picture

Thank you very much for this HEADER. the FED is the incarnation of the mantra :  The sky is the limit for those who believe in the God of "free" markets and American Enterprise! 

Like the Christian kings of yester year, the US capitalist Oligarchy has spawned its Mordred. And Camelot is dying in agony as God abandons those who cry in blind hubris "Gott mitt uns!" or its frankish version that launched the Crusades "Dieu le veult". 

Hubris is a killer and mindset change is sooo... recurrent in humanity; history, alas, rhymes. And the bells chime to sound the end of each polluted blood line.

What Hulagu did to the tree of knowledge in Islam; 1258, what the Crusades did to Christianity in dire defeat, what the Franks and Venetians did to Hellenic Constantinople, what Charles V did to the Amerindian civilization and to Europe under the Spanish Inquisition gun, what Pax Britannica did to Imperial Europe --aided and abetted by the Teutonic and Slavic morph under nascent capitalism--, the FED is doing to Pax Americana's US capitalism ideology.

The laurel tree of knowledge is fragile in the hands of men blind from "its all about ME". 

The Oligarchs ALWAYS love to kill their own progeny like Agememnon did to Iphigenie to convince the Gods to give him the wind to go to Troy.

Whom the Gods wish to destroy they first drive mad. Let the wind blow and let Agememnon of our age drink his dregs of bitter victory. 

Troy is forever the place where we all go to meet our Nemesis. 

And Nemesis's role today is to initiate the demise of the Greenback, false God of our age.

Those who pump and those who dump; two faces of the same coin.

Capitalist "free" markets for headless chickens end up where  all dreams end.

Lay on the Apple strudel ideologues of "supply meets demand" all draped in the white of vestal virgins ! 

You can hear the Oligarchs laff and laff behind the tinsel curtain ! 

PS : For those who watch "football", gott mitt uns has fled from the Brazilian camp to another; we'll find out which one very soon !  

trader1's picture

is it very soon yet? ;-)

ebear's picture

NSA killed the internet star

(we can't turn back, we've gone too far)

asking4it2k's picture

So Peter Schiff was right again ???

JRobby's picture

Yes it has. Kiss growth and innovation goodbye until the reset.

Citxmech's picture

If the system needs to blow-up before you can secure growth, should it be called "re-growth" instead?  

Seems like some kind of maintenance program might be a bit more efficient than an endless Keynesian cycling of economic window-breaking and replacing. . .  

JRobby's picture

Maybe. I am not allowed to have razors, knives or scissors so I don't split hairs anymore.

(Parole conditions)

Comte d'herblay's picture

"The purpose of the capital markets is to connect capital with business to create value". 


This demonstrates as nothing else can what a Luddite company Phoenix Capital is.

If you don't know by now that there was a pair-o-dimes shift a decade or more ago, you should stop writing, get up to speed, and then maybe get a job in Academia yourself. 


Blood Spattered Banner's picture

"Capital" in itself is central planning. Only a few have the access to "Capital", and if your not a member (think FOMC governers), you don't get shit.  You might get some smaller bank sucking off the tit of the "Capital" holders to lend you money, but will get raped with interest.

I get the feeling Phoenix Capital is just as bad as other wealth managers and TBTF banks, except they sell "doom porn" in their portfolios. 

Capital and free markets are fucking dead and perversed beyond recognition.