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Does The Fed Really Have A Choice?
Submitted by Charles Hugh-Smith via OfTwoMinds blog,
Does the Fed really have a choice, given that the game is now for all the marbles?
We all know the global economy is slowing, so why would stocks soar from here? The basic answer was articulated by Chris Martenson: because this game is for all the marbles.
If the Powers That Be let markets melt down from here, where's the bottom? Where's the plan to bail out all the pension plans, banks, insurers, etc. that will be crippled by a full-blown market meltdown?
It would be a lot cheaper and less painful to prop up stocks at these levels (a 10% decline) rather than let them fall off a cliff to a 40% decline.
Many people dispute the idea that central planners can prop up the stock market once sellers panic. This is a worthy discussion, and the general point of disagreement is planners' ability to counter big-volume selling.
In other words, it may be possible to elevate markets in low-volume settings, but once selling picks up, planners lack the tools to stem the tide.
On the other side of the debate are those who wonder if the panic declines are as engineered as the lofting-ever-higher uptrend. What If The "Crash" Is as Rigged as Everything Else? (August 26, 2015)
Here is a daily chart of the S&P 500: the wedge could break either up or down, but the stochastics and MACD are somewhat constructive. It wouldn't take much of a rally to crank out a bullish cross in MACD.

The basic mechanism for pushing markets higher has been around since the 1920s. The game only requires two players colluding: one player buys everything at the ask and then some, pushing price higher. The second player picks up the baton and does the same, and then passes the baton back to the first player.
Once others see the rising trend, they start buying, and both players can sell a bit into the uptrend. When price reaches a line of resistance known to every technician (and trading bot), the players push price decisively through the resistance. This triggers more buying, and the players can sell a bit into the rally, until the next resistance line requires a push.
At some point, those who expected a drop and shorted stocks to profit from the decline will have to cover, i.e. buy back shares. This buying pushes price higher, a surge the players can accelerate with tag-team buying at critical levels.
As each level of resistance is surpassed, those tempted to sell start doubting the wisdom of selling in a new uptrend. Those who keep shorting at the next level of resistance are soon forced to cover (i.e. buy stocks) as each level of resistance is taken out.
At the end of this game, price is catapulted to new highs, forcing the last bears to cover. At this point, those who had their finger on the sell button are now congratulating their patience, and those who recommended buy the dip are proven correct.
The problem for technical bears is every technical system has been programmed into every trading program. Once you know that observers are keying on specific levels, the game boils down to blowing through those levels.
This has nothing to do with fundamentals or what should happen in a recessionary global economy. It has everything to do with managing news flow, expectations and the order book of insiders.
The Fed certainly has the power to drive a sword into the heart of equities by talking up trightening very aggressively. Maybe the Fed will slay the stock market at its meeting next week.
But what's the game plan to save everyone that's blown out of the water as a result of all that tough talk?
We aren't privy to the closed-door discussions, the informal talks and the game plan for proxies, dark pools of capital, etc., so we'll just have to see what happens. But it is a lot easier to reverse a 10% decline than a 40% decline. What would you do in the Fed's shoes? Let the market have its way, or crash it with tightening?
More to the point: does the Fed really have a choice, given that the game is now for all the marbles?
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The piper has to be paid at some point. The can can only be kicked so far.
In my day
A ball bearing was worth more than one marble
Oh fuck off with this QE 4 hopium shit already Chuck!
Chuckie Hugh-Smith may have lost his marbles. I have some sympathy for him.
Because of all the things I have lost the thing I miss the most is my mind....:-)
Question: Why do we still call it "The Fed", and not "The Den of Thieves"?
After $4 trillion of QE, the St Louis Fed now says QE doesn't work - and ZIRP doesn't work either.
The Fed has shown us it is simply doing stuff and doesn't have a solution.
How does prolonging ZIRP help you win the marbles (and make Schauble wrong)?
It doesn't, and Hugh is missing the real game here.
They don't care about the stawk market, they only care about their power which is
solely dependat upon the USD remaining the primary reserve currency.
They WILL raise rates for that very reason,and don't say you weren't warned,in
a disingenuous way for sure, but warned you were,
This is war, for all the big marbles., not a schoolyard game with glass balls.
And what if central planners want a precipitous drop in the stock market.
Smith is assuming the Fed is trying to prop up the equity market.
A big assumption.
Bonds compete with gold and there is a gold problem in London.
An estimated 119 tonnes in London backing an open interest between 12,000 and 19,000 tonnes.
https://www.bullionstar.com/blogs/ronan-manly/how-many-good-delivery-gold-bars-are-in-all-the-london-vaults-including-the-bank-of-england-vaults/
Don't overthink this, The Fed doesn't have a problem so long as people accept their paper/digital promises...
The can only can be kicked so far...truer words were never spoken. Remember Kyles Bass' wise words: "A voluntary restructuring will be painful, and involuntary restructuring will be incredibly painful. If the Fed raises rates then they are real. If the Fed does not raise rates (in the face of 5.1% unemployment - their numbers!) or does more QE, the you know its just a matter of time before the shit hits the fan in an unmaginable way.
"The can only can be kicked so far..." -- Yes, my father said this in 1971...
they can never raise rates. an asset valued in worthless units will find its actual value, zero.
I think they figured out how to put the can in a hamster wheel.
Is the FED really in control of this process?
Let's check back in a month.
Bernanke said a long time ago, that the Federal Reserve could buy up the entire stock market... and then they did.
Actually they are not. More to the point, they are irrelevant as they are about to cease to exist ..
First lets revisit January 2015..
1) 45 Billion USD to set up special veterans Administration programs for wounded Vets and those with special needs.
2) 100 Billion USD to set up an ongoing special Task Force to investigate and prosecute organized crime and government and corporate corruption at any level.
3) December 15, 2014 Wanta’s funds were transferred to the Wells Fargo Bank of Reno, Nevada. On December 17, Wells Fargo confirmed this to the US Department of the Treasury Compliance Department.
4) Ambassador Wanta is waiting for the required Letter of Invitation by Wells Fargo for him to appear at the Reno Branch to make Sole Principal arrangements to have access to his funds, which Wanta was told totals 30.9 Trillion USD. (actually now is at 32.8)
5) Once he receives this Invitation from the Bank, he can appear and make arrangements to access his account and be able to make disbursements.
http://www.veteranstoday.com/2015/01/11/another-thwarted-attempt-to-hija...
Update to Jan. 2015
BRICS Announcement and USD Collapse
This is based on this conversation on 3/24/2015. I am providing the entire conversation of 2 hours for your perusal. However, if that is too much for you, and you feel you cannot carve out the time, I will assist with a summary. This will be earth shattering and history making. There will be pain. More for some than others. Then there will be healing for all. It is an exciting time to be alive.
The following is derived from the the last 11 minutes of this conversation, starting at ~109:30. Once you listen to this, it is good to listen to the previous hours to comprehend the entire context. You are not going to get this anywhere else. Not even from other so-called alternative media. Not Drudge. Not Alex Jones. Not Glen Beck. Certainly not from Fox News or CNN. They have all been informed. They simply refuse to inform the rest of you. They will pay for their sins.
Veterans Today Radio - March 24, 2015
https://youtu.be/dX2MGrSfOuY (notice this is dead)
I was smart and made my own archive: https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (full 2 hours, and last 11 minutes as a teaser. The entire 2 hours is helpful for full context. Also free copy of Wanta's book, no longer available. This was the first book with Barnewall. If you can spring for the Kindle at $16.95, you will have the latest revision.)
- Going down in the next 90 days to 6 months. (we are currently within the 150+ day mark)
- BRICS announcement of new global currency and central bank system. [1]
- Federal Reserve System will collapse and the USD "petro-dollar" with it.
- USD tied to US stocks and bonds, markets will crash completely. Do not own US stocks and bonds. Sell them now, unless you think yourself genius enough, or have inside info to hold onto them to the very last minute to max profit.
- 30 to 60 day period of adjustment post collapse.
- Healing process to purge the venom (derivatives) in the present monetary system. [2]
- There will be bank runs. There will be distribution disruptions in food and other consumer goods. There will be a shock in prices temporarily.
- Black markets will prevail for a time for certain goods. Especially guns and ammo. The internet may be shut down temporarily during this transition.
- Checking accounts are not FDIC insured. Only savings accounts are. Have no more funds in your checking account than you need for immediate needs. (current bills, food, consumables).
- Those that have (physical) gold and silver on hand, prepare your face for a big smile. Gold will at least double overnight. Same for silver. And will probably double again through the transition period, depending on how long the transition is. (Confirmed via Bill Holter and Jim Sinclair in the last 30 days)
- Good to have a line of credit tied to your metals to a present BRICS nations banking system to their currency to best endure transition period.
- Many uninformed, and/or simply incapable citizens will be left out in the cold. - Prepare your heart to be a good Samaritan to those that ask for help. Especially family and friends.
Actually t-minus 22 days and counting ..
On the Pope's visit. (Sept. 23) Wanta in his Dec. talk (see box.com archive) speaks loosely about the Jesuits. Wanta is a very pious RC. All of this is not coincidental. Again, consider the original task force (Operation Stillpoint) formed in '80, between Nov. and Jan. '81 ..
William Colby - DCI/OSS - Roman Catholic
William Casey - DCI/OSS - Roman Catholic
Vernon Walters - DDCI - Roman Catholic
Leo Wanta - I.G. for DoD - Roman Catholic
William French Smith - Atty. Gen. - Presbyterian
Ronald Reagan - POTUS - Presbyterian
Things in seeming chaos are well under control. It takes time to introduce a poison/virus into the system without detection. Same malady once exposed, is quickly purged ..
http://deltasix9r.blogspot.com/2008/03/peter-flemings-foreward.html
--------------
[1] Meaning a new world reserve currency. Not a "one world currency." Not that I'm a big fan of central banks in principle, but no one/system is perfect. There will still be a lot of work to be done in monetary policy reform.
[2] There is up to 5000 Trillion in mortgage fraud, tied to these derivatives. See Greg Morse for full amplification. http://saveourfamilyandhome.com/
"Checking accounts are not FDIC insured. Only savings accounts are."
That's the funniest fucking thing I've heard all day.
"Checking accounts are not FDIC insured. Only savings accounts are."
That is not true. Savings & checking accounts and some mutual fund checking are covered.
https://www.fdic.gov/consumers/consumer/information/fdiciorn.html
As long as we're in a fiat currency, the can can and will be kicked.
And there's something that this article forgot to mention:
THE FED IS NOT IN THE MARKET TO MAKE A PROFIT.
and that's pretty scary if you think about it all.
And then one day the man who had agreed to trade his country house for an exsquisite and exotic tulip bulb didn't show up to complete the transaction.
"THE FED IS NOT IN THE MARKET TO MAKE A PROFIT."
Because they are in it for the plunder.
Zion is a scheme, not an ethnicity..
Israel is a British creation. The Balfor Declaration.
http://www.zerohedge.com/news/2015-09-07/bed-despotic-house-saud#comment...
Israel is a creation of Zion. Imagine the Gypsies could carve out a "homeland" in, say Romania, for themselves.
WW-I was a war Zion and the Rothschild banksters maneuvered Europe into.
The Rothschilds funded the arms build up and whispered in all the slithers' ears that they could overcome their neighbors in a war.
Zion lit the whole thing off, and then, when England was on the verge of defeat, extorted England into being first the occupier of Palestine, and then Zion's patron in Palestine.
Zion is a scheme, not an ethnicity..
See Herzl for the outline of the scheme that is Zion.
Gee, it only took about 5 posts in to see the jew bashing begin.
In an article about the FED. Go figure!/sarc
Slavery was never abolished, it just changed owners via fiat fraud.
In a PLATFORM like ZH which is an economic/political blog this moron asks why there is jew-bashing?
Get over yourself.
The ONLY thing I know about Jesus is that he was a cross dresser.
Ikey the Incorrigible.
Israel (State of 1948/49) is a creation (engineered) via the RKM (Rothschild Khazarian Mafia) ..
http://www.veteranstoday.com/2015/05/08/proposed-declaration-of-war-agai...
The Khazars exposed ..
https://www.scribd.com/doc/123652605/Genome-Evolution-of-Jewish-Populati...
The Jews exposed ..
http://tuppersaussy.com/museum/html/writings/articles/dialvol1no1.html
I'm a blood Junker. Cousin Otto was quite astute, would you not agree?
http://www.newrepublic.com/article/116913/federal-reserve-dividends-most...
http://www.themoneymasters.com/faqs/
http://www.pragcap.com/who-owns-the-federal-reserve/
"THE FED IS NOT IN THE MARKET TO MAKE A PROFIT."
Quite probably an old wives tale.
Just like the NFL is a non-profit organization. The individual franchises are run for profit, but the League itself is a non-profit. Of course, that doesn't stop Roger Godell from pulling down about $5 mil per year or so.
The PLAYBOOK says market must be UP when interest rates rise...this is the actual start of lift off.
"The can can only be kicked so far." Yes, but the can can be kicked for longer than you can remain solvent.
MACD, hah.
The piper has to be paid at some point. The can can only be kicked so far.
Maybe so, but that time is not yet. They need to kill the shorts without causing panic. Before interest rates rise the margin requirements will be tightened. A shorts squeeze without any change in price and without making any headlines so the sheep don't panic.
The Fed doesn't make decisions, it follows orders.
The "frontman", as they say.
This is a real time, real life game of thrones.
The real money (assets) will be made by crushing the markets and then stepping in (fiat) to save the markets.
Mathematically the banksters win the game. But math won't save them from the hang mans noose.
Lest we forget in the game of thrones -
One day, King Nebuchadnezzar woke up and had lost his marbles. Anything can happen.
The bankers must repay us and I do not own stocks.
The "Network of Global Corporate Control" stole "many thousands of trillions" of dollars from us, which amounts to millions of dollars each for every person on the planet.
http://divinecosmos.com/
https://www.youtube.com/watch?feature=player_detailpage&v=lyXi1efbYrk#t=863
None of the above is correct.
The money in question does not exist.
Everyone is backrupt.
...and bankrupt too !
except those in hard assets
It does exist. In TVM-LSM-666. 617, 500 MT AU.
Google Prince Julian Macleod Tallano to learn more.
https://dl.dropboxusercontent.com/u/41001366/IMG_0108.JPG
You have to go Full Retard
"You never go full retard!"
Happy Jack would not have been able to save them from that evil Drug Syndicate unless he was full retard.
Sometimes there are exceptions...
This, however, is not one of them.
The DEN OF THIEVES, formerly known as the FED, went full retard with Bernanke's QE policies.
Considering the current price of the Sp500, it has already broken the above wedge marked in red on the chart. So yes this bitch is about to have an epic liftoff. The unwind cant unwind unless the unwindors are ready for the last pillage of the unwindees. Which I believe to be closer to end of September. Guess we shall find out.
When I look at it it bounced off the top of the wedge and is now retreating
Fred was a Brit.
Israel is a British creation. The Balfor Declaration.
http://www.zerohedge.com/news/2015-09-07/bed-despotic-house-saud#comment...
https://www.youtube.com/watch?v=0akBdQa55b4
Where's the plan to bail out all the pension plans, banks, insurers, etc. that will be crippled by a full-blown market meltdown?
why does this guy even get posted here if he's that dense?
Send up the .25 trial balloon. Then qe with a vengence, perhaps $170B per mos.
I agree in principle.
But if they were going to do that, they'd have needed to do it in April.
.25 now will cause a stampede out of stocks and commodities to anything with a coupon. And with Deutsche Bank teetering, with Europe hanging in the balance, no one really knows how much it would take to topple them.
And they are big enough to topple the rest of the international banking system all by themselves...and there are other giants who are not more secure.
but how long before $170B won't buy a burger?
Markets to the MOON, Alice!...There's a conditioned Pavlovian reflex to a Fed Chairman blabbering that soothes investors and stops the PANIC! It has worked so well in the past and will continue to do so in the future thanks to the PPT and meaningless Fed Speak.....I have no idea when everything will get blown OUT of the water, nor WHEN that will occur...
casino's don't care if their players walk out with empty wallets...why is this any different
Selling into the rally.......
Who gets stuck with the bag when the music stops?
The Fed will raise rates because if they don't they will be signaling a loss of control. They want to continue the 'It's all good' meme and they don't care what C H Smith thinks. They can crash it another 10% and then go back to the same old tricks to pump it back up. There is no market just central planning.
Quite right... but I do think the FED will need more to maintain the "all is well" perception in the face of growing negative news in local and global markets. To raise rates now would be to risk bears sinking their teeth and getting this whole situation way out of control. So they'll postpone rate hikes to yet another future date until they have the requisite news to ride on and minimise that chance of bear control. Society is barely paying attention, waiting a few more months won't change anything. If they do raise rates they will do so by a very small amount, just enough for a moderate correction and shut down the bears for the next cycle. It's a big pump, little dump, big pump, little dump plan to keep confidence in the system... The question is do you think they can do it without losing confidence and how long until malinvestment is undeniably eating economies from within? I think they've already lost confidence from the international community that matters and the signs of malaise are there all over the place, it's just a matter of how quickly that festers internationally and locally. Who knows though, stupidity is infinite and society is case in point. Until people start to wake up it's QE infinity, so just BTFD then stack your earnings just in case...
The Fed can play this until the end of time. Everyone wants the same thing being moar. Limit down is the tool. Then melt up. They print fiat for Wall Street not Main Street and only to ramp stocks. This cannot and will not end until the end of corporations as the means of governance.
I think the Fed raising rates has always been a flat out bluff or more likely, a highly conditional statement. I think any statement they make about the future is political first and real, second. It means their statement is meant to show they are serious and can play the other side of the game to raise rates. It would also have helped Obama in that it wouldl begin to look like a real market and hot economy. How can you call it a hot economy with ZIRP? Raising rates in light of the current market carries a signifcant downsid looking bad for themselves and Obama.
Mostly, any Fed statement is subject to the economic weather of the moment. It's like planning a day on the lake a month from now. It's a good idea and if you are in the summer the odds are good. However, the weather of that weekend will be the actual determinant of whether or not you go.
...not so sure the usual game rules apply....
If the amount of equity gets too low, deflation could subsume the entire system...this time may be different.
Disagree.
We don't know what the reserve ratio's of banks really are...but evidence from Europe, at least is that they aren't good.
The values of the assets they hold vs their liabilities is what determines whether those banks are bankrupt. All it takes is one big bank bankrupting, and that bank's assets - held by other banks - become valueless, causing them to rupture in turn.
It is Russian Roulette with all but one cylinder filled with bullets. And once a few banks are revealed as bankrupt (because they always were...that is what Fractional Reserve banking IS, the sale of money for interest which they do not have) it results in a general stampede away from banks and banking.
'Accomodation' on the other hand can be managed, and only 'blows up' if two things happen simultaneously:
1) People lose confidence in the currency and decide to trade it en masse.
2) There is some recognized better thing (even if only temporarily).
The big banks were bankrupt in '08. The FED bought all their garbage debt in '09. They also changed/suspended accounting rules. Bankruptcy is not allowed! That's what turned the market up at 666 in March. The continual devaluation of the dollar(lower standard of living) is how this garbage gets payed off.
See it as it is, there are no marbles.
You don't throw the peanut butter jar out while it has some peanut butter still left in it. You scrape it out to make one last sandwich, then you throw the jar away.
I put nuts, bolts, and random road finds in Plastic peanut butter jars,
That way I almost know where I put some of the stuff I know I have and can't find.
My Martha Stewart insider tip of the day.
Use it wisely and stay out of Jail.
George Washington Carver is my hero.
Too much volume. Like trying to hold back the tide using plywood. If there's a panic sell off, nobody can stop it.
The Chinese have shown the way: limit down and then halt trading on active stocks. Trade minor stocks at trickle volumns until the market is technically green on the day, propagandize the hell out of this fact, and then reopen a few days later into huge panic buying.
Any questions?
Good in theory, bad in practice.
The difference is the Chinese governement has no qualms about jailing or executing billionaires as scapegoats to feed the propaganda panda. In the US, the billionaires own the government.
Has Charles considered the option that the policy makers actually want the current system to fail so that they can consolidate more power after a dramatic crisis that puts everything else to shame in terms of magnitude and destructiveness?
Sure they can algo run all the stops they want, but the end goal is to take over the world. That can only happen after the scuttling of the entire existing world geopolitical and financial system.
The PTB like the current system a lot. Nothing could possibly compare. The will do anything to save it. And certainly are.
What we have here is a lack of imagination..................
Its all a CONfidence game...
why the HELL does the "IDEA" that the fed "wants to save" keep being regurgutated. The other side of this idea is that the FED "wants to unsave" - that is bring down, or stated otherwise, to destroy.
the other side of the discussion, is that financial collapse and chaos brings about " consolidation" of a global agenda.
the fed is a tool for this consolidation.
so in play, does one "blow an enormous soap bubble" to "save" or to watch it "pop".
methinks it is blown to watch "pop".
The only global agenda is infinite growth through unfettered consumerism until all tangible things on Earth are utterly devoured. Meaning the same agenda as the last 10,000 years.
If it sounds suspiciously suicidal, it is. That's what happens when you allow the monkeys to do as they like.
"The Fed is hard wired to print" - Ron Paul
"The money printers will print" - Marc Faber AKA Dr. Doom
The Fed is the hammer.
We are the nail.
No different than Communist China,Central Planners around the globe have their trading desks with unlimited margin and money printing capabilities.Trading desks at the Fed,Treasury Department,Bank of Japan,etc.etc.Why even have a stock market? If Corporations were smart,they'd remove themselves and go private to avoid Government and Bank manipulation of their stock.
If Corporations were smart
Corporations are first of all the management and they usually get a big chunk of stock options and profit from a manipulated market, even if the mangement skills are mediocre. So why would they be so stupid and go private?
+1 ----hit the nail on the head
One possibility is an oil spike maybe due to an incident in Middle East.
This would allow fed to hike and reduce the QE in EU / JPN.
The Oil / energy stocks could get a lift , plus the war spending could get
other sectors excited ( not mention the short squeeze in equities
One possibility is an oil spike maybe due to an incident in Middle East.
This would allow fed to hike and reduce the QE in EU / JPN.
The Oil / energy stocks could get a lift , plus the war spending could get
other sectors excited ( not mention the short squeeze in equities
It's amazing earnings are not even mentined in the above article.
It's the bottom line that will drive stock prices higher. Not fantasy.
The technical trading game only works as long as there is some sort of fundamanetals somewhere in the background.
Traders today think they have eliminated the need for fundamentals.
They are wrong.
If markets soar it will be because of helicopter money inflation. Dow 50k.
Loaf of bread 1k.
What a bunch of nonsense: aren't the Chinese authorities spending fortunes (they own 10% of their market by now) without satisfying all the sellers? When the tide turns, nobody is bigger than the market.
Poll: The rally peters out today
All gains are given back within a day or two
A couple of days to sober up from the easy life of the Hamtoons , then POW right to the moon ,Alice.
I give it maybe a week, but I'm ready to watch the Black Swan Dive!
JP Morgan once said:
"Any man who bets against the United States, Will go broke"
I think the world is to stupid to dump the US at this moment of history. I has no other "champion" to replace it.
China is not transperat nor trustworthy enough, just see its antics over the last few weeks.. arresting jornos and bokers.
The US is still the only champion around.. unfortunetly.
There is always gold. Unlike US treasuries OR dollars, it's in limited supply...
AngelOfJoy has a powerful argument. Even though gold and silver may still be hammered in terms of dollars in the short to mid term, it will still come out and trump the dollar. Given how much gold the Treasury has "leased" and has wound up in Chinese hands, I have to agree that China has a significant valuation advantage going forth. Sadly, those days are being delayed by China's own decision to not TRUTHFULLY disclose their full holdings, so you're correct on the transparency issues. The USA though is partially responsible for the trustworthiness issues with the beligerent behavior we consistently invoke around the Globe. How does one expect China to react otherwise?
I'm continuing to stack as I can, although awaiting delivery longer and longer is making me more of a nervous wreck.. Sheesh!!
And of course what the writer described to bid market up is a felony called collusion/bid rigging.
If a down stock market will not be tolerated by central bankers then the end result is everybody and everything is all in, no investment anywhere else, zero risk, zero return. . . .in essense your brokerage account becomes your bank account. It will take atomic liquidity to keep that bubble inflated.
The wild card in this may be the 2016 elections. Will the Fed let the markets correct some and then magically jump back in with more QE? That way they may think they have taken some of the air out of the markets but recovered them in time for the elections. I don’t know...
I will just get long with what the Fed supports; and make coin off the Fed. Thanks Mr. FED.
We all know the global economy is slowing, so why would stocks soar from here? The basic answer is simple: The Fed has no choice, because this game is now for all the marbles.
In Weimar Germany stocks soared ... until they, and everything else, abruptly collapsed. Then, as now, front-running and inside information proved to be enormously profitable. Keeping up with the Jones proved to be what made the irrational behavior so universal.
Chuckie is exactly right.
Nobody can afford lower asset prices: not the pensions, not the banks, not the government.
Therefore, asset prices will be supported.
They also cannot afford lower asset prices...as in being the last out of the market. They will have to balance fear with necessity.
The timing of Central Bank activity looks more like a managed hand-over of power from the D-branch of the Banking Party to the R-Branch.
If you look into the last few decades of elections you will see that when the economy is declining in the last year of the encumbent's reign, the opposite party wins.
Pity the only difference between the parties is which lies they tell which constituents, having exactly identical policies.
The stock market is not the economy nor can it sustain the underlying economy. The market manipulations that are occuring are causing more and more malinvestment into a Ponzi that as all others in history will eventually implode under it's own weight. As it grows, it takes more and more hot air to sustain it. If it's for all the marbles, you might as well plan on an implosion of epic proportion at some point. The economy will eventually disintegrate underneath all the malinvestment that is being driven by it. Think tulips.
Exactly! The stock market, as in an array of companies cannot artificially stimulate organic demand. If the demand is not there, the simple fact someone is bidding up their shares will not make a sound economy. In fact, the market signal will become disconnected from the market. This is probably part of the reason that oil prices have been crushed. The demand was never there.
The question that should concern central planners is the long term purpose of propping up the market. At some point the game will be up and what is the point of the game? The point is an actual, real life, healthy economy. An economy that always and ever requires props is not real and is not healthy. Thus, the interventions are like picking the wrong medicines for an illness. They must change.
However, of all professions on the earth, politics is often the art of deception and images and illusions. So, it is natural that they think they can do the same thing with an economy.
BTFD
Britches.
How much can you water down the whiskey before it has no taste and people don't want it?
Once you understand fractional reserve banking, then you will understand that they cannot raise rates in any real way. I did not say 'will not'. I said CANNOT.
They might raise them before the eyes of the crowd while unleashing an equal and opposite flow of money creation with the hidden hand, as a pure confidence maneuver. But this would be Russian Roulette, with five chances of dying for each of surviving.
The global banking-and-currency-system has so much accumulated interest that debt service is not being managed - hence the QE.
When they are manually peddling the economic bicycle through QE to keep the worlds' currencies and markets from collapsing, ANY application of the brake is going to trigger that collapse. Yet any failure to brake will simply set the stage for an equal-and-opposite blow-off top, whose timing will be a matter of public psychology.
The short answer is that debt in such a system is never retired, only rolled over in repetetive 'consolidation loans'. The portion of that debt (which also includes the currencies themselves) that is accumulated interest continually grows in such a system. This leaches ever-more of the productive-sector's profit away from productivity towards finance - by NECESSITY AND DESIGN. Eventually the productive sector cannot grow...but in failing to grow it cannot roll-over debt...but in failing to roll-over debt it cannot meet its payments... And then the whole thing collapses. This is the Deflation Option.
The opposite possibility is that they continue to ACCOMMODATE. But in accomodating, more people are getting more money for less real productivity, while fewer people are getting less money for more real productivity, incentivizing less productivity - moral hazard. The capitulation point comes when people realize that productivity is actively penalized, and that the mechanism of penalizing productivity is the financial system itself - BY ITS VERY NATURE. Then people need only realize that their choice is total unproductivity or abandonment of the financial system in favor of barter or physical currencies. This is the Hyper-Inflation Option.
If you look at the marginal effectiveness of QE you will note that each printed dollar lead to less than one dollar of economic expansion. The productive sector cannot grow, and ANY rise in the rate they pay will result in immediate collapse - TODAY.
If you look at the labor-participation rate you will note that it is plummeting. If you subtract government employees, such that you see only those employed producing things people would voluntarily trade for, you will see that the labor-participation rate has been in a long term decline, and has crashed in the last 8 years - AGAIN TODAY.
Fed's balanced on a knife point.
Either they collapse the banking system, or the currency system, with ever less space between the two alternatives.
The only difference between alternatives, is that the timing of the banking system collapse is sure...but results in bankers losing everything; while the currency collapse results in a reset for bankers and governments, as all societal debts disappear, but with uncertain timing.
- They lowered rates and murdered velocity.
- They funded the world almost entirely with central bank money and made saving irrelevant and worthless.
- Free money for the elitists created waste and corruption.
Could it be so simply that reversing the process would reverse the above?
Yes.
It is as simple as reversing the above.
HOWEVER...
- The above was done incrementally since 1914. Not merely since 2008. What you've listed, which they've done since 2008, is what they did to AVOID reversing all that they'd done since 1914.
It is called a "Crack-Up Boom".
You need to understand that the basis of the monetary system is non-interest-bearing credit creation (CB liability) based on an equal and opposite interest-bearing-asset (a CB asset marked to face value). So, to create $100, you need a bond with a $100 face value. The Bond, then is $100, and $100 is the bond. They are two entries on the central bank balance sheet representing the same thing.
EXCEPT THE BOND BEARS AN INTEREST RATE WHICH CAN ONLY BE PAID WITH CURRENCY THAT DOES NOT EXIST AT THE TIME OF ISSUE. So, they roll-over the debt, and the $100-bond is replaced by a $100+outstanding-interest (say maybe $110) bond. And the game begins again. This is why National Debt can only expand in such a system if you are the reserve currency. If you are not the reserve currency, then you run a mercantilist export-driven economy, and your books are balanced by foreign exchange reserves. But in local currency, you never have enough money to pay off the debt used to create that currency. THAT IS THE NATURE OF THE SYSTEM.
So, I can tell you roughly how much they've rolled over that debt, minus wars and exceptional spending. Simply what was once a $100 bond is now a $5400 bond. That is conservative. The number is likely much greater. What this means is that $100 of $5400 is the real principal, while $5300 of $5400 is the accumulated interest. Productivity of $100 of real capital is being required to service $5300 of incrementally accumulated interest....and even with the efficiency provided from technology...it can't do it. So they lower rates to make it easier to service the accumulated debt. They fund the roll-over from the CB...which actually just makes the interest-wall harder to climb...but delays its collapse.
So, what happens when they have to issue $110 bonds to retire the old $100 bonds, and only actually get something less than face value for it? Well, when that happens all the debts denominated in that currency become un-payable. Each default actually destroys the money used to pay some previous debt...and so on, until you are left with only the original principal, plus any real growth that may have happened since then.
HERE'S WHY THEY DON'T WANT TO LET IT UNRAVEL:
- You can't control the pace at which the system undoes what was done since 1914. What took 100 years to do with credit inflation can be undone in a few days...but it would be very traumatic to all involved.
OK.....so then, should I order a case of popcorn now?
Let me get this straight you *actually* believe that the US government is just going to GIVE a fellow named Wanta $32 TRILLION DOLLARS?
Excellent post gc. I would like to emphasize your labor participation rate, too. Federal workers are a net loss to the system. Government is a net productivity loss, at least to about the 90th percentile, particularly the Feds.
As an example, when you go to the DMV you are going to register and pay extra money for a vehicle you already own, already have a receipt for and are ready to drive. However, you cannot legally drive it without government permission and registration. So, we pay a clerk, clerk's boss, clerk's building, clerk's fully funded pension, clerk's operating cost, business equipment and holidays to do an extra set of paperwork. The only minor advantage is if it is stolen it is slightly more traceable. However, you could do securtiy on your own.
Now imagine if you had to go to the DMV for your TV, fridge, entertainment system, kayak, and antique sofa. Imagine every transaction required another government deed and permit. You see the enormous loss in productivity?
That is why I also hate the GDP numbers. They count government spending as exactly equal to private sector spending. In theory the governmet could become 100% of the economy and it would suffer no loss. The proper way to measure the health of an economy would be to do something along the lines of subtracting the government portion from the private sector or do some ratio. You know how it is said that if your debt reaches 100% of your GDP you are on your way to financial ruin? Well, it would be similar.
I work in a heavily regulated industry. I am told when and for how long we can use the word "new", as if that is a government concern. I am told where I can use a highlighter and whether I can write or attach a sticky-note to a document. We cannot write the title of a lecture we invite people to attend. They have to guess. Information flow is probably less than 25% of what it was when I started.
I was feeling sorry for myself until I recently talked to a home appraiser and someone in real estate. I think I have it good comparitively. I think every company now has a "compliance" department which is the forerunner of KGB-type political officers being assigned.
All you idiot, moron, naive, dipshit statist-leftists who always think a new rule is the actual solution to everythign should have to spend time in bureaucratic hell trying to comply.
I digress. The point is that the currency game allows the government to grow through visible regulatory means, invisible productivity losses, and increase taxes through debt and inflation.
Bravo, gc.
Imagine a Banty Rooster you trained to sing... Or perhaps a turkey?
"You're off to see the Wizard, The Wonderful Wizard of Oz.
You'll find he is a whiz of a Wiz! If ever a Wiz! There was.
If ever oh ever a Wiz! There was The Wizard of Oz is one because,
Because, because, because, because, because.
Because of the wonderful things he does.
You're off to see the Wizard. The Wonderful Wizard of Oz"
If they raise rates without any net monetary inflation, there isn't enough money to pay debts, or even debt-service. This applies to ALL DEBTS (including government ones, including those filling the SS trust fund, including those used to pay for Welfare, Medicaid, and all the stuff the Free-Stuff-Army militantly demands)...and the collapse would unfold VERY FAST, and TOTALLY CERTAIN, as one bank's collapse caused its bond-holder-banks to collapse in turn.
If they print money then at some point people will abandon that money for anything more real, while ever fewer do real productive work, and ever more collect public benefits and/or work for the Financial Casino to produce nothing of real value.
If that happens then the standards of collateral for the creation of that money would have to be relaxed such that ever-more-uncertain-assets back its creation. When people abandon the currency, the debt principal and currency cancel each other out, and the sale of a tiny percentage of real physical assets would cover the oustanding interest - likely in either a new currency, or via barter.
Only one of these results in governments and banks living to fight another day.
Which one do you think they will choose???
a couple of things----
all debt is not due on the same day---
mark to market no longer is the rule--
To redeem anything you may not have to mark it to market, but you'll have to sell it in the market for whatever the market demands.
Regardless of the maturity date, it is not infinity. When the currency goes bust so do any and all assets denominated in it.
The market has more drama than on facebook. Every day it's up, all the bull cases come out. Every day it's down, all the bear cases and crash come out. Such a headache it gives.
Only a headache if you have nothing better to do with your time and/or life than obsess to the point of developing OCD over markets you have no control over, and whose movements generally only benefit the members of a very, very small club, one which we are not members of, and never will be; which is fine with me. If there really is a God, one day sooner than any of the crooks can imagine, they will have to answer for their criminal activity, all perpetrated so they could spend a few short years buying worthless baubles. Their reward, I can only pray, is spending eternity in a lake of fire, getting rammed in the poop chute by demons.
It would be a lot cheaper and less painful to prop up stocks at these levels (a 10% decline) rather than let them fall off a cliff to a 40% decline.
Many people dispute the idea that central planners can prop up the stock market once sellers panic. This is a worthy discussion, and the general point of disagreement is planners' ability to counter big-volume selling."
So, you're 55, eligible (with a 20% penalty until 59 1/2 with no penalty) to retire and start drawing your first 401k benefit. In a mere 10 years, you'll be able to add a social security benefit as well.
The racket is rigged, and you know this. You already SAW a 40+% decline in your portfolio's value in 2008.
Next to that--or worse--what's 20%, you think...?
Now, if the job market were healthy, you MIGHT be able to stick it out, hoping for a few more raises in the next 10 years or so, or perhaps even a promotion, that might elevate your earnings to a higher benefit (having also added to that 401k as well).
A very big gamble...
Knowing that it is NOT, you could be out of work (in fact, it's highly likely you will be), or else, you'll be replaced into a lesser job not able to meet income needs anyway. In fact, you're more likely to need some kind of nowhere job to fill early pension gaps no matter what, so...
At least, you think, you're GETTING a check today, instead of hoping you'll still have an account that'll provide one tomorrow...
You don't plan to live lavishly anyway, but it would be nice to have that check NOW, while you can, perhaps, still do something productive with it, especially when you consider that the purchasing power of tomorrow's retirement dollar is GOING to be less (same as it ever was) despite any temporary currency war going on...
Do you really want to fret over a monitor each day worrying about your 401k value, while the racket taxes your nerves with behavior you don't understand, can't control, and which may wipe you out at a moment's notice?
For a max of 20% cost?
No fucking way; you get the hell out as soon as you can, and start enjoying life. You put your 40+ years in.
To hell with it.
The people who come home from Vegas with money in their pockets are the one's who quit while they were ahead...
I doubt pension funds (big time racket players) have figured this in, and when early draws become a serious issue, how do they continue to play the racket with less and less dough?
m
Not bad.
To your question, the Federal government will be confiscating all 401K accounts rather soon. Give it a few years. The pension fund managers will either accept government jobs, or take the bulk-sum payout that will be offered and vanish into the night. Either way they don't give two shits and will simply sit in place doing what they do until the reaper comes riding in.
Agree, on some if it, but not on the time frame.
The important thing is that Martin Milner has died.
https://en.wikipedia.org/wiki/Martin_Milner
He was a pretty good cop character but no Jack Webb.
Nice that they have old TV photo-plays on DVD. One of the true assets of the tech age we live in.
Not disputing that the crooks in Washington want to steal 401K accounts, but they can't without putting their own retirement accounts into serious jeopardy. Revolutions have started over a lot less, and I don't think most voters understand the incredibly lucrative retirement pay Congress (and presidents and supreme court jesters) have given themselves.
If you are a crook in Washington, you can either tell the academic quacks at the Fed to print like their lives depend on it, or you can sacrifice everyone's retirement -- including your own.
Its easy for Congress to eliminate YOUR pension, but tell us how you think they would keep their own, far bigger, pensions in such a scenario.
Congress will have to burn every bridge and call in every favor to cover over the collapse in Social security payments. Taking private savings on top of that would spell the end of the regime -- read your history books and remember this time won't be different
Let the market have its way, or crash it with tightening?
LET the market have its way? As if the Fed has a choice. They only pretend to be in control. And the worst of it is that they believe their own bullshit.
Many people dispute the idea that central planners can prop up the stock market once sellers panic.
What is there to dispute? Just in recent times, they couldn't do it in 2001 and they couldn't do it in 2008. They always have the lame excuse, "nobody saw it coming." I could see it coming just from reading the news. And I'm not an economist.
"It would be a lot cheaper and less painful to prop up stocks at these levels (a 10% decline) rather than let them fall off a cliff to a 40% decline."
Not when math dictates a bigger crash later.
Greenspan propped up the Nasdaq in 1998. It fell 76% from its eventual peak.
"If the Powers That Be let markets melt down from here, where's the bottom? Where's the plan to bail out all the pension plans, banks, insurers, etc. that will be crippled by a full-blown market meltdown?"
This really is the most important question in America right now! We have staked America's future on bloated stock values. Here is the flaw in this. "Stocks do not create wealth." "High valuations are not real wealth that can be distributed to those holding them, only fiat can be distributed" "So high stock valuations can't all be cashed in to meet pension and savings and insurance needs" "You know the instant people try and CASH OUT to get that wealth, THE VALUE CRASHES".
IT's All Fake!
go to the window, open the sash, lean out and yell "I'm mad as hell and I'm not going to take it anymore"
actually its the price that goes down--the value is the same as it always was. If the value is collateral then thats what it is, the count/amount is a price function -not a value function---Goldman has a VAR model that it sells to pretend value. Have you tried to figure that out--its nonsense. Just like P/E ratio that isn't a ratio so it can't be used on more than one stock-- its a price divided by earnings --not a ratio and doesn't depict value.
-----people tallk about a home when they really mean a house--its the same thing--
Is this where the tide goes out and we get to see who was swimming without their trunks on?
Now we in Great Russia are blessed to hear our dear leader voice in streets! Ou Putin! You are our Sun! Our God!
http://youtu.be/iVZOfCFvOwI
Thank you tor your wisdom and greatness!
Moron... Watching TeeVee much ?
What if people no longer want marbles, but want pogs?
aaah, but you all are so much living in the past 80's.. like u.s or fed matters.. tiger and bear are happy together and i bet they are not using stinking dolla..
China buys Russian crude oil to ensure supply security: CNPC chairman
http://en.chinamining.com.cn/News/index.html
I contend that the FED has no intention of selling but instead is buying up the planet on behalf of the FEDs owners--Lloyd Blankfein and company Goldman Sachs.
What is to stop them? They own the western militaries and that is the only thing that can stop them: a faction of NATO that is led by a charismatic leader.
There are a world of people to get behind such a leader at this time.
If the FED raises rats, more Treasuries will be dumped.
It's simple, really.
10 year bond yields will move higher.
Sorry.
yes but the fed has only jawboned a measly 1/4 point and the whole world is selling treasuries. how about a half point?
Half-point= chaos. Too late for that.
This was an IDEA that the Fed and some parts of the US Government embraced after 2008 - the concept that the Dow Jones is a "flag" for the US economy. So if they use every trick and manipulation to hoist the Dow Flag as high as possible ... then America must be winning. Right??
TOTALLY WRONG.
I thought that Dr. Jon Hussman took a great stab at giving the counter-argument this week. See his commentary at www.hussmanfunds.com
I will give a different counterargument. The buying and selling of goods in the marketplace cannot simply happen through re-cycling of debt. The Fed cannot boost "consumerism" simply by lowering interest rates ... with the idea of creating more Aggregate Demand. This is a Keynesian fallacy. If people use debt to buy things, there is NO mechanism to shift the market towards the productive use of goods. The entire US economy becomes distorted into price levels and production levels that are out-of-whack with the real productive needs of America. The spectacular growth of the Service Sector economy in America is a direct result of this distortion. It becomes impossible for new companies to design and build innovations that are really productive for America's future - because there are no valid "price signals" to guide them towards the right resuts. There is only rampant consumerism for items that meet daily appetites, but do not build a stronger nation.
America will crash heavily because the bloated Service Sector economy is not survivable in the long run. Stock market investors will simply go to other places in the world to invest - those places where real productive investment is flourishing.
I think you have it mostly right. The key problem is that government interventions throw garbage in they system, sand in the gears of a market. Value becomes impossible to asses. But, what does take it's place is gamesmanship. Now, you invest based on the next thing you think the Fed will say or do. It is no longer about productivity or the next cool iThing or even corporate profits. It is about government intervention and divining the mind of the Fed, the central banker or even a Congressional stimulus package. There is no value proposition in any of these things.
The Fed can crash or elevate a market with a single sentence. Apple or GM or Google could not do it on it's best or worst day, which is actually proper. They are not the whole economy, but the Fed and the government kind of...are. When China can jail or shoot a short seller, you have a whole new level of market intervention and whole new layer of fog between you and real value.
Last, the currency manipulations also further cloud value.
The market through the elegant and beautiful simplicity of prices everywhere and at all times is constantly and perfectly revaluing everything. The arrogance and ignorance of govenment combined with real power destroy it and all it's benefits in organizing a society.
Here's the problem; you can't second-guess what these fuckers will/won't do. I'm basing my decisions on the death of the petro-dollar. I'm sorry, there will be no WWIII among the Nuclear Powers. Nobody Wins. Get it? I'll just keep stacking and wait to see what is offered on the other side of this economic disaster brought to us by the Dumb Fuckers in Washington D.C....
i think the fed can do QE and raise rates at the same time. they not mutually exclusive. the fed suggested raising rates, the chinese started selling treasuries, game on. the fed can either print money to repatriot those bonds, or buy them and orphan them. if they can soak up half of the 7 trillion outstanding without raising rates even one point it will be mission accomplished. now those new bond sellers are buying into a rising rate environment, which prefers the sellers interest. but you know if it doesnt involve a white cop and a black man being shot in the back obama hasnt a clue and to some degree that would give the fed room to maneuver
What if...
...the FED cannot lease out anymore gold?
The on-going collapse in China proves the banksters can prop the markets temporarily, but they cannot prevent a general decline.
Once confidence goes, it is game over.
I think the collapse in the U.S. equity markets is in progress regardless of FED intervention.
The fed is the crisis
Try going to your local bank and getting a loan at 0% or even 0.50% (a LOAN, not a deposit). No one in the real world pays the Fed's imaginary rate anymore, not even companies with the best credit ratings.
The last time clueless academics kept interest rates too low for too long (the 1970s), it created the eurodollar market -- a real banking system outside the jurisdiction of the Fed. Its happening again.
The Fed normalizes rates or else the Fed's relevance goes down like CNBC ratings. Its that simple.
IMO, the biggest issue is that the Fed and its banking owners have created an environment where the corrupt economy is much more important to maintaining their power than the real, value adding economy. They want everyone to believe that the only way to survive and thrive in their game is to become corrupted (and that corruption is normal for humans). In doing so, you hand your power over to them and embrace the corruption. It is then hard to leave.
In an ideal world, there would be no Fed. The Fed being a corrupt and corrupting influence must give up power... once central banking is done, the other corrupting powers will crumble as well.
What fills the void?
Freedom, truth, honesty, spirituality, diversity, opportunity, decentralization ... in other words, it would be what the history books, written by central powers, consider "a dark age". It would be the middle ages, but with much more advanced technology. Power and responsibility would be handed to the people and a various few would want it and accept it. The growth paradigm would be revealed to be false and an artifact of central controller greed and central bank inflation. Think how hard it would be to create monopolistic industrial monoliths without central bank largess and the (free funded on leverage with banker guaranteed appreciation) public company funding mechanism.
Banking's two original sins:
1. Borrowing short at variable rates and lending long at a fixed rate, AND
2. Fractional reserve lending
would have to go away. The pace of the world would slow and find a new balance.
What really matters anymore? These markets certainly do not. I happen to see people getting poorer, leaner and unable to make ends meet. A breaking point exists out there; I just don't know what it is.
I do know that average Americans are basically broke. It's a paycheck-to-paycheck world and that is very fragile.
Anyone investing in this stock market is crazy! My theory is simple.
If wealth can be easily produced by expanding debt and devaluating a nations currancy, why do we have any global poverty? Lets get Africa's Central Bankers to do the same for their enire Contenents economy and produce wealth from thin air! Then why do people believe that the last 7 years of Stock Gorowth is anything more than a bubble? If stocks are inflated and currancies are over valued than paper wealth is meaningless!
I am not a gold bug, but when assets such as stocks and housing are inflated and commodities are in a deflationary environment, the argument for gold remaining flat makes no sense. Gold should either be deflating or should be increasing in value. Is Gold being manupulated in order to keep a high dollar? My common sense tells me gold is the place tobe over the next few years untill this ponzi crashes and the economic reset occours.
They could stop doing whatever it is they are doing. They could stop going to work. They could dismantle their system and allow truth and reality to reign.
They will never do that. But there is always a choice. Never forget that they had that choice.