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The Fed Has A Big Surprise Waiting For You
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
Risdon Tillery Greenwich House day care, New York May 1944
The topic of potential interest rate hikes by central banks is no longer ever far from any serious mind interested in finance. Still, the consensus remains that it will take a while longer, it will take place in a very gradual fashion, and it will all be telegraphed through forward guidance to anyone who feels they have a need or a right to know. Sounds like complacency, doesn’t it?
Now, it seems obvious that the Bank of Japan and the ECB are not about to hike rates tomorrow morning. In Europe, dozens of national politicians wouldn’t accept it, and in Japan, it would mean an early end to many things including Shinzo Abe.
But the Bank of England and the Fed are another story. Though if the Yes side wins in Scotland next week, the narrative may change a lot of Mark Carney and the City. That leaves the Fed. And it’s important to realize and remember that, certainly after Greenspan entered the scene, speaking in tongues, the Fed has become a piece of theater. The Fed is about perception. About trying to make people believe something, and make them act a certain way that they choose for them.
That’s why after the Oracle left they pushed first a bearded gnome and then a grandma forward as the public face. The kind of people nobody would perceive as a threat. Putting a guy who looks like second hand car salesman in charge of the Fed wouldn’t work.
Not when a big financial crisis looms, and then continues on for a decade and counting. That makes keeping up appearances the no. 1 priority. That’s when you want a grandma, or you’d lose your credibility real fast. You need grandma for your theater, for the next play you’re going to stage.
That market volatility today is at record lows is part of a big play, or a big scene in a play if you will. And the goal is not to make markets look good, as many people think. Making markets look good, making the economy look good, is just an intermediate step designed to lure everyone in.
You make people believe you got their back. All the big investors. Because they make tons of money, while they thought maybe the crisis could have really hurt them. Even the public at large feels you got their back. Because they don’t understand what the sleight of hand is.
The big investors understand, but you got them believing you will play that hand forever, or let them know well ahead of time when you intend to fold. The big investors think you will skim the public, but not them. They think you’re all on the same side. And the public thinks you’re healing the economy, and saving their jobs and homes and pensions.
When rate hikes are discussed, like I did two weeks ago in This Is Why The Fed Will Raise Interest Rates, most people have similar initial reactions. ‘They can’t do that, it would kill the economy, or at least the recovery’.
But the truth is, there is no recovery. It’s just a scene in a play. And the economy is completely shot, it only appears to be left standing because the Fed poured oodles of money into it. Or rather, into a part of the economy that it can control, that it can get the money out of again easily: Wall Street banks. And Wall Street equals the Fed.
Charles Hugh Smith, in What If the Easy Money Is Now on the Bear Side?, notices that there are hardly any bears left in the market, and that shorts are disappearing as a source of revenue for bulls. Interesting, but he doesn’t yet connect all the dots. CHS thinks big money managers can make ‘the play’, that they can fool the rest of the market and unleash a tsunami that will bury the bulls.
I don’t think so. I think what goes on is that the Wall Street banks, many times bigger than the biggest money managers, see their revenues plunge. As they knew they would, because free money and ultra low rates are not some infinite source of income, since other market participants adapt their tactics to those things as well.
Which is what Charles Hugh Smith points to, but doesn’t fully exploit. And it’s not as Wolf Richter presumes either:
After years of using its scorched-earth monetary policies to engineer the greatest wealth transfer of all times, the Fed seems to be fretting about getting blamed for yet another implosion of the very asset bubbles these policies have purposefully created.
The Fed doesn’t fret. The Fed has known for years that the US economy is dead on arrival. They’ve spent trillions of dollars backed, in the end, by American taxpayers, knowing full well that it would have no effect other than to fool people into believing something else than what reality says loud and clear.
Philip Van Doorn, who I quoted two weeks ago, got quite a bit closer in Big US Banks Prepare To Make Even More Money
For most banks, the extended period of low interest rates has become quite a drag on earnings. Net interest margins – the spread between the average yield on loans and investments and the average cost for deposits and borrowings – are still being squeezed, since banks realized the bulk of the benefit of very low interest rates years ago …
That is the essence, and that is why grandma will announce higher rates, against a backdrop of 4% GDP growth numbers and a plethora of other ‘great’ economic data and military chest thumping abroad.
The US economy is dead. The Fed has known this for a long time, but pumped it up to where it is now to draw in all the greater fools, the so-called big investors who have made money like honey from QE and ZIRP. They are the greater fools. The American real economy ceased being a consideration long ago.
We’re in for big surprises, and they won’t be pretty, they’ll be pretty nasty. There are far too many people who think of themselves as smart who don’t see the difference between a theater play and a reality show. And I don’t mean CHS or Wolf, they’re much more clever than your average investment advisor.
The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it.
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logicalman,
And you're probably right that, the US does NOT have the gold that they say they have.
I would be surprised, if they did.
E I
you missed an 'or'...the price of gold would have hit $50,000....remember it went up 20 fold between 1971 and 1980. The ONLY reason it did not continue is that Volker raised rates. After that the rise in gold would have continued again but something else transpired...the Saudis were allowed to get gold in other ways, lots of it.
Real wealth at the sovereign/Central Bank level is gold...nothing else...everything else is just a paper place keeper.
Once again gold will rise, probably by 30 fold this time and all this debt, just bad promises, will disappear. Those with gold will have the only wealth that is not held in real material things. It won't be painless but it will be definitive.
LVP,
Good morning
Firstly
For what I read, Volker raising interest rates had two affects…, of many, of course:
1) Offset Saudi Arabia low oil revenues while decimating Soviet Union Empire
2) Lower US inflation. Of course, skyrocketing US debt.
Secondly
I said it before and I’ll say it again:
I believe gold will be the last bubble that we will ever see, before we having to face the coming humanity crisis
I believe shorting the dollar will be the trade of the century, even that most of these traders will go broken before the US
I believe that real wealth is:
1st) That you and your family understand reality as is… And not as our deluded mind tell us it wish
2nd) Arable land in Paraguay
3rd) If you stay in America, it needs to be away of both coasts and over undergrounded water. And this community/town has to be small, united, and heavily armed. Gold will mean nothing for these folks. Access to medication and doctors, that’s gold.
Thirdly
The next billion people will be the last billion
Note: US can ‘buy’ some more time as long as:
a) Keeping getting more Light Tight Oil (LTO) shale. But it’s unlikely because of the level of difficulty (it will be very costly. Not worth).
b) If Putin goes Yeltsin… take the money and let Russia be divided. That should give humanity 5/10 years.
Then, 2027, the latest, most people won’t have oil, natural gas, and followed by electricity.
Jobs?
Are you kidding me?
We will be talking survival, Buddy!
Not enough rope in TX for these demonic motherfuckers!!!
They will have to answer for the Molestation of the Middle Class.
As is pointed out the FED and all central banks are privately owned. Who says they just don't say? WE give up. And walk off with their bag of marbles?
At some point it has to no longer be about the money. It is about the control, the power. Evil.. EEEEVILLLLLL
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/12_Paul_Craig_Roberts_-_Worlds_Most_Powerful_Banks_To_Loot_U.S..html
Everyone has a delusional dollar mentality. the green paper has been the phantom goal all our lives, it's all we know.
but what happens if and when hyper inflation takes hold? when the holy dollar finally becomes a bad joke that first the world turns its back on, then the late to game average american? at that point he with the most dollars could in actuality become the biggest loser.
There isn't a cat in hell's chance of an interest rate rise BY CHOICE! Certainly, the TBTF banks would lap it up, but the key problem for the Government and the Fed is the corresponding increase in bond yields. External debt is mostly short term and the effects would be felt immediately. The cost of serving the national debt is around $233bn for 2014. Rates only need rise by 1 per cent to have a massive impact on Government finances and an increase in the deficit is bound to occur. Since most economists do not forecast an increase in GDP above perhaps 2% an increase in rates can only lead to a vicious circle of money printing and bigger deficits which will lead to massive inflation. After that, yes! interest rates may well go up. . . . though not by choice! But because the markets will finally get rid of this phony economy built on artificial interest rates!
jubilee (call it default if you like), when it comes, the main problem for those working for and protecting the wealth of the .01%, is how to position them to keep the bulk of the elites wealth and power in what comes after. all the rest is show.
An economy that isn't "revived"; ie. producing, doesn't have any wealth to be sucked out of it; all that can be sucked out of it is paper numbers; to which one can reaply; :"good luck with that".
I don't get it. This essay doesnt have enough meat to chew on here.
I really don't see a catalyst for rates to rise. I really don't.
It's called the "harvest" and the sheeple who bought into the "recovery" and thought they were safe are about to be introduced to a terrible term in finance that even Tyler hasn't used:
PLUNGER RAPE
In the bond business we called it "Skull fuck"
After you'd taken everything possible with no remaining bones left to gnaw upon, you took the skull and fucked it before throwing it away.
The ultimate degradation.
Egor: Fuck me man, there's nothing left.
Satan: Oh yeah, watch this
LOL, skull fuck is so 1990's. JFK.
In the twenty-teens, they throw away the skull, and fuck the neck hole that it was attached too.
ISIS releasing video soon on pay-per-view.
this is true. These creatures whose dynasties lurk among us for hundreds of years see the equity of the middle class as fruit in their orchard.
Its harvest time in America, man the lifeboats and park their controlling shares in ASIA, where they will be harvested cyclically over the coming decades
Asia?
Bush bought Paraguay.
Is that a plumbing term?
SURPRISE!
We're returning to a gold standard.
>Crash this year
>Next year
Buy the Diplodicus
I think we crashed 5 years ago and we are still in a coma, not yet aware that we are dead.
The fed has had us on life support, but that has been very costly, and we don’t have insurance (jobs)
The Banks want to pull the plug.
Here is a nice chart of the patient over the last ten years;
https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.html
Just te final bowel evacuation, and the corpse is ready for burial.Nice and shallow so it
can be used as a 'grow bag'.
Thank you Dapper...very good chart and definitions.
My youg son and I are interested in Economics and he is just starting in high school, so I read the site and showed him how the BDI works and why it is interesting.
That website and book are very good stuff.
Agree 100% with your good comments. I believe debt is borrowing from the future and next generations, without a plan to pay it off (or any hope), so it is all 'life support' for a dead patient.
Good analogy...and ties in with some cyberpunk and Matrix concepts.
Which crash?
The market maybe this year, no later than next year. But the big crash, 2016. End of the (financial) world, my bets are 50/50 by end of 2018.
I think there will be continuing gut punches until even the sheeple can see the inevitable, with an ongoing demonization of the west/build up of the east meme (BRICS) until the dollar loses its reserve currency status when it is voted down in January (and replaced with the SDR by the BIS). So: most of the events leading to the inevitable fall happen this year, but the death blow to the dollar happens early next year.
Note: this doesn't preclude a crash in the markets this year. That could happen, and the dollar could still hold some value until it is voted out.
I just hope gold/silver/canned foods/lead remain 'on sale' for a while longer while I expand my bunker...
This is the end my friend
https://www.youtube.com/watch?v=JSUIQgEVDM4
Jim Morison
My brain is squirming like a toad...was Morrison offed because his daddy didn't like his anti-war stance, being a rear admiral in the navy and in charge during the Gulf of Tonkin false-flag incident?
Harvey Organ says metals will reach their true value before end of year...Harvey is not on my list of trusted people, I prefer Jim Willie, but he gave much evidence why it will happen...However it works out, I truly think before next summer, people will be waking up in a different world. I also think they are grabbing at straws right now until the November elections...After that, it all cuts loose.
I saw that video too. He made some good points. But a rate increase would crash PM's i think? which would benefit TPTB right?
I saw it too, Harvey is awesome! LBMA CME and Comex all busted before the end of the year. I'm not holding my breath, but I will be laughing my ass off if he is right!
good point troublesum..I like most others do not have a clue, we are jsut trying to put the pieces of the puzzle together, and I do enjoy
reading comments on ZH, they give great information. I like reading different opinions..The book of Proverbs says "A wise man has many cousels". :-)
When? Once there are wide restrictions/monoply in travel.
Anyone making a dated prediction like that will be made a fool of...
Dated predictions are not a good thing I agree....When you ask Jim WIllie when it will happen, he says "the 52nd day of September" :-)
Agree with Hulk, but...now the Pope believes we have scattered WWIII, that opens the door a crack wider ?
I believe the real issue is the debt and no way to pay it off...so there is no more funding to do productive things...and only negative/destructive gets funding...to land grab the good things.
The debt or the war, or both, or the annexation, or the exit (Scotland, UK, Portugal, Argentina, etc.) from 'the system' will trip a tipping point.
Pope started the point ? Is there a clock, or is something falling-crashing now ?
So you prefer a guy who has no better track record than all of the other PM pundits and, to add to it, believes that robots are stealing his luggage (absolute whack job, JW is).
Well he is entertaining at least, and no matter how wild his predictions he still beats the hell out of listening to/watching the main stream media, but ya I wouldn't bet the house on the guy.
Haven't heard the luggage stealing one, but on one of his interviews he started talking about US troops using ray guns and mind control and stuff...He should probably stick to geopolitics and finance.
I went to my search engine and type in "harvey organ luggage robots" and found nothing...Please provide a link.
>> "harvey organ luggage robots"
I think they were talking about Jim Willie.
OK good. But the FED is no longer the WORLD. And it still remains that a rate increase will bring down trillions in derivatives everywhere this octopus goes. So yeah some favoured banks may make a buck more but what are the repercussions through all economies everywhere?
THIS is a serious question by the way. Trillions in derivatives interconnected throughout the world. Based on % rates, bonds. Personal debt everywhere. Raise the rates? What bank anywhere has a balance sheet that can absorb the losses?
So someone please explain this to me.
WW3
Why would favored banks care about repercussions through all economies everywhere, if that interferes with them making a buck more?
Nobody seems to care about sustainability anymore.
Just make as many bucks as they can this quarter.
The Fed is but one tentacle of the global squid. All other central banks are likewise functionary tentacles. They are pawns working together, guided by a higher hand. The parrot beak in the middle of the squid tentacles strive to ignore the rule of law until we are all survielled and destitute. Once the whole world is broke and at each other throats, they will bring in the rule of "law" and use it to "save" us from ourselves. Saving us from the problems they caused.
The squid brain believes we will greet them as liberators. Nope.
Will Gramma wake the Bond Vigilantes?
Grandma Yeller IS the Bond Vigilantes. What the Bond Vigilantes WANT has not changed: how to get it HAS changed.
Wake the fuck up.
Yeah, whatever. But it's hard to see a bond rout being advantageous at this point. Unless the Fed wants Congress to finally put it out of it's misery.
The general public seems to be getting savvy to it's schtick.
Bond vigilantes are a extinct species. Bond speculators replaced them long ago. Bond speculators sit down the hall from the stock speculators. All their paychecks are signed by the same entity.
Ill admit I believed raising interest rates would come long after more rounds of QE but this argument has merit. If a rate increase comes before another round of QE then a serious question is what happens to my PM's. Im 30-40% PM's (physical only) rest cash cause i just don't know which way this whole thing is heading?
The Fed is not independent, it is political. It is there to provide low cost funding to the Congress that bestowed it with power. They have no intention of raising rates and causing deficits to swell.
Correct on all three counts, they are trapped.
Now for something completely different!
http://www.coyoteblog.com/coyote_blog/2014/09/prices-paul-krugman-and-consistency.html?doing_wp_cron=1410546556.8293058872222900390625
Or not ;-)
khakuda. almost. but not quiet. you got #2
#1 - the fed is there to make the big banks money.
#1 - (let's repeat). the fed is owned by the big banks. they are there to make the big banks money.
#2 - the fed does what the big banks tell them to. if it means 'trickle down' to corrupt congressmen, and if
at that time it will help make the big banks money, they will do it. indirectly, secondary, 'it is there to provide low cost
funding to the congress' (for now i will ignore 'that bestowed it with power'). currently, it provides low cost funding to the congress, to vote to spend money for MIC and congress gets it's kick back from MIC.
#3 - the BIG BANKS FUND MIC. (the tax payer ultimately, but the big banks make the loan and we pay it back).
#4 - at this point in time, if and when the FED decides NOT to fund congress, they will not. and then NONE of these congress clowns would be elected if they did not have BIG BANK FUNDING. big banks point the money at the people who WILL NOT 'unbestow them'. never. ever. will never happen.
even though there are very effective 'community organizers' who can gets lots of ghetto people lined up for votes after the free chicken dinners.
and the MIC knows also who feeds them. if they get pissy, they get unfunded also. and the big banks can go fund the 'other guys' that will take the current MIC guys out, even if they fund other countries, (aka - 'enemies of usa').
been done before, might be done again.....
it could be different, but it's been 100 years now in the USA like this.
Ok, lets just go ahead and get this over with.
The Fed funds the MIC & welfare = War AND Welfare. The government (Congress & Executive branch) obliges both, its not a one way street. You can choose to focus on the MIC and ignore corporate AND individual welfare all you want but thats what .gov & the Fed does.
Are we all awake yet? ;-)
The Fed funds the banks, that funds the government.
MIC is part of the government.
Wall Street is part of the banks.
And corporate and individual welfare comes from?...
nmewn,
Why many here make is so complicated?
US is a Corporatocracy (corporations and banks run by the Power Elite) and that the President is the manager.
Corporatocracy = Weak national parties and strong political representation of individual districts, large U.S. military establishment, big corporate money financing election campaigns, and globalization tilting the balance away from workers. — Jeffrey Sachs
The Fed does not care about the individual welfare (Bread & Circuses), because they know that are NO solutions. Fed protects the Core.
The individual welfare is for the politicians to take care of it. We can have a conversation of what should or what should not be subsidized by the government, but it wouldn’t make an iota of difference, because you and I don’t have the power to change Jack shift.
Before I answer, where are you from...originally?
Just a curiosity question, there is no right or wrong answer.
nmewn,
Brasil! And I live in DC.
Thanks, I just like to know the background so I can try to frame it so it makes sense to the person (of whatever culture).
EVERY government is a corporation. The first instinct of any corporation (and the duty of its "officers") is to protect the corporation so it can grow and make the "officers" wealthy.
The very first AND last act of any government is self perpetuation, at whatever cost to anyone else. Government has its rulles and bylaws just like any corporation. If you ever thought it was anything else, you were wrong.
If you would like proof of the devolution of corporations as a construct of the power of governments look at where the pensions are now.
Largely government.
You chose well, just realize, I am its enemy ;-)
You know we can see your voting history and see how big of a neocon you are, right?
And you know I can see yours and know what a wretched little turd you are don't you?
Let me tell you something about myself, I am not a pacifist, never have been, never will be. I may have libertarian leanings but I am not going to commit suicide or allow someone to harm me (or mine) to make some surreal idealogical point, that I met my death most honorably, clutching my cherished values unto death. Thats for idiots, like you apparently.
No, you don't know me at all.
You however, "Slave" spend a great deal of your time pointing to Saint Pooty and his oligarch angels as the second coming of Christ (I assure you he's not) and everything wrong on this entire planet is the fault of some vast western conspiracy centered on me...as opposed to the billions of others who have differing opinions and objectives.
I've never disguised myself, I'll even spell it out for you, I'm a ruthless motherfucker, recognizing no marquis of queensbury rules when it comes to my (or mine) asses on the line just like any other non-pacifist.
I hope I've made myself clear, put your hands on me and I'll kill you.
Uh oh, I struck a neocon nerve on the internet tough guy.
I've made this clear before, I like no oligarchs, but I definately enjoy watching Putin piss in our Zionist cheerios. You, however, tow the Republican party line to the letter. You can call yourself libertarian all you want, but you're champing at the bit for the next war and the next (R)etard president to vote for.
You, young boi, couldn't be more wrong.
It was I who proclaimed myself as one of the first TP on ZH and exposed myself to the arrows of idiots like you. TP is not establishment "republican". The establishment republicans AND democrats are the ones who attack us. McCain said we are hobbits...lol...and naturally your cohorts relied on the tried & true...razzzist angle. So predictable.
You guys kinda stepped in it with the whole teabagger bullshit though but whatever.
I am a fiscal conservative (but now that doesn't matter at 18 trillion) with libertarian tendencies, just like I said.
And you would be exactly what, besides a slave hurling unfounded accusations?
/////////
And thats it? Scurry off without any quid pro quo even though you knew what I am and tried to make me out as something else. Its ok, I know, its what you do.
I think you forgot your meds.
Its getting late but I think you need a diaper change before you fuck with me. So...I'll see you in the morning after your mommy changes it.
That's three times now we've gone at it. Everytime I call you a neocon, you call me a liberal, I tell you how I'm not a liberal, but you don't ever tell me how you're not a neocon.
*sigh*
I feel like I'm arguing with a senile old man.
Both of you are missing the point.
They love when we do that. In fact, they count on it.
Tactics without strategy is the noise before defeat.' Sun Tzu
Fellow south American: they touch you, oh yes they do, daily, in ways you don't even realize if you don't just stop and think about it.
Yo Slave:
evidently, from this interaction, you have shown yourself just to be an asshole.
That comes from any race, religion, nationality or age.
Some assholes just don't get it that they are, well, assholes. and not real people of whatever body parts they might wish to assume.
I'm rather exercised about this because you have been rather boorish in the process.
- Ned
thatz my reddie, asshole
If I couldn't be more wrong, please tell me where you differ from neocons.
I was excited when the TP emerged too but I realized they were not what they seemed. Unforunately most grassroots TP don't see it yet. TP and neocons believe the same things. It grows more apparent with every day. TP has been whipped into shape in Congress. It doesn't matter who you vote for.
Since when do you think somebody who throws "Zionist" around would ever play the liberal racism angle?
I am an actual fiscal conservative, similar to Ron Paul, but the difference between me and you is that you are not fiscally conservative on foriegn policy (neocon).
lol...you were "excited" were you? I was enraged, still am. You have no fucking idea.
If you would have been paying attention I was saying cut the europeans loose a long time ago on "purely fiscal" principles so that rings more than a little hollow.
perhaps it is the fluoride? but it is something,
maybe just genetic stupidity or some self destructive
recombination of amino acids, however ...
.
we have entered what appears to be an age of
ethnocentric military dictatorships or fiefdoms
dedicated to the proposition of self mutilation
and general environmental destitution. the entire
phenomena seems to be facilitated by some form
of collective stupidity here and abroad reaching well
into the federal and feral levels.
i hope there is a cure and i hope it will be
discovered very soon, maybe you have it in your
place somewhere?
it is the electromagnetic fields
being amplified at regular and
disorienting frequencies; making the
internet grow at the cost and expense
of your brain and bodies electromagnetic,
historically and naturally established,
resonance.
no?
i'm with you buddy - i was trying to keep it brief.....
I know. But we gotta get the whole story out there so people can decide whether to keep living a lie...or do something about it.
I gotta say, human nature being what it is, I don't hold out much hope.
Awake and asking questions.
No matter what or where funding goes. Banks everywhere have NO BALANCE SHEETS that can survive a rate increase. Toxic assets now marked to "maturity" with fantasy evaluations. Derivatives that explode over the WORLD GDP on any bright forecast.
No bank in the world would survive the "tit" being weaned for the sake of a few bucks on what???.
AGAIN serious question. How can this "globalist paradise of folly" even contemplate allowing rates to rise? Without imploding every balance sheet everywhere?
Again I ask.
and SHORT OF any answer. I will speculate war is the only way to dig out of this nonsense. Then the hope is to be the victor and dictate the penalties/returns. PLUS excuse your own debt/steal all the gold in the process.
ONLY way I see is if these idiots have assured themsleves that world domination will write off all their excesses...allow take over of every resource chain. Make every losing nation fully accountable for every debt in every way PLUS reparations.
Erase a billion or 12 billion people.
And forgive all favoured banks (maybe 4). Hold every other asset holder hostage for every dime owed PLUS %. Make sure it compounds so private property is a thing of the past.
And forget personal debt. That is where the rates will go to 30% overnight. Or more.
No, not short of answers, just getting a beer ;-)
Yes yes, banks are convenient whipping boys (but for who?) and I agree that a banks balance sheet is like trying to untangle a gordian knot as to assets & liabilities.
But...again...they are "highly regulated" by .gov, one of the most (if not THE most) regulated "industries" (lol...I even hate calling it an industry) there is.
With a wink & a nod (and a stiff penalty at the expense of the dollar you labor for) the plebes are satisfied once again for a while. Yes, "They got their come uppence, those damned criminals!!!"
Did they now, did they really?
Corzine in jail yet, any "Friends of Mozilo"?
Its incestuous, its what people need to realize.
Yes, incestuous arm-wrestling but who controls the $ spigot? There's the leverage. If .gov had the juice it wouldn't be all slap-on-the-wrist. Sorry but BIG banks/FED are running the show. They made sure we have winking and nodding chimps in D.C. so when they say "higher rates or war", there's no one at home to come up with anything else.
The leverage is created by law. They depend on the respect for law.
But what is law, if it is not right & just? Without that, it can't be law, the Fed has no army to support it and only the worst dregs of any society would support it even if it did have that army, if they knew what it was.
Duty & honor remains with the people, unless they're mercs and mercs know what their fate always is.
Right on, and Congress would love nothing more that to regain control of the purse itself.
As it should. Save the Fed. Federalize it. But the people in congress, well, that could be a problem.
dead and dedicated to causing death. it is the money
system stupid.
.
http://www.youtube.com/watch?v=i_di1hlm2Ug
The Angels Rejoiced Last Night-Gram Parsons Emmylou Harris
Gram Parsons, wow, last time I was out in California, I took a little trip up to Joshua Tree to see Joshua Tree Inn room #8 where Gram Parsons and Keith Richards use to party and make music...what a lose.
Some great pics here>>>
http://selvedgeyard.com/2010/03/21/1969-desert-trippin-gram-parsons-anit...
aaahhh link, thanks for that.
From "Before They Make Me Run" by the Stones, Keith singing.....
Booze and pills and powders, you can choose your medicine
Well here's another goodbye to another good friend
After all is said and done
Gotta move while it's still fun
Let me walk before they make me run
(about Gram P)
Gram Parsons - She
http://www.youtube.com/watch?v=t6YMdZdD9iQ
i should have asked " what is dead yet remains
animated and dedicated to causing death?"
(zombie)
it is the money system stupid.
.
Sing Me Back Home-Gram Parsons
http://www.youtube.com/watch?v=lgAVzk2T4jU
.
Gram Parsons - Kiss The Children
http://www.youtube.com/watch?v=vuWZNZTU-Z4
.
Well, it's said my life has been so free and easy
But I'll tell you now the story isn't so
'Cause I've spent a lot of time down on the corner
Tasting tears and spilling whiskey on the floor
Such a shame that it's so hard for me to tell the truth to you
But by now you know the kind of man I am
So don't turn your pretty face away from me, dear
'Cause there's kids in this game don't understand
One more night like this would put me six feet under
But my heart will still be fighting for your love
Just remember, little darling, that I love you
And kiss the children for me, please, before you go
So don't play this crazy game with me no longer
'Cause I won't be able to resist my rage
And the gun that's hanging on the kitchen wall, dear
Is like the road sign pointing straight to Satan's cage
And the gun that's hanging on the kitchen wall, dear
Is like the road sign pointing straight to Satan's cage
blindman,
Your style reminds me of an architect friend that moved to Spain.
You are not him, are you?
no, i'm not him in the usual way of
identity attribution. i have never been
to spain so that can't be me.
i do, however, have a very close spiritual/ musical
adviser and friend who was a licensed architect
before he moved to florida where the spanish
language is ubiquitously spoken.
perhaps you are seeing too deeply through
the semiotic blanket of delusion placed all
over this?
"The Fed doesn’t fret. The Fed has known for years that the US economy is dead on arrival. They’ve spent trillions of dollars backed, in the end, by American taxpayers, knowing full well that it would have no effect other than to fool people into believing something else than what reality says loud and clear.And Wall Street equals the Fed."...
Explains in 2 sentences Fed policy since TBTF fucked everything to hell 6 years ago!
And our epitaph
"The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it."
Shame on all of us 6 years later for not demanding answers, "arrests" and the real change that might of lessened the damage!!!
Remember the Occupy movement? How'd that work out....
War is next.
Don't bother, it's here.
It died just about 2 1/2 months ago when the housing market suddenly keeled over
Might also be firing for effect, and to see if some offing can be gained between .25 and zirp, to provide ammo for the next shakeup? Dunno, but it feels like something is going to pop soon.
Gramma's going to lose her cookies before this is over.
Hopefully televised.
Well i guess the Fed will own the Govt. because govt cant afford the interest expense on 17 trill. Too many places gonna being laying off and closing to trumpet big GDP. Seems they can only mask economic malaise for so long.
Time for another 9/11 event then, oh! I know, we could have a crISIS. Any excuse to fire the printing presses to warp speed.
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” - Ernest Hemingway
So the fed can raise interest rates and destroy the stock market consequently putting the government's tax obligations into an immediate death spiral, or they can: pretend to start raising rates, then print print print. There is no way out. They will print until the system blows up.
There is no other way for them now.
My opinion: They will print like it's never been done before. Hyperinflationary collapse, etc. etc. crISIS (CIA whatever) meet the Fed, Fed, meet crISIS. You guys are going to be the best of friends and print lots of money together.
They will nuke a US city, or start WWIII before they allow their guilt to be exposed. Raising rates will expose the guilt. They don't want that. They'll sacrifice untold millions of innocents instead.
And that's how they all end. Destruction of the currency. Nothing new under the sun.
Risks will become apparent and tangible (energy, products, etc. will rise inflation) after Scotland, UK(IP), Ukraine, East Europe, Spain, Portugal, Italy, Argentina take falls this year.
Many could leave their union, or join others.
Then rates will rise and fiats may collapse.
Could come many ways.
We are so fucked
Wait a minute. WAIT a minute! WAIT JUST A FUCKING MINUTE!! Are you insinuating that the cheese in the mousetrap is always free?!?!
I like that. " cheeze in the mouse trap is always free " ? Going to use it. Thanks.
You are welcome to it, with one small caveat: If you use it when alcohol is being served, you must solemnly raise your glass and loudly say, 'This one is for the Asscannon'. And then make a circle with the thumb and forefinger of your right hand and hold it over your left eye like a monacle as you take a drink. And if anyone asks you what the hell you are doing, you have to say, 'Don't ask- they'll kill me if I tell'.
So confusing...so does the Fed work in league with Voldemort or are they just a bunch of bumbling idiots? Is the Fed ruled by the same evil bankers who's livelihoods would be ruined by a collapse or by some hidden Sith Lord? Or might they just be playing the same part Gideon Gono played in Zimbabwe or Rudy Havenstein in the Weimar.
Currency systems come and go like hurricanes, they make a mess and then just blow them selves out. These folks are just doing the job central bankers have always done....run the currency until we the people order them to print 'just a little bit more'. They do that and then their jobs are done.
The next currency system may be better, maybe we'll hate it too.
any currency designed as a wealth prevention tool, like the USD, for those who exchange work for a wage MUST be hated like the life stealing plague it is.
its time for a new batch of patriots, who have the backing of a lucid public.
I guess we are all entitled to opinions, but the writer of this piece is being a bit arrogant in assuming that his thesis is correct and his conclusion that banks will profit from short term interest rates rising lacks any evidence to back it.
A quick glance at balance sheets of Citi and BofA clearly tell you that they are in the sh*tter, financing themselves via preferreds that pay 6% and God knows what kind of garbage on their asset side. While net interest margins may rise with interest rate hikes, so would write-offs. Provision for losses are at absurdly low levels.
More importantly, the Fed would set itself up for failure if it tries lift off and we get an inverted yield curve, with risk assets possibly falling 50%+. The cartel will not risk their status quo just on temporarily higher profits, survival cones first. I may be wrong, it is a crony organization that is deteriorating. Just my 2c:
Exactly, I call bullshit. Automatic Earth has always been married to their deflationary thesis. Not going to happen. The banks are leveraged at least 40-50/1. Raising rates would blow up their leverage. It's just not going to happen.
Also, it's far easier to create a boogeyman like Russia, or ISIS then blame the currency collapse on them.
Agree, Sgt, on the deflation angle, but the author is a work in progress, has come a hell of a long way in a short period of time, and is fighting the good fight. Might wanna cut him some slack.
I'm sure he is. I don't hold this against him by any means. I just want to make sure others are able to see other points of view.
There's been many public outlets going quiet, or starting to echo the propoganda party line, and it makes me concerned. Many used to be great outlets for information. I don't know if they've been intimidated by someone, or if they're just paranoid they're going to be suicided. Anyway, there's not enough truth out there, and we need to leave a bread crumb trail for those just now waking up.
As you say Automatic Earth has been banging the deflation drum for a long time. Then again ZH has been banging the gold explosion and runaway inflation drum for a long time without that happening either. The end result is as yet unknown. Automatic Earth is well-written and well-argued so always worth considering other intelligent opinions - especially ones that acknowledge the obvious - the Fed is run by and for the banks and couldn't give a shit about mainstreet or the general population.
My opinion: well, I'm commenting on ZH about an AE article, and not AE commenting on a ZH article...
Point taken. Now that I think of it, I haven't heard much from Automatic Earth since around 08. All the truthy sources have been going dark, or to the party line over the last year, two or three. It's wierd.
I'm with you. Bank balance sheets are filled with crap. Not marked to market. 10 year yields for Spanish and Italian bonds 2.5%. Give me a break. For a bankrupt economy? Liquidity allows these banksters to buy up that crap to prevent real market risk valuations. That shit should be yielding 20%. If the author thinks that banks would prefer to pay grandma 6% and lose 3.5% on their bond yields, well, think again. Grandma ain't gonna get shit!
Thanks for the info. This what I am looking at. This whole globalist vision has backfired to the point of no return. Nothing short of collapse due to utter exhaustion on this treadmill of shame.
I hope they raise it by > 1%. I got the popcorn ready.
"The big investors think you will skim the public, but not them."
I just love that line. The Fed is their friend. Don't fight the Fed.
They sleep sound knowing the Fed is all about Skimming the Public.
right?!!?!
Whom exactly do you think the ultimate puppet masters favour?
I say themselves only. BIG investors, here today, gone next Tuesday. Minions to be played and carry out the agenda.
Other suprise: Treasuries Taper Tantrum Ruled Out by BofA Seeing Japan Buying
http://www.bloomberg.com/news/print/2014-09-11/treasuries-taper-tantrum-ruled-out-by-bofa-seeing-japan-buying.html
Excerpt:
Japan is likely to replace China and U.S. banks as the lead supporter of Treasuries as the Federal Reserve moves toward ending bond buying, according to Bank of America Merrill Lynch.
Policy makers who next meet Sept. 16-17 have cut purchases of government debt and mortgage-backed securities to $25 billion a month from $85 billion starting last year.
Buying by U.S. banks driven by rules limiting risk-taking and China more than offset the Fed’s tapering, keeping long-term interest rates low, said David Woo, head of global rates and currencies at Bank of America in New York.
This is the Fed’s third round of purchases, or quantitative easing, to drive down borrowing costs.
“Effectively, there has been no tapering whatsoever so far,” Woo said at a round table in Tokyo on Sept. 8.
“As the Fed was trying to unwind QE3, U.S. banks and China started a secret QE4.”
China held $1.27 trillion of U.S. notes and bonds at the end of June, compared with Japan’s $1.22 trillion, Treasury Department data show.
Belgium more than doubled holdings in the past year to be the third-largest owner with $364 billion.
Belgium is home to Euroclear Bank SA, a provider of securities settlements for foreign lenders, and probably serves as a custodial holder for China, Woo said.
He estimates the Asian nation increased purchases by about $130 billion in the first quarter, or $560 billion at an annual rate. China’s currency reserves rose to a record at the end of June.
“China in the first quarter was funding more than 100% of the U.S. budget deficit,” Woo said.
“Between U.S. banks and China, they’ve been buying a boat-load of U.S. government bonds. This to me is the single biggest story of 2014,” he said.
So now the monkey finaly shows it’s ‘one ugly motherfucker’ face out of the sleeve!!! https://www.youtube.com/watch?v=VcgRaf38uCQ
I call bullshit on that article as well. It's not in the interest of China to do that, they're far better off just saving those funds and buying gold. All the big money people I've talked to are abolutely sure the Belgium buying of UST is straw buying by the ECB-JCB-FED to keep the currency block afloat.
Once Europe, Japan or US falls, the rest follow. It's just a matter of time, and it will likely be hyperinflationary. Deflation is just too easy to prevent (printing press).
Yes. I see no advantage to individual banks. Octopus of abuse through Central Banking is so huge. One falls, We got dominos. But banks will fail first. Big money people? Better get out of the system as well.
The Federal Reserve has failed to take serious efforts in pushing the government to take the necessary reforms needed to move the economy forward. Policy makers aided by the media thrive at presenting simplistic answers that solve both economic and society’s problems with little or no effort required from the masses.
What started as a program to support and prop up the economy has morphed into the main driver of economic data. Between the low interest rates that has propelled investors into high risk assets in search of a positive return on their money, and money being pumped into the system, the markets have become distorted and disconnected from the economy. The idea that investors will continue to pour money into the sky high equity market is flawed. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elu...
Here are my 2 cents -
The FED can not raise rates because interest payments will bust the US budget beyond any reasonable (or fantastic) notion of something sustainable or even believable. They will monetize debt by buying bonds and manipulating rates until China and Russia move to dethrone the dollar as the reserve currency. At this point, H2 2016, gold will be trading at $2500/ounce.
The move to dethrone the dollar would occur with a peg to gold on the Yuan and a call for the US and the FED to do a refereed audit of its gold. The refusal to allow outside auditors would be immediately followed by a world-wide dollar dump and then an official US devaluation by a peg to gold at about $5000/ounce. This would likely be followed by further dumps in the dollar when markets reject that it's worth even that much. Dollar finds support at about $7500/ounce. This would occur sometime in late 2017.
"Those are my principles. And if you don't like them, well, I've got others." Groucho Marx
I'm mostly with you Scarlet. But I think the time line is far advanced from 17. My bet is that the collapse will happen before Dec. 31 of this year. Why?
The Shanghai silver exchange has had it's inventory reduced from 33mil oz last year to a paltry 3mil oz today. China has been absorbing about 2mil oz per month for simple industrial utilization. There is about a 1.5 month supply of physical silver. The rest is all paper. China is occupying the long open interest position on silver. When the SHTF they will ask for delivery on their comex long positions.
Also, the Shanghai gold exchange, as of Sept. 22, 14 will be an express cash for metals exchange. No derivatives like " if I had gold I'd sell it to you at this price " or, " if I had money, I'd pay you this much for gold". The price discovery mechanism will be re-rationalized.
Lastly, without definitive support, I'm led to consider a silver lease by China of over 300mil oz which was part of the " favored nation " negotiations. The 10 year lease was reportedly entered into during 2003. Expiring 2013, Time flies. The Chinese have been waiting for their silver since Dec 31.13. They are angry. They have had less silver returned than Germany had gold returned. Who would have thunk?
http://goldsilversecurity.com/agree-disagree-harvey-organ/
My stern advice to all prognosticators…
Rather than state that “I predict blah, blah, blah,” why not simply state that – Given the basis of x, y, and z, I have concluded that it is plausible that the value of “x” may reach “y” within time-frame “z.”
Anything stated with a level of conviction and certainty beyond the clear boundaries of the preceding statements framework – should be viewed by the recipients of such information, as nothing more than a bunch of bullshit – or at best, a hunch – or guess.
But if James Turk does it, why can't I????
I'll bet you a silver ounce on it, and I hope you win.
Why would Dollar, Inc throw away their monopoly that they've spent a 100 years to build? Makes no sense,
we'll see.
if banks demand greater profits on their credit, they'll have to also issue more credit with the higher rates.
and go moar sub-prime in the process.
commercial and consumer.
whatever. if rates jump out of concert with borrowers' access to a repayment stream (income) simply because the banks want higher profits, this can only serve as notice of upcoming deleveraging and all that comes with it.
now, if the BK rules change the magical protection student loan debt currently lives under, then this may foster an appetite for borrowing beyond present levels in the consumer sphere, at least. yes, moar deleveraging, but frees up plebes to "buy" moar stuff.
some (not all) debt issuance may need to take the form of a utility model some have suggested, with the "profit" directed at public benefit instead of private gain for anything long term to work.
riffing...
Every day the chances for a Republican takeover of the Senate are increasing (according to the lamestream).
So it makes sense that the Fed will recognize that 2015-2016 market plunge can be blamed on "The Republican Do-Nothing Congress".
The Fed needs to raise interest rates, but have avoided that till now because there is no-one to blame for the market plunge that will follow.
Republican takeover of both houses of Congress = Fed fall guy when rates go up.
Which might just be retarded enough to work, considering everything so far has been blamed on the obstructionist House of Representatives LOL
China would be buying more gold except finding real deliverable physical not so easy
When it's addressed to China, I like to throw in an extra tungsten rod. To keep up goodwill.
Something tells me the Chinese have some pretty damn good suitcase-sized 3-D sonar tomographic scanners that can tell you the weight, purity, thickness, and crystaline structure of a Au or Ag bar, and tell you waht you're personal problems are to 5 decimal places.
;-)
When the rich, phony, corrupt, criminal capitalist gets a little bit nervous, the 'Federal' Reserve comes to the rescue overnight - no question.
Until it can't, and that's when the average, unconnected Joe needs to make sure they are not part of the buy-in official solution.
http://youtu.be/J9F2QBak06U?list=UUViQ4xAD3EljTI1hwbovvbQ
Interesting meeting of the San Francisco Employee's Retirement System Wednesday, Sept. 10. A very lively discussion on hedge fund investments with staff recommending a 15% investment from the 20 billion fund. Staff forecasters said that the danger of another recession was far off (6 years or more) yet the specter of the Fed raising interest rates may make that a rosy projection. I wonder how the Nation's public employee's pensioners will suffer under the collapse of investments in their various funds. I wonder if public financial managers watch this blog?
The public employee pensioners will expect their respective entities to raise taxes to a level that ensures that the promises made to them are kept and they get every dime they believe they are owed. If their funds have gambled with their money and lost that is hardly their fault, and the taxpayer must make up the difference.
Wish what you want. Bankruptcy nullifies it.
That isn't what I want. A few years ago I had an argument with some guy who was a public employee over this very topic and he insisted that taxes had to be raised to pay them.
How essential was that public employee's job?
Bingo! ZH discovered the raison d'etra for the Fed.
They've been pussyfooting around it for years, but this article nails it.
Ok: why does the FED NEED interest revenue to begin with?
It's a lever that allows them to exert a force on the overall economy. It's merely a tool to them.
It's interesting how none of the people here talk about the "warS" and how war spending might help invigurate USA's failing economy the same way it did before WWII. Don't you guys believe this is the case and if not, why not? Im genienly curious to know.
Um perhaps because this time America will lose.
America always loses.
Hmm. When wars are funded by a fully operational fiat finance system that is not inherently already bankrupt,...wars are like broken windows, and after the war broken things must be fixed, so war supports the economy before and after the end of the war.
Problem is the fiat now is too far gone worldwide, and eveyone owes everyone else. There is no simple way to fund any war at this time that does not risk financial market collapse either through energy collapse, food collapse or financial collapse. Both WWI and WWII were funded by the west.
This is a good article talking about how many never paid off their war debts for the last 100 years, since the creation of the FED.
This time the debts are world-scale and the fiat is almost worthless to hyper-print our way out.
https://www.imf.org/external/pubs/ft/wp/2013/wp13266.pdf