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572 Reasons Why The Fed Is Terrified To Hike: "One Rate Cut Every Three Trading Days"

Tyler Durden's picture




 

If sometime it feels like central banks have "have your back" when trading stocks every single day since the collapse of Lehman, you are wrong. They only have your back every third day, because according to Bank of America there have been a ridiculous 572 rate cuts around the globe since the fall of Lehman, one every three trading days!

Perhaps this explains why with 572 rate cuts in the rear view mirror, which have succeeded in pushing global stock markets to record highs and yet have failed to either unleash the "wealth effect" for the rest of us, to stimulate inflation, or send US GDP into a stable, 3%+ growth trend, in fact culminating with the most recent GDP contraction during the so-called recovery (at least until all negative data is revised positively), one can see why the Fed is just a little worried about breaking a trend that has been working... if only to create the illusion of paper wealth for a select few.

P.S. the number above of course does not account for the $13 trillion in direct liquidity injections central banks have conducted since 2008, which have flowed through directly into both the bond and the stock market, leading to unprecedented bubble in both asset classes.

 

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Thu, 05/21/2015 - 15:55 | 6118776 JustObserving
JustObserving's picture

It is the 168.25 trillion reasons that the Fed cannot hike - the over $150 trillion in unfunded liabilities and the $18.25 trillion in US debt.

US has debt and unfunded liabilities of $1,400,000 per taxpayer and rising at $70,000 per taxpayer per year.

Hiking rates with such large debts is financial suicide.  Look for negative rates to come to the land of the Fed.

Economist Kotlikoff: 'Our Country Is Broke'


"Our country is broke. It's not broke in 75 years or 50 years or 25 years or 10 years. It's broke today," he told the Senate Budget Committee. "Indeed, it may well be in worse fiscal shape than any developed country, including Greece."

http://www.newsmax.com/Finance/StreetTalk/Kotlikoff-GDP-debt-deficit/201...

Thu, 05/21/2015 - 15:57 | 6118795 bania
bania's picture

I guess we reach death in 428 more rate cuts?

Thu, 05/21/2015 - 16:11 | 6118854 Beam Me Up Scotty
Beam Me Up Scotty's picture

No, I think it will be death by Boogleooga before we get that far.

Thu, 05/21/2015 - 17:22 | 6119098 SickDollar
SickDollar's picture

war is coming bitchez

Thu, 05/21/2015 - 21:15 | 6119715 MonetaryApostate
MonetaryApostate's picture

Depopulation in 3...,2...,1....

 

"You can't taper a Ponzi-Scheme." - Max Keiser

Thu, 05/21/2015 - 15:58 | 6118798 Fish Gone Bad
Fish Gone Bad's picture

It has been broke.  But just like a little kid, it is pretending it is not.

Thu, 05/21/2015 - 16:53 | 6118929 tc06rtw
tc06rtw's picture

… you can’t  [GET / BE / STAY ]

 RICH  if you’re not  CHEERFUL !

Thu, 05/21/2015 - 16:01 | 6118809 kaiserhoff
kaiserhoff's picture

Right about the debt, but keeping rates low buys a few extra weeks at best.

She's gonna blow.

The Fed has two weeks of experience, and seven years of repeating the same stupid mistakes.

Thu, 05/21/2015 - 16:58 | 6119023 max2205
max2205's picture

How come everyone on ZH isn't a millionaire? 

 

Btfd!

Thu, 05/21/2015 - 17:03 | 6119039 kaiserhoff
kaiserhoff's picture

We all will be, but by then a Starbucks coffee will cost a hundred grand.

Thu, 05/21/2015 - 16:54 | 6119007 oudinot
oudinot's picture

Thanks for the reference, Just.

Thu, 05/21/2015 - 19:25 | 6119433 jmeyer
jmeyer's picture

The USA cannot go " broke " like other entities. We are the baddest and biggest on the planet. Not even China has our infrastructure. And the EU is praying to stay alive. We may well have a devaluation someday but we'll still be number 1. And the Fed can't risk raising rates all by itself. It'll need a market driven reason. There are also around 1000 TRILLION in derivatives values. If 10 % was at serious risk of default we're out of luck and the credit markets would be unable to function. The central banks and their compatriots are doing all they can do to contain rates. If they fail ( as ZH readers seem to hope ) head to the hills and get off the grid.

Thu, 05/21/2015 - 15:56 | 6118781 Chuck Knoblauch
Chuck Knoblauch's picture

GDP data issues?

That would be my biggest concern.

Party approved GDP is not the number I'd use.

Thu, 05/21/2015 - 16:13 | 6118859 Beam Me Up Scotty
Beam Me Up Scotty's picture

Yes.  "When things get bad, we lie".

Thu, 05/21/2015 - 15:53 | 6118782 Skateboarder
Skateboarder's picture

Goodness, Tyler, I thought Michael Snyder had gone into list-making overdrive.

Thu, 05/21/2015 - 15:54 | 6118785 Dumgoy
Dumgoy's picture

Natzis, be on the lookout, never again!!

Thu, 05/21/2015 - 16:00 | 6118806 davidalan1
davidalan1's picture

Ivy league fuckers who painted themselves into a corner by lowering rates and not realizing the ultimate outcome?  Brilliance..Gee wish Id gone to college..

 

On a side note, I also think of Jethro bodine trying to get a ladder sideways through the door while yelling for granny...

Thu, 05/21/2015 - 16:02 | 6118814 q99x2
q99x2's picture

FED is not terrified. They are raking in more dough than ever before possible.

Thu, 05/21/2015 - 16:23 | 6118896 Dumgoy
Dumgoy's picture

I agree.  Not to mention they can print as much as they want or need, just as they always have.

Thu, 05/21/2015 - 16:04 | 6118822 Stoploss
Stoploss's picture

Was fucking around with an ARM holding buddy about the looming rate hikes.

The sombich nearly had a heart attack, no shit. I had to go show him how rates can never go up and he has absolutely nothing to worry about.

 

Not expecting a return invite to the bday party next year either.   My bad...

Thu, 05/21/2015 - 16:44 | 6118973 walküre
walküre's picture

so you told him to get a massive jumbo mortgage to buy now or be priced out forever?

not being invited again to the bday party may be the least of your worries....

Thu, 05/21/2015 - 16:05 | 6118828 WTFRLY
WTFRLY's picture

Fuck the Fed. How do we direct the next violent riots in their direction?

Thu, 05/21/2015 - 16:05 | 6118831 Rehab Willie
Rehab Willie's picture

get ready for the new normal, .00025% interest rates.

Thu, 05/21/2015 - 16:12 | 6118855 Pheonyte
Pheonyte's picture

 -.00025% is more like it.

Thu, 05/21/2015 - 16:22 | 6118891 all-priced-in
all-priced-in's picture

Adjusted for inflation that will be -20.00025%

 

 

 

Thu, 05/21/2015 - 16:11 | 6118852 Dr. Engali
Dr. Engali's picture

For a minute there I thought we were going to get one of Michael Snyder's lists.

Thu, 05/21/2015 - 16:12 | 6118857 skbull44
skbull44's picture

Death by a thousand cuts??

http://olduvai.ca

Thu, 05/21/2015 - 16:13 | 6118861 robnume
robnume's picture

ABOLISH THE FERAL RESERVE SYSTEM!!! Abolish fractional reserve banking!!

Thu, 05/21/2015 - 16:25 | 6118905 Dumgoy
Dumgoy's picture

and abolish Natzis!

Thu, 05/21/2015 - 17:27 | 6119114 1stepcloser
1stepcloser's picture

while we are abolishing things, lets abolish Di-Hydrogen Monoxide.  I'm sure the masses will get on board!

Thu, 05/21/2015 - 16:47 | 6118989 Keltner Channel Surf
Keltner Channel Surf's picture

In finally acknowledging the power of algos/HFT in the FOMC statement, the Fed revealed the new strategy:  'virtual' rate management.  If, on some miracle, econ data improves, they'll simply change enough keywords in their releases to get text-parsing machines to push various rates where they want, then have Dudley and Evans fine tune it with comments at perodic Water Buffalo Lodge meetings. 

At least, that's their plan, but . . . if the best-laid plans of mice can go awry, what about the schemes of less industrious creatures?

Thu, 05/21/2015 - 16:53 | 6119001 fremannx
fremannx's picture

I'm not sure the Fed is smart enough to actually be terrified. If former chief, Ben Bernanke, is any indication, as a group they are delusional enough to believe they arr in control of the economy. Peter Schiff thinks Bernanke actually thinks he helped save the world from financial armageddon.

 http://www.globaldeflationnews.com/peter-schiff-says-bernanke-really-bel...

 

In the long run, the Fed will self-destruct...

http://www.globaldeflationnews.com/the-creature-from-jekyll-island-the-e...

Thu, 05/21/2015 - 17:11 | 6119060 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

572 rate cuts since September 08 is American exceptionalism in theory, and practice. American exceptionalism is that happy place the American Government likes to go to when it can no longer accept reality and needs to suck its thumb in dark corners for a while until it can figure out more hystrionics to regress with while it sucks its thumb.

 

572 rates cuts is Uncle Sam sucking his thumb for the World to witness, and mock mercilessly. What insane asylum would accept Uncle Sam today?

Thu, 05/21/2015 - 17:12 | 6119067 JenkinsLane
JenkinsLane's picture

573rd cut is the charm.

Thu, 05/21/2015 - 17:19 | 6119092 kevinearick
kevinearick's picture

It’s a U, to compensate for demographic deceleration; this time they have food stamps.

The Unified Field Equation (misnomer) & Compensation

Begin with 0 = 0. Add components on each side. You have a stack and a dynamic heap. For the dynamic heap, turn the equal sign vertical, to see the double-sided mirror, acting as a dimensional multiplexer.

What is time? What is the difference between AC and DC? What is opposite and what is complimentary? If the square root of 4 is 2 AND -2, what is the square root of -4? Are imaginary numbers imaginary? What are prime numbers? How do you make Maglev work, for you?

If you do not know where/when the center of the universe is, how can you measure time, or anything else?

If a bunch of homosexual cardinals assemble a bible, to bankrupt marriage for the sake of State feudalism, does that make it useless? If a popular president anoints Supreme Court Justices for life, with the blessing of Senators, and the acquiescence of Representatives, does that make the US Constitution useless, or just the interpretation? Which way is backward and which is forward?

What is the current economic traction slip ratio at your position? Why would you exchange natural resources, and your time to move them, for empire money, and expect anything other than a supply-side real estate prison?

Funny, only manufactured majorities need money to get up in the morning, to play make-believe, blindly assuming that humanity, and themselves by extension, is the center of the universe.

Thu, 05/21/2015 - 21:29 | 6119753 22winmag
22winmag's picture

The South was right!

Thu, 05/21/2015 - 23:22 | 6120046 honestann
honestann's picture

The bill for mammoth government and the mammoth irresponsibility of a debt-based culture has come due... and there is no way out but catastrophe.

The past 40~50 years have been absolute 100% PURE SCAM.

But you need to research (or remember) how things used to be 40~50 years ago!

#1:  no credit cards (didn't exist).
#2:  homes purchased with cash...
#3:  ... or > 20% down payment @ 12~15% interest.
#4:  inability to create infinite debt (money == gold).

And so, when humans wanted something, they had to go out and earn the money to buy what they wanted.

!!!!!  WHAT A CONCEPT  !!!!!

One that is almost entirely inconceivable and unknown today!

Furthermore, given 10~15% interest rates, nobody wanted to borrow too much to buy a home, because they'd be paying 3 or 4 times as much for their home as the asking price.

The result?  Homes were much more affordable.  And many people crunched the numbers and realized they were better off being super-frugal for 5 or 10 years in order to save up the entire price of a home.

PLEASE... try to imagine their situation.  In their late 20s or early 30s most folks could save enough (by being frugal) to buy their home cash.  No interest.  Thus they paid about 1/3 as much as fools who only paid 20% down payments (which then was considered by many to be crazy and irresponsible).

Think about this.  You and your partner are now 30 years old, own a home outright, and have 100% of every paycheck available for spending money.

No wonder they only needed one in the workforce!  No mortgage payments!  No credit card payments!  No car payments (because people would rather have an older used car than pay 20% interest)!

No wonder the economy was reasonably healthy (in comparison)!

But this is just the start.  This is where the DEBT BOOM begins.  Given that the dollar was disconnected from anything real in 1971, the government, the federal reserve, and all large corporations could go insane with zero restraint.

And so politicians figured they could make the economy APPEAR to boom by... BORROW AND SPEND... knowing the debts can be paid off with later debts for decades... until making the payments became problematic.  Which would be after those cretin politicians were dead and gone.

And so the federal reserve and financial corporations created UNLIMITED CREDIT, so everyone on the planet could BORROW AND SPEND.  Again... the only limit on this scam occurs decades later, when people can no longer even make the interest payments on their debt.

Once this DEBT ATTITUDE became brainwashed into an ever-increasing majority of the population, the economy APPEARED to be good... in the exact same sense that your neighbor seems to be doing great financially given the 2 or 3 newish cars parked outside, the yacht, the long family vacations every year, and so forth.  What is INVISIBLE is... the ACCUMULATING DEBT.

As many have said before here in ZH (but never often enough)... debt STEALS goods, goodies and economic activity from the future, and makes them happen TODAY.

Well, that scam reached its limits.

THE ENTIRE FUTURE HAS BEEN TOTALLY STOLEN.

Now everyone in the evil empire and the western world is stuck in a no-win scenario.  Or more precisely, and ALREADY LOST situation.  THE FUTURE WAS ALREADY CONSUMED in the 40~50 year party that is finally ending now.

ALL THAT REMAINS IS DEBT.

In case anyone didn't notice... paying off debt doesn't cause new goods and goodies to pop into your mailbox.  Paying for the party is no fun, because it is all the pain with none of the pleasure.

This is the unavoidable situation today.

Sadly, this also royally screws the few responsible debt-averse people who exist today.  How so?  Because the entire might, power and manipulation of the governments and central banks are spent to HOLD HOME PRICES HIGH.

In other words, to make homes... the largest expense of almost everyone... remain A HUGE RIPOFF.

This is done so the banks can PRETEND their mortgage loans aren't under water.  This also lets a few more debt-addicts borrow a little more on the margins as the bogus theoretical nonsense prices of their home pretends to rise slightly above their equity.

Everyone responsible pays through the nose for this.  Everyone who would save to buy is stuck with massively inflated prices.  These honest and responsible folks DO NOT CARE about monthly payments, because they intend to make ONE PAYMENT... period.  And then never pay a dime again.

But they can't, because they recognize prices are UTTERLY INSANE, even more blatantly so because they are held up high in the stratosphere by low interest rates.  And since the majority DO only care about the size of the monthly payment, the low interest rates allow insanely high home prices to persist... for well over 10 years now!

Now everyone is screwed... responsible and irresponsible.

And no way out, because predators dominate everything.

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