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The Terrifying Reality of the Fed’s Decision Making Process
The Fed is a money-printing machine that wants stocks to go higher.
That’s effectively all anyone needs to know regarding the Fed’s monetary policies. Every other statement regarding the Fed is only accurate for a brief period of time as the Fed continually changes its goals, thresholds, and responsibilities almost every other month.
Throughout this time period only two things thing have been constant:
1) The Fed has continued to print money expanding its balance sheet.
2) Stocks have moved higher.
The reason we suggest this is because, based on the Fed’s actions, these are the only sensible conclusions one can come to. The Fed obviously doesn’t have any forecasting ability. It didn’t predict the Tech bubble, Housing Bubble, 2008 Crisis, Arab Spring, EU Crisis or Housing Bubble 2.0.
Moreover, we’ve been hearing that “growth would pick up in the second half of the year” for 5 years now. It has never shown up. Neither has income, full-time employment, the labor participation rate, or anything else that would indicate a strong economy.
Secondarily, the Fed has proven that it is only too happy to A) ignore reality in the form of any data that contradicts its theories and B) ignore any “threshold” that the Fed itself might establish as a target for stopping the printing presses or raising interest rates.
After all, the Fed suggested it would stop QE and raise interest rates when unemployment hit 6.5%. The Fed predicted this would happen in 2015 (that terrible forecasting record again). Unemployment hit 6.5% back in the first quarter of 2014. So the Fed dropped its unemployment threshold because said threshold was “no longer meaningful.”
Then there’s the Fed’s 2% inflation threshold, which we hit last month. The Fed again ignored this, claiming that the inflation numbers were “noise.” Now Fed Presidents are claiming that inflation might remain below 2% for several years or that inflation might go above 2% and it wouldn’t be a “catastrophe.” The way things are going, Janet Yellen should predict that inflation will be between negative infinite and positive infinite sometime in the next 10 years. At least that would be an accurate forecast.
At this point, one can surmise that the Fed has absolutely no idea what it’s doing and is simply making things up as it goes. Moreover, there’s little hope of reining in the Fed because even if Congress implementing a “balance sheet size threshold” or “number of QE programs threshold” for the Fed, the Fed would simply ignore them.
If the notion that the single most powerful entity in the world economy is ignoring warnings signs everywhere and continues to operate based on debunked and delusional academic theories worries you, you’re not alone. After all, it takes a special type of ignorance or delusion to ignore the fact that the cost of living is soaring throughout the US today.
Here are Food prices.
Here are energy prices:
Here are home prices:
And in case you don’t own your home, here are rents:
Inflation is already a reality. It’s only a matter of time before it gets out of control and crashes the economy and markets. Stocks love inflation at first, but eventually the rising costs destroy profit margins. We’re currently in the first half of this. The second half will be a doozy.
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 http://phoenixcapitalmarketing.com/special-reports.html
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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In the old days the Fed would remain secretive and now they are in the open. This expose of their activities should be frightening to even the most staunch Keynesian. END THE FED NOW
All fine, but I figure "it" doesn't just blow up one day. No, 'it' slowly, steadily fades away into stagflation, as the reality of devaluation and moral hazard gradually seeps in, and the faithful fall off the wagon, slowly and one by one.
Where it ends? Most likely, with something similar to Mexico or Venezuela. But that can take decades. Surviving financially isn't hard, just get "real." However, the big problem will be inherent in political upheaval.
It's no fun sitting inside the gray bar hotel, dreaming of all the doubloons you have buried in the hills. So it's best to work within the system, keeping enemies close in order to front run the chaos as best as possible. PMs, no debt, no substantial visible 'confiscatable' assets, and a couple of escape plans, tailored to different scenarios.
Not a plan to run off the cliff and into some other messed up regime, but more one of slipping into safer, more rational zones amidst the turmoil right here.
Think boiling frog, only don't get in the pot!
So there is a process? I guess that is news worthy..............
The Fed has two sets of mandates, the public ones and the not-so-public ones. Since keeping inflation under control and keeping unemployment low, supposedly their two main goals, have been miserable failures, they are happy to keep quiet in the face of government fudged data. And they will certainly not divulge the secret policies which are very successful, keeping banks rolling in the dough and manipulating equity and bond markets for the benefit of the .01% (including themselves and their owners). The best we can hope for is a slow decline. They've seemed to have given up on the US economy and it's citizens as a whole, as has the government. There has been no attempt to reverse the decades of economic policies leading to our decline, but there are plenty of plans to strengthen them. Examples are the new free trade deals and permanent inflation as official policy.
US & UK Domestic, Monetary & Investment Policies the same.
This is interesting to compared. We are in Stagflation right now deciding if we will be Greece or Japan. But to me we followed the British Empire or Joined them with our "Military Republic". Really the main difference is that the average household debt in the UK is $200K and their average income is like $19K British Pounds (where the US Is $52K).
But clearly with US Debt at $60 Trillion, zero savings, and masses of 90 Million People not working, we are going to join the UK SOON.
IS this Neofeudalism or Neoserfdom?
Clearly the UK Wanted to create or maintain a lower class and dress up the Economy with fake statistics.
The USA has now Joined the Game since Manufacturing Peaked in 1979. The wave of Immigration and Congress calling for Amnesty while minorities and poor people are on food stamps and hurting for Jobs that will never materialize... Obviously there is a Plan here.
People in Power and people with Wealth Just Want Little people to remind them & their Egos of how self-important they are. After all they are Politicians. They are used to it.
And it smacks of New York City early 20th Century, the Triangle Fire, using women for slave Labor, the Abuse of US Miners historically.
Do countries need Slaves to support Capitalism OR Is there a way to continue flirting with Democracy?
Alan Greenspan's portrait should appear on every US Negotiable Instrument. He embodies the Banker-Put whereby every liability is underwritten by taxpayer credit.
He more than any other living being has made the United States the Basket Case of the Global Economy stuffing itself full of debt until it explodes like the diner in Monty Python
fed academics and other academics work for the maggots. policy is maggot policy.
Janet Yellen has chosen to take us down the same the rabbit hole as Bernanke on a journey to prove that if we just continue doing what is not working, all will turn out fine. Caution, this path leads down, and down, and down, farther and deeper then most can ever imagine. If asked to critique "Old Yellar" now playing in theaters everywhere I would by way of the reasoning above have to give her the maximum two solid thumbs down. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/yellens-job-critique.html
Why does the FED keep printing money? It’s engineering the crash the Federal Reserve Note. The FED has already stolen the gold in Fort Knox and going to buy up lots of property when the crash comes with the U.S. taxpayers own gold.
the game was been played, if you weren't at the fed. meeting,( or behind the scenes buying political power to save your ass ), voting on qe1, and you can't borrow billions from the fed. at 1% or less your the loser.
when is it going to be OBAMA'S FAULT..... (only when he takes up tennis)
So is it time to buy gold yet?
3% inflation...... libtards call it "economic growth".... plus pelosi told us "unemployment is good for the economy" ... and other gems... with RETARDS IN CONGRESS AND FED POLICY FOR THE ULTRA RICH... what can possibly go wrong.... I love the unemployed barking about the wave of illegals and the benes they are geting... coming soon is the "burn baby burn" crowd full tilt boogey...wait til obumbler-care really kicks in and premiums skyrocket( the dumbasses like obumbler care because they neglect the DEDUCTIBLES) and the economy totally disappears... except the insurance companies of course... WHAT WAS IT $1 BILLION THIS YEAR TO "OFFSET LOSES".. HEY THAT'S "CRONY CAPITALISM" AT ITS BEST...cbo estimates a trillion a year once the prong is fully inserted into the taxpayer rectum..only $16k per TAXPAYER/YEAR TO INFINITY... Now tell me, you been living "illegally" in the ussa for years and now there is a new wave going to get amnesty... are you going to turn yourself in and claim youare a new arrival and collect all the benes??? why not? so the 350,000 will morph into 25 million in no time... now that is going to boost the economy for sure....
Regardless of what you name it the "Federal Reserve Nightmare" or the "Yellen conundrum", the box Ben Bernanke made when he painted both himself and the Federal Reserve in a corner remains. Bernanke has by passing the chairmanship to Yellen escaped from the QE trap but left the rest of us fully in its grasp.
With a policy of loose and cheap money the Federal Reserve continues to please those gambling that not fighting the Fed guarantees profits. Meanwhile Americans are forced to pay higher food, gasoline, and health insurance premiums, Any thought that inflation is not higher has come from the false illusion brought from lower payments on things like auto loans and mortgages, this is a one off and will not continue. Big Trouble lurks ahead. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...
Ryan Dunn's Porsche GT3 was absolutely flawlessly beautiful up until the exact moment it slammed ass end first through the guard rail and flew 150 feet through trees as a flaming unrecognizable fireball.....
Why do we expect the global financial system to be any different?
It will "work" all the way up until it doesn't
They've ROBBED savers, expecially seniors of over $1 TRIL since 2009, it's a clear Crime vs Humanity !
those fools should have just bought the S&P, even Obama told them it was the time to buy!
Pays a larger dividend than the bonds yeild and thants not counting the capital appreciation what with the value going up every day.
Sad, but true.
What savers? Money in the bank, bonds and pension funds is an investment ... not saving. A market collapse would have lost them a lot more. The Fed's can kicking gave them an opportunity to divest.
Divest to what?
Live chickens and vegetable crops, throw a little blubber in there so when people are trying to put meat back on their bones they can speed up the process.
Making Boomers pay for the awful leaders they keep selecting ... Bush, Clinton, Bush, Obama were our choices over Dole, Gore, Kerry, McCain, and Romney ... WTF ... these are the 'Best' Americans to lead us ... well then we deserve what we get.
Don't blame boombers. The political primary process is a beauty pagent for a preselected gaggle of hags that someone else owns. As George Carlin said 'you aint't in the club', neither are boombers.
What's so terrifying about juggling chain-saws while standing on rickety platforms propped up by 55 gallon-drums filled with nitroglycerin?
Where's your sense of adventure?
Print moar welfs & SERVE UP THE POPCORN!
When we understand that the Fed is trying to keep the dollar alive and that it's actions do not have much to do with the economy, we can better understand why they do what they do. Much of what they (and the Treasury of the USG) do however is done where no one can see....so that makes figuring out what is happening a tad harder.
Ever since Greenspan the Fed has been trying to keep the dollar alive....actually Volker was the first to confront it's limited lifespan. Volker had the luxury of a good economy and less of a deficit so he could raise interest rates.
Yellen really has few options and they all involve tossing money into the hyperinflation engine. No doubt they will continue to purchase derivatives to keep rates low and markets up. Eventually they do not run out of money but the money runs out of buying power. Then it is over for the dollar.
The amazing thing is how long they have been able to keep this sick dollar alive. Truly awesome.
PS Dollar creation is inflation, it may not show up in daily prices in the USA but it does show up somewhere.
nice phrase: "keep this sick dollar alive". I find it sickening too.
I agree. The FED has proped up their Ponzi impresively, but the end is the same. As an investor I wish I had a reliable leading indicator to know when ever more crative FED actions and lies finally crash. My bet is that the reset trigger will happen first in Europe, or China then the US. I am mostly cash and not shure where to go.
When they get the guns.
http://www.nraila.org/legislation/state-legislation.aspx
"...This is a serious blow to the anti-gun activists and the billionaires behind this effort who are trying to push their handgun registration scheme disguised as a “universal background check” measure. Initiative 594 is sponsored and heavily funded to the tune of $2.5 million by wealthy elitists who have created the front group WAGR to push their deceptive and misguided proposal to uninformed voters."
ditto +1
The article says "At this point, one can surmise that the Fed has absolutely no idea what it’s doing and is simply making things up as it goes."
Or maybe the Fed knows exactly what is going on and has decided that we can't handle the truth.
"Or maybe the Fed knows exactly what is going on and has decided that we can't handle the truth."
Or maybe the Fed knows exactly what is going on and has decided that it can't handle a rope around its neck...
Janet Yellen will keep on lying, and the media wont ever call her out on it.
The truth is the FED can't raise interest rates without crashing the big banks. Amazing these so called "expert" economists and media keep falling for the FED's lies.
** Like the FED hasn't actually tapered, and is secretly telling their primary dealers on Wall Street to buy US treasuries via EUROCLEAR in Belgium ??
Average inflation as shown by those charts is around 3%.
And why exactly is that acceptable?