This page has been archived and commenting is disabled.
The Fed's Hands Are Tied Unless an Complete Meltdown Hits
The last 12 months has seen a sharp shift in tone regarding criticism of the Fed. Up until 2014, the mainstream financial media’s view of the Fed and its policies was that they had saved the financial system in 2008 and generated an economic "recovery."
Anyone with a working brain knew this was bogus: you cannot solve a debt crisis by issuing more debt. But because the financial media makes its money from financial firms’ advertising Dollars, it (the media) was happy to promote the narrative that the Fed was omniscient and expertly adept at managing the economy.
Then things began to change.
First in the summer of 2014, Congress moved to introduce new oversight of the Fed’s policies, particularly regarding its control of interest rates.
Then the Fed was ensnared in a “leak” scandal indicating it had been providing insider information to key individuals before the public (the Fed has been leaking information for years... but the fact it became common knowledge was new).
And then a growing number of commentators began to point out that the Fed’s QE programs didn’t actually do anything for the general economy, but did increase wealth inequality.
It is this last item that has proven to be the most problematic for the Fed… particularly now that the markets are collapsing with interest rates already at zero.
The Fed has openly stated that QE was a success because it pushed stocks higher. However, it’s hard to swallow this when stocks erase ALL of their post-QE 3 gains in a matter of four days.
In simple terms, the market collapse of the last week has proven point blank that the Fed’s theories are bogus and not based on reality. Moreover, now that the financial media has begun to promote the narrative that QE creates wealth inequality, any new QE program would be seen as a bailout of the wealthy.
This means the Fed will be unable to directly intervene to prop the markets up. We get evidence of this from the fact that NO Fed officials appeared yesterday to provide verbal intervention for the markets.
Every other time the markets has broken down in the last six years, a Fed President appeared to talk about some new policy to prop the markets up.
NOT THIS TIME. The Fed's silence signals that things have changed in a big way. Smart investors should start preparing now. This mess is not over by any stretch.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy if you …
Best Regards,
Graham Summers
Chief Market Strategist
Phoenix Capital Research
- advertisements -
if lowering by 0.25% did not change anything why would a rate increase by 0.25% have a dramatic effect?
The Fed would like to "tighten" as long as things don't fall apart. On the other hand, they didn't increase their balance sheet by so much just to let things crumble after they finished. They have too much at stake. Expect more tough talk but when the market is off around 20%, they will do more QE.
So the Great fix that is to fix all problems, is to jack the rate up.. Can't see how this will fix anything. The FEDs shareholders are still the Main St Banks, so the more money they create out of thin air, the more they get in kickbacks from themselves.
But then few ponder the idea that the FedRes, or more precisely, those the FedRes serves, desire a "meltdown."
When you control the the media, the courts, the grifting banksters, the swindlers (Wall Street), and the violence that backs it all up, government, you can just as easily profit on the way up, as on the way down.
Zion is a scheme, not an ethnicity..
How many banksters can you get into a Volkswagen Beetle? All of them.
Dude from Capital P-
you thought you were on top of the world - and that your predictions were becoming true(after 4 years you are shouting "short!!"....and wtf??
all major indices retraced almost all loses.....
This must be very disappointing again....
all your crash theories are back in the closet...
All those expensive champagne bottles you opened for nothing....
Frustrating! The markets are just 5-7% down...no epic collapse ....not the end of the world...so far just a healthy correction...
prey again this weekend to the god of corruption and manipulation...
tick.........tick...........tick..............BOOOOOOOOOOM
None of this matters. Not the statistics, the charts, the algorythms, the 'guidance', the interest rates...none of it. What matters is that I go to the store to buy milk, and milk is there.
Fool with the economy all you want, play this game or that one. As long as milk is there, you're probably ok. And that is what it all will come down to, whether milk is there when people go to buy it. As long as the basic supply-chains are kept intact, the Ponzi can go on for a looooooong time.
The average guy won't take to the streets with torches and pitchforks because the capital gains rate goes up, or corporate taxes don't get reduced. Hell, he won't even complain too much if you manage negative interest rates...as long as milk is there when he goes to buy it.
Remember that. It's all about the milk.
agree.. all the big financial market talk means jack shit to joe average.. really how do the events on wall street affect his life saving of $217.45 and his world of warfcraft high score?
www.teamramgold.com/about-us
Well in that case strap on your helmets cause we bout to crash!
"I am sticking with my view that as long as the Fed is pragmatic it will make the right move in either direction—stand pat or raising rates—and I am far more confident that the impact will be more mild as long as they have assessed the situation and acted the way they have said they would," Cramer said.
Thus, Cramer thinks that the rally on Thursday was not due to portfolio managers celebrating that there will never be a rate hike. Rather, it was a "in Fed we trust" rally to confirm that investors trust the decision that the Fed will make.
"What a relief it is to know that the grownups not the ideologues are really in charge. This huge sea change is confirmation that I am not alone in my thinking," Cramer added."
THIS is what one shark tank guru thinks...
And with the announcement that GDP came in at a startling +3.7 (annualized) will likely mean the Fed will try something sooner, rather than later.
Nearly a week ago, we saw the start of what seemed like a unravelling of a mindless DOW at 18k, as well as major trouble in the Chinese economy, such that many were bracing for a much larger meltdown event. For a while, it really did seem like things were coming unglued.
Then...the last couple of days happened, and the indices world wide shot up, and not just a little. In fact, very few racketeers are showing signs of panic anymore. Even the nut quoted above, himself hollering for Fed intervention just a few days ago...
So, what happened?
I'm not sure, but whatever it was, it didn't happen in open view. Phoenix is correct, there wasn't any public statement by the Fed (just a scheduled blow from one president, and nothing specifically aimed at calming what seemed to be a rising jitter), and yet...we get the last two days. Nothing changed about fundamentals, nor about the ocean of debt, nor about the struggling masses, and still, the rackets rocketed up.
Why?
Either the wild declines weren't really signs of real trouble coming to a head, or else, what we think about central bank power and willingness to do ANYTHING to stave off collapse, including any limits we believe exist, are completely wrong.
There is NO reason for the one to have occured if the other is legitimate.
I recognize that millions are regularly pasted to monitors to scope their 401k's and stand to be wiped but good if it actually does go nuclear, but even THEY have to be just a little dismayed at what we all just went through.
I want to know exactly WHAT happened, and I have to say, at this point, I really don't know what to believe...
m
now that the financial media has begun to promote the narrative that QE creates wealth inequality... This means TPTB are cushioned for the next fall with Trillions in excess reserves.
https://research.stlouisfed.org/fred2/series/EXCSRESNS
What if the ol'bitch raises rates?
Basically this, but with student loans, government bonds,
https://www.youtube.com/watch?v=bx_LWm6_6tA
The "economy" at this point is basically the Fed lending to the banks at 0% (ZIRP), who in turn lend to the US government at 2%, or to students (government backed loans) at 7%, or via credit cards at 20+%. The fact of the matter is, all productive lending opportunities have been chased out of the country, so the Fed has manipulated rates to permit non-productive, ultimately destructive lending.
If the rates were more approriate, say 10%, the university departments that end in 'studies' would see their attendence fall by 95% overnight, since the students taking junk majors on junk loans would be gone. Obama would no longer be able to play Santa Claus because no one would have lent him the money for it. Even consumerism/materialism would be cut back because the $50,000, 84-month, 0% interest auto loans (among other loans) simply wouldn't be there. Finally, the stock market would be much less of a mess b/c higher rates means that people saving for retirement would not have to gamble in the markets just to beat inflation.
These are all good things, but the reason it doesn't happen is because:
1) Obama can't play Santa Claus any more,
2) Wall Street would be smaller because savers wouldn't put so much money in the stock market, and therefore
3) Washington DC and the bankers would have less power
well said, sir
QE = Trickle up economics
Seriously? QE4 has probably already started--sopping up the treasuries China is dumping. Of course, they'll call it something else. i.e reverse double twist (with a full gaynor)
you markars can stay the other markars must go +100)
im sorry you meant markLAR right, south park, anyway youre spot on
munch munch, eh, what's up doc,,,
;-D
These experts at the Fed remind me of experts from years past. Jeez, doc, those leeches look scary . . .but hey, you are the expert!