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The Fed's Hands Are Tied Unless the Market Crashes
The markets have a major problem.
That problem, simply put, is that QE ends this month.
QE has been the driving force for the stock market since 2008. This factor, more than anything else in the world, is responsible for stocks rallying to new all-time highs surpassing even the 2007 peak.
To be clear QE 1 and QE 2 were widely accepted in the business community because of their context: QE 1 was a reaction to the 2008 meltdown, with QE 2 considered to be needed because QE 1 didn’t quite “get the job done.”
However, QE 3 and QE 4 were both game changers. The first two QE programs had fixed deadlines which emphasized notion that eventually the Fed would end its QE efforts and risk would be permitted to move back to more market-based levels.
However, this all changed in the period from September 2012- December 2012 when the Fed announced QE 3 and QE 4: two “open-ended” programs without fixed deadlines.
The message was now clear: risk would be mispriced ad infinitum until something breaks.
It is not coincidental that the market staged its largest, most bubblish move during these programs.
Which brings us to today. QE 3 and QE 4 are ending in a little over a week. And the Fed has made it clear than a stock market correction will not goad it into engaging another QE program anytime soon.
Indeed, in many ways the Fed’s hands are tied. Politically it is becoming more and more evident that the Fed will be blamed for the US economy (note the recent emphasis on income inequality in Fed speeches). Having just engaged in QE for TWO SOLID YEARS STRAIGHT the Fed would totally destroy any and all credibility in its monetary policies to engage in QE anytime within the next three to six months.
Which means… the markets are losing their most critical prop: the Fed’s money pumps. Sure, verbal interventions will trigger short-covering rallies like the one we’ve seen in the last week… but the money won’t be coming…
Prepare now, the next round of the crisis beckons.
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I know ya'll will think this is nuts...but every time i see one of those guys jump the fence at the White House the thought is who would benefit from the assasination of Oboma? (Please note: although really thinking Oboma is a creepy guy no one wants that to happen if they have any brains)
And here is who would benefit...Democrats. They would have the martyr of all time for their political railings. Just imagine it. And since the Democrats have been in charge of the secret service and the security at the White House one really has to wonder and that wonder only leads to the idea that the Democrats no longer get much use out of Oboma, and like the woman from Hawaii who "authenticated" his birth certificate and who was the ONLY one that died in that small plane crash, Oboma not alive is an amazing vehicle for the Democrats.
If i were Oboma, I would be hiring my own personal protectors kinda like any of the rock stars do. It seems pretty obvious that up to now these guys have been amateurs and look at where they've got...now just think about someone with real professinal training...Ya'll might wanna watch that Olympus Has Fallen movie again...(Gerard Butler)
How could the FED justify continuing to buy bonds when the 10 year is below 2% and the 30 year is below 3%. They won't
The next QE will be buying equities out right and openly.
their charter says anything, they can buy anything, like the line from Chinatown when the detective confronts Noah Cross, most men never realize they're capable of anything... or everything is this instance
yellen's POMO ends on the 29th.
So what's the other Fed surprise that could fool the herd into thinking that prosperity is back (ie: driving markets higher) ?
Interest from bond purchases - yellen has mentioned this a few times - sneaky bitch!!!!!!!!!!!! Proceeds from bonds could hold up the pending crash.
All should end around Nov 5 - what else is on Nove 5? Can't remember. Anyone? Anyone?
the fed changes the way they gauge inflation almost on a daily basis the latest one I like . going out side to measure the growth of the moss on the side of the fed building and then multiplying that by a factor of 1000 and then moving the decimal point, and thus there will never be a interest rate hike
The Fed would be best off doing nothing unless they have to because anything they do might backfire. The euro-zone is in a far bigger mess than recent headlines and figures suggest. Most of the growth in the Euro-zone over recent years has been in Germany and that bright spot is now under pressure. Italy has been in recession for two years; France’s economy has been stagnant for months.
Now that Germany is in trouble, many economist think the chances of a Japan-style deflationary spiral have risen sharply. What it all boils down to is Germany can’t keep buying Greek bonds and other bad debt with German taxpayer money until the end of time. The article below looks at the corner Central banks have painted economies into by attempting to paper over reality and how these polices will hinders growth for as long as the eye can see.
http://brucewilds.blogspot.com/2014/10/global-economic-malaise-due-to-debt.html
I am still thinking that the Fed needs to destroys its own credibility in order to create the required conditions for a globally managed financial system.
They need to create the problem for which they (the global banking empire) then will provide the solution.
You hit the nail square on the head! EXACTLY the overall plan!
Depends on who the Fed is working for.
judgment day is near I can just feel it!
Soon the public will be Yellen from the rooftops!
The sheeple will only be outraged if their 401Ks are affected.
The little pony tailed girl asks his father, "Papa, how many life boats does this unsinkable ship have?" He replies, "No worry my dear, Captain Yellen will be safe."
Papa says to little pony tailed girl
sorrie honey
all the zero hedgers sunk the boats
in unfortunate ,boating with bullion accidents .....
As the little pony haired girls asks her Father, "how many life boats does this unsinkable ship have?" "I'll ask Captain Yellen" he replies.
Captain Yellen says the life boats are reserved for the banksters.
You'll be safe though, Sweetie, Banksters have a penchant for little girls.
If the market crashes the Fed will cease to exist. It will be a moot point.
Okay, so, what's next? Who picks up the pieces..who provides alternatives... who makes those guilty accountable for what they have done?
Americans have the power to redress any grievance that could be named – and thus, exercise sovereignty; but they REFUSE to use that power. There are three main reasons for this failure: one is that they have no knowledge of such power; the second, they’ve been herded into a kind of impotent stupor by medication and indoctrination; the third, that they aid, benefit or were complicit in such evil (full article).
350 million people's future mortgaged to the hilt all to keep a few festering puss nuggets on top and in full denial of any wrong doing.
They think they are doing it for God or some quasi patriotic belief that if you kick the can down the road long enough a solution to the whole problem will reveal itself and save their collective asses.
They are the deceiver of deceivers, they are the liar to the liars, and everyone on earth is a mark.
And in Bolivia every worker gets a Christmas bonus equal to double their salary and paid for by the government.
... after the government has stolen money form those peasants, and their employers.
FED policy has done following:
1. negligible genuine sustainable economic growth resulting from to lower interest rates to consumers & businesses for genuine sustainable economic activity (instead of financial engineering)
2. grossly inflated the prices of financial assets through HUGE carry trades, record high leverage & financial engineering (eg record high stock buy backs by corrporations using cheap debt), ie the MOTHER of all bubbles
3. destroyed the interest-earning power of earned-money savings from who-knows-how-many-trillion dollars of created-money
4 greatly increased the inflation in agricultural commodities, ie FOOD, the ultimate essential
5. greatly suppressed the volume of lending from banks & non-banks due to absurdly low lending profits from record-low net-interest margins
6. provided White House & Congress with MEGA green-light to spend & issue trillions more debt with reckless abandon due to twilight-zone low treasury rates
7. increased my net worth by 50% in 6 years by exploding the market value of my financial assets - I already sold everything to keep the gains and am waiting in cash for the inevitable bubble burst
Plus many, many, many other negative effects, eg draining off securities needed as collateral in free market.
FED is an EXCELLENT example of a "domestic enemy".
Your "cash" that you are sitting on will become worthless.
It won't be totally worthless, shredded up finely FRN's make good fire kindling.
Not instantaneously in a crash. In the first few weeks after a crash everyone is dying for cash. If you are sitting on cash, you can buy assets for pennies, as those caoght short unload assets including gold just to pay bills. Only when this cash reaches general circulation (ie velocity increases) does it inflate ie decrease in value. A crash is a perfect time to load up on hard assets or capex in fact it's the number one way to really get rich, just ask the fed's buddies.
If the Federal Reserve (FR) says it will end QE permanently, we should know their words mean nothing. What will determine their actions will be the hundreds of market players that pound on their doors, threatening to cease their bribes.
What else should we expect weak-kneed, useless idiots to do but set another QE in motion?
So it will be until the dollar and world economy are utterly destroyed.
For those who doubt this eventuality, they need to be made aware of the fact that, for the past 150 years (since the National Banking Act of 1863, the precursor of the FR Act), the nation has been using, and fostering, a currency that necessitates the financial cannibalization of following generations of Americans.
In other words, since 1863, US paper currency has been collateralized (backed) by US government obligations. Previously, gold was the collateral; now, collateral consists of US Treasuries and Mortgage Backed Securities. The value of one depends on the Treasury’s ability to collect taxes from following generations of taxpayers; and this is impossible, both practically and constitutionally. If such taxes are to be imposed and collected, such must be done before power passes from the hands of the first generation; for, following generations will not voluntarily cannibalize themselves; hence, the practical impossibility. Further, for a tax to be constitutional, it must receive the consent of those taxed (among other considerations); and, how can children, or the unborn, give consent to taxes necessitated 20 and 100 years before their birth?
The value of MBS depends on a viable real estate market; and, with near-zero interest rates for 6, going on 7, years, we should expect a slaughter of real estate values when market forces claim vengeance for those zero rates.
To say the least, we live in interesting times; perhaps, unprecedented times; for, when was the last time, the world stood on the cusp of the inauguration of a world-wide dark age?
And this leads to another question, “How will we survive this storm without example?”
We must learn lessons of American Founders. Americans have the power to redress any grievance that could be named – and thus, exercise sovereignty; but they REFUSE to use that power. There are three main reasons for this failure: one is that they have no knowledge of such power; the second, they’ve been herded into a kind of impotent stupor by medication and indoctrination; the third, that they aid, benefit or were complicit in such evil (full article).
We have, in other words, the power to make men accountable for what they have done. We only need to learn law and procedures of that power; and then use them.
it'll just have a different name.
5 years are you are still trying to apply logic? QE 4 will happens, and most likely 5, or 6 before logic returns. The very fact is still effecitve (at lower interest rates higher stock markets) in europe shows you we have a LONG way to go before people wake up. not ot mention we are still a decade away from Japan type stats. oh, it is happening...but the masses can be dumber longer than you'll remain sane.
Yep, and when the shit really hits and the masses hate the scum, the "full faith and credit" of the USA becomes "the full wrath and confiscation" and is readily foisted on the producers. At that point elections will be all electronically controlled and the only positives of the ordeal will be that multigenerational parasites will be kicked off the teat because they no longer need their votes. They will be replaced by nepotists.
If they aren't expecting major upheaval, why are they arming IRS agents?
Ending QE (or a stealth version thereof), is Politically, and by proxy, Socially untenable. Officialdom no doubt has either an indices 'number' in mind or a 'panic meter' measuring 'device' in which to use as 'cover' to step in again. What matters at this stage is, will the timing of their next intervention be adequate to shunt a cascade before it gains momentum.
Belgium will save them.
You have it backward.
The Fed's credibility is intact with the only constituency that matters: the markets. And the Fed continues to validate its credibility with QE programs. Therefore, the only way to destroy its credibility is to withdraw QE.
This is the big "waiting period" before things really start moving. The investors all believe that they WILL be supported by the Fed, no matter what they say about ending QE. Those investors don't think the Fed has any choice.
The end of QE has not been factored in yet. If the Fed does stick to their guns, the weeping and gnashing of teeth will be deafening, and the market will tank.
But if they weaken, and try QE4, I don't think the markets will be all that happy either. QE4 would mean that all the bullshit about "recovery" would be exposed for what it was...bullshit. If the market was harboring any hopes over the past few years, those will be dashed quickly.
No QE4, the market tanks. More QE4, and the mask comes off, investors panic, and the market tanks.
Rock, meet hard place.
Correction, More QE4 and the Fed lights the fuse on the golden rocket as everyone realizes that the value of the Federal Reserve Note is heading to zero. The stock market will also go up as it represents 'real' claims on production, but PM's will launch into the next solar system as the modern currencies are all a confidence game and the Fed will have exposed everyone to the reality that they should have no confidence in the Fed and the the FRN.
the fed will destroy any credibility if they shove cash into system without waiting for a period of time '
what kind of credibility does the fed ever have .. open ended distortions all over the globe.. and some one talks of the feds credibility lol
I know right. The FED has ZERO credibility anywhere in the world but then again neither does any other CB. The FED is still the turd with the fewest amount of flies on it.
Credibility is for little the little people......
This is all fraud and distortions. There is really no meaning to paper money anymore, as long as you have special interest that can create and allocate money at their wish.
Hell they don't even need to say they "print" money, they just do it.
The whole system has run amock in a fury of stupidity and greed, and without gold as an anchor, we are doomed if we accept their rules and their game.
Get out, and get into gold.
If you don't trust 5000 years of history more than you trust the FED, you really deserve what you are about to be served.
On one hand you admit that QE3 is "open-ended without fixed deadlines," but then you go on to say that QE3 "is ending in a week."
Something which is open-ended without fixed deadlines, cannot technically "end."
When it was announced, there was no end or deadline, unlike QE1 & 2.
The end was announced by the FED so that brings it to a close and gives them a chance to re-invent it with different rules.
The Ponzi Munchkin has moved the goal posts before.
"When money start to spread in the society 'above acceptable limits', we create financial crises to take them back. We dictate governments to take measures and apply austerity policies directing money back to us. We keep money valuable to everyone and secure our profits."
http://failedevolution.blogspot.gr/2013/12/an-imaginary-dialogue-between...
QE4 is coming. We all see it, unless your CNBC's Steve Liesman or other TV idiots who are cheerleaders for the FED and this phony recovery.
After QE1 and QE2, they are getting more and more merged together.
The market is more and more reliant on QE whatever the number.
The more time before we crash, the bigger the crash will be.
Yous can pay mees now or yous can pay mees laters.
can i pay you
in tatters...
2 professional friends? As if being a professional has anything to due with past,current and ongoing events related to anything outside the profession their in. Sheep come in many walks of society.
QE is a magician's distraction. They'll get the money out there another way and it will be stealthy.
Yes, unlimited credit lines to other CBs and TBTFs will do the trick, for a while.