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Dear Janet, Seriously!!

Tyler Durden's picture




 

The Fed's confidence trick this week was, once again, the Keyser Soze gambit (via Beaudelaire)-  "convincing the world of Yellen's hawkishness, when no such character trait exists." However, unlike the movies, stocks and FX markets have already seen through the con, leaving Fed Funds futures alone to believe the hype. As we noted previously, "The Fed Can't Raise Rates, But Must Pretend It Will," repeating its pre-meeting hawkishness to dovishness swing time and again in a "Groundhog Day" meets "Waiting For Godot"-like manner. Time is running out Janet, tick tock...

 

This is what we are to believe a "data-dependent" Federal Reserve is thinking...

Source: @Not_Jim_Cramer

And for now, Fed Funds Futures are falling for it...

 

But the broad equity markets aren't...

 

Nor are Financials...

 

And nor is The Dollar...

 

Because, as we noted previously, the market (and The Fed) know perfectly well that raising short-term rates would be like taking away the punch bowl just as the party gets going. As rates rise, the economy’s production and employment structure couldn’t be upheld. Neither could inflated bond, equity, and housing prices. If the economy slows down, let alone falls back into recession, the Fed’s fiat money pipe dream would run into serious trouble.

This is the reason why the Fed would like to keep rates at the current suppressed levels. A delicate obstacle to such a policy remains, though: If savers and investors expect that interest rates will remain at rock bottom forever, they would presumably turn their backs on the credit market. The ensuing decline in the supply of credit would spell trouble for the fiat money system.

To prevent this from happening, the Fed must achieve two things.

First, it needs to uphold the expectation in financial markets that current low interest rates will be increased again at some point in the future. If savers and investors buy this story, they will hold onto their bank deposits, money market funds, bonds, and other fixed income products despite minuscule yields.

 

Second, the Fed must succeed in continuing to postpone rate hikes into the future without breaking peoples’ expectation that rates will rise at some point. It has to send out the message that rates will be increased at, say, the forthcoming FOMC meeting. But, as the meeting approaches, the Fed would have to repeat its trickery, pushing the possible date for a rate hike still further out.

If the Fed gets away with this “Waiting for Godot” strategy, savings will keep flowing into credit markets. Borrowers can refinance their maturing debt with new loans and also increase total borrowing at suppressed interest rates. The economy’s debt load can continue to build up, with the day of reckoning being postponed for yet again.

However, there is the famous saying: “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.” What if savers and investors eventually become aware that the Fed will not bring interest rates back to “normal” but keep them at basically zero, or even push them into negative territory?

If a rush for the credit market exit would set in, it would be upon the Fed to fill debtors’ funding gap in order to prevent the fiat system from collapsing. The central bank would have to monetize outstanding and newly originated debt on a grand scale, sending downward the purchasing power of the US dollar — and with it many other fiat currencies around the world.

The “Waiting for Godot” strategy does not rule out that the Fed might, at some stage, nudge upward short-term borrowing costs. However, any rate action should be minor and rather short-lived (like they were in Japan), and it wouldn’t bring interest rates back to “normal.” The underlying logic of the fiat money system simply wouldn’t admit it.

 

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Fri, 10/30/2015 - 21:52 | 6733100 philipat
philipat's picture

Problem is, the "Markets" ARE now The Banks/ESF. So long as they are all in on the game, the "Markets" will never "Get it". It's ALL centrally-planned now.

Sat, 10/31/2015 - 00:25 | 6733359 Keyser
Keyser's picture

Janet called me last week seeking advice on the next leg of strategy for her gambit... I had to tell her that she's basically fucked, left standing in a corner with a paint brush... Time to come clean, beg for mercy and do what banksters and politicians have been doing for centuries, blame it on your predecessors... 

Fri, 10/30/2015 - 22:05 | 6733118 Ignorance is bliss
Ignorance is bliss's picture

I am waiting to see if the bankers get the Greek capitulation or the Icelandic incarceration. I think they are a little afraid to find out. There is no where to run and no where to hide.

Fri, 10/30/2015 - 22:09 | 6733127 Caveman93
Caveman93's picture

How about we invest in strong horses and rope and re-do what the Russians were so good at with having folks drawn and quartered. I will start that domain on Go-Daddy tonight!

Sat, 10/31/2015 - 00:15 | 6733342 Money Counterfeiter
Money Counterfeiter's picture

If the US would have stayed on gold in 1971 gas would have been $10 a gallon and our economy would have become export orientated.  Going off gold was the goal from the beginning for the bankers and Freidman was there with Kissinger to feed the idiot Nixon the bull crap.

Imagine the US today with balanced trade and a economy dominated by manufacturing instead of waters who serve bankers.

When it is said and done people will look back at 1971 as the beginning of the end.

Sat, 10/31/2015 - 01:06 | 6733401 Nobody For President
Nobody For President's picture

Nope - 1971 was the beginning - the year I bought our land in the country and started building family, homestead, and community. It was a lot of hard work. I am 76 years old, and have zero debt.

Still here on the land, intend to die here, as my wife did last year. Made some applesauce this week from the last of our apples, gave the some of the bruised ones to the deer. This is deeply satisfying stuff - hard to really explain to city/urban folks. I can open my office door, just did, and hear - nothing, except quiet. That's deeply saftisfying too. Not bragging - paid lots of dues for simple pleasures. Would do it all again in a heartbeat.

If you allow TPTB to set your agenda, (or a dead President,) you will get what you deserve.

Sat, 10/31/2015 - 06:28 | 6733600 fukidontknow
fukidontknow's picture

Wow no debt at seventy six - most folks around here won't be mortgage free before one hundred and three.

Sat, 10/31/2015 - 06:49 | 6733616 new game
new game's picture

nobody for..., awesome quick story. i too am where you are at but can hear a hiway way off. occasional plane. somehow, most everyone gets what they deserve, both good and bad...

Sat, 10/31/2015 - 12:02 | 6734378 venturen
venturen's picture

what's your property tax....hopefully you picked the right state

Sat, 10/31/2015 - 12:53 | 6734549 Mr. Universe
Mr. Universe's picture

While the Central banks have always been problem #1 the precursor to 1971 was 1963. JFK is killed and one of the first things Johnson does is debase our silver coinage. The minimum wage in 1964 was $1.25 in silver. 

Sat, 10/31/2015 - 00:26 | 6733362 Keyser
Keyser's picture

Long guillotines... 

 

Fri, 10/30/2015 - 22:07 | 6733119 Caveman93
Caveman93's picture

Must ...expand...economy...exponentially...always....or die.

 

EDIT: I could scratch out "economy" and just replace it with "Debt" I guess?

Fri, 10/30/2015 - 23:17 | 6733255 MontgomeryScott
MontgomeryScott's picture

Professor Barack Hussein's 'Economy' primer, course 101:

1) 'DEBT' is 'MONEY'.

2) Raising the 'DEBT CEILING' doesn't raise the 'DEFICIT' (we've already done that 158 times, and we are doing way better than befoar, and we still need MOAR!).

3) Over the weekend, I expect you to memorize these facts. Next week, a NEW FEDRES chairman is taking office, and she (YES, SHE!, for those of you who are 'sexually-challenged') looks like an under-the-bridge troll from Yonkers, but she needs to be trusted. IMPICITLY.

4) I AM your 'commando-in thief', and you WILL COMPLY with my 'voluntary' requests.

(This message approved by Col. R. Emmanuel and Cmdr. V. Jarrett)


Fri, 10/30/2015 - 22:10 | 6733132 Guitarbill
Guitarbill's picture

It would be nice for the Fed if there was an event, then they can just blame it on(insert event here) and use that as the excuse not to raise rates. But what are the odds of that ever happening?

Fri, 10/30/2015 - 22:11 | 6733133 Grandad Grumps
Grandad Grumps's picture

In previous cycles Wall Street would rotate out of the so called growth companies *which are just money losing companies that do not deserve the amount of capital infused in them and are simply vehicles used to reward cronies" and would rotate into companies that made a real profit and pay a dividend.

Staying in the GAAP losers that pay no dividend (and given no return on investment other than fraudulent price appreciation), delays and makes more likely the failure of the system. There is never a chance for a recovery.

I find it hard to believe that there is any real value associated with social media companies, that have been capitalized many, many, many times over their capability to return the money to investors.

It seem we "could" ease out of this overvalued market if there was an honest attempt to rotate out of price based investing and into value baed investing. Without something like that, it is just fraud 24/7.

Fri, 10/30/2015 - 22:20 | 6733152 Grandad Grumps
Grandad Grumps's picture

I also recall that in business school they taught us that equity was the most expensive form of financing (echoed by exec classes at Haravard). This is a lie. Equity is the cheapest form of financing when it can be given to people in lieu of pay and it can be issed with no thought of quantity...

... AND, when it is completely ignored by Wall Street when figuring Adjusted earnings. Issuing more equity shares is absolutely free financing. My top 10 business school taught us many, many lies, most likely intentionally.

Fri, 10/30/2015 - 22:12 | 6733134 max2205
max2205's picture

Too late. The third depression started this year.  Can wait for the reports to be Moar faked.

Fri, 10/30/2015 - 23:32 | 6733284 MontgomeryScott
MontgomeryScott's picture

Wait.

WHAT?

Are you saying that unemployment and productivity and GDP estimates are 'not real'? Our GOVERMENT told us that these things ARE 'factual', and you expect me to believe YOUR tin-fol-hat-wearing conspiracy theory 'Chicken Little' cries about these statistics being totally FALSE?

I bet YOU are one of those bloggers on Tyler Durden's website!

Yeah, you're sitting in Mommy's basement, reading INTERNET FEAR PORN stuff, and trying to 'fact-check' things...

You need to get up to speed, bucko. Jeb Bush, for example, gambles on 'Fantasy Football' Vegas odds. OH SHIT, I just got a tweet about one of the Kardashian girls...

Fri, 10/30/2015 - 22:24 | 6733159 GRDguy
GRDguy's picture

The Federal Reserve has been a con on the American people since it begin.  Had they not brought so much attention to themselves, they'd probably still be getting away with their con.  They probably figured they would own everything within a 100 years, but they're not done yet.

Fri, 10/30/2015 - 22:31 | 6733168 Sorry_about_Dresden
Sorry_about_Dresden's picture

https://www.youtube.com/watch?v=l7vLp7XiKeE

The cunts are planning their next swindle!

I love it how Stanley Fischer who is the Vice-Chairman of the Federal Reserve Bank (#2 under Yellen) comes , directly, from the Israeli Central Bank. 

Prior to his appointment to the Board, Dr. Fischer was governor of the Bank of Israel from 2005 through 2013.

Nothing to see here; move along people. Just a coincidence! 

Sat, 10/31/2015 - 01:31 | 6733434 Nobody For President
Nobody For President's picture

I managed 60 seconds of that before I had to abondon that ship and pour another Scotch. I've run a hell of a lot of (local, community) meetings over the last 40 years, and I have NEVER come in last, like a fucking judge or something, sat down, and launched into reading a prepared text. She barely acknowledhed that anyone else was in the room. About as much leadership charisma as my cat, who runs away whenever another human shows up (except the neighbor lady who feeds her when I'm away). Unimaginaly boring, but what the hell, they are all bankers.

Sat, 10/31/2015 - 05:07 | 6733540 Philo Beddoe
Philo Beddoe's picture

I think you are my new hero. 

You are about the same age as my father but completely the opposite in terms of mentality. 

Sat, 10/31/2015 - 11:32 | 6734258 Sorry_about_Dresden
Sorry_about_Dresden's picture

OK....after reading your comments I have to point out something that struck me as very peculiar in this: 

Open Board Meeting of the Federal Reserve Bank Borad - October 30, 2015


1) First bizarro point is that they would even film this for public consumption?????????

2) Now this is the really strange part.....at the very end of the meeting Chair Yellen, Grand Yenta of planet Earth, calls for a motion, and pardon me for shouting but I don't want anyone to miss this point. at about time marker 01:09:00, at the very end of the meeting she ask for a motion to:

"Approve the interim final rule to implement the requirements of title 3of the TERRORISM RISK INSURANCE PROGRAM REAUTHORIZATION ACT OF 2015" at 01:09:00.

hUhh!!!! WTF you say??? Yeah, me too!!!! So....what is the TERRORISM RISK INSURANCE PROGRAM REAUTHORIZATION ACT OF 2015???? I have never heard of that act...here it is:

https://www.congress.gov/114/plaws/publ1/PLAW-114publ1.pdf

I am sure it is innocuous!!!! sarc/on but if someone else wants to dig to find something in this please do.



Sat, 10/31/2015 - 03:05 | 6733482 Bernoulli
Bernoulli's picture

I watched the first 34 minutes of this. Does this mean I am now officially insane?

It should be clear that when investing in or lending money to a company, this could lead to a loss.

So why is all this discussion and regulation even necessary? Please? Isn't it a waste of time?

The regulation for Too big to fail could be EXTREMELY SIMPLE:

"Moral hazard regulation"

Article 1)

NOBODY WILL BE BAILED OUT. EVER.

Explanation of Article 1)

Everybody invest and lend accordingly. Don't trust anybody. All your money can be lost. And we will not be there to save you. Grow up.

The end.

Done.

But hey, all this regulation will not be necessary anyways, because the next crash will be so big, that no bailout will be possible, even if they tried.

Fri, 10/30/2015 - 22:31 | 6733175 Mayer Amschel R...
Mayer Amschel Rothschild's picture

Keyser Soze? More like feeble Verbal Kint.

Fri, 10/30/2015 - 22:36 | 6733187 mr bear
mr bear's picture

Janet talks the hawk, but doesn't walk the hawk.

Sat, 10/31/2015 - 08:25 | 6733685 Eyeroller
Eyeroller's picture

And has gotten away with it every month (except on the day she made the Sept. announcement, then "markets" returned to "normal" after that). When will this strategy no longer work???

Fri, 10/30/2015 - 22:46 | 6733200 Herdee
Herdee's picture

Ask the politicians that will hike the deficit to $19.5 Trillion where the new tax money is coming from if interest rates go up?The government keeps coming back for more increases which always comes down to the point of everything in government being shut down because there's no money left.That's in a falling interest rate environment and ignoring the unfunded liabilities going forward.Like over $200 Trillion,so is everyone in Washington on an extend and pretend drug or are they all on LSD and in Alice in WonderLand?It's a ticking timebomb as the deficit grows and if interest rates go up while the babyboomers pressure the system.It's called compounding interest.

Sat, 10/31/2015 - 07:03 | 6733620 new game
new game's picture

the fed. on a balance sheet that means nothing. seriously all this disco chit chat for not.

THE FED STASHES DEBT ON a BALANCE SHEET AND IT BECOMEs BASICALLY BLACK HOLED.

so in the final analysis; it doesn't matter a flying fuck. the fed answers not to the market or a higher power as long as we all are forced to use dolla and have no alternative.

worrying about the fed is a red/blue game of distraction at the highest level...

Fri, 10/30/2015 - 22:58 | 6733223 mijev
mijev's picture

Every time I see the words "Federal Reserve" now my brain switches it to "Forward Reverse." USD morphs to LSD, bankers to wankers, markets to murky and stocks to stanks. Oh, and politicians to useless, self serving, corrupt, greedy motherfuckers. I thnk it's time for a drunken weekend. 

Sat, 10/31/2015 - 00:04 | 6733328 slovester
slovester's picture

I can somewhat relate to that.  Whenever I see articles/blogs/speculation/etc. about the Fed raising rates, my brain plays Johnny Mathis singing "Until the twelfth of never..."

Fri, 10/30/2015 - 22:59 | 6733226 MontgomeryScott
MontgomeryScott's picture

DAMNIT, JANET!

https://www.youtube.com/watch?v=NBjVBbeqf7E

(You KNEW this one was coming!)

Sat, 10/31/2015 - 01:38 | 6733439 Nobody For President
Nobody For President's picture

Damn - Damnit Janet was Waaaaay overdue. Thanks for beating me to it.

Now I'm gonna go watch The Usual Suspects again...

Fri, 10/30/2015 - 23:10 | 6733252 kev the bev
kev the bev's picture

Bernanke on BBC Hardtalk blaming everyone else apart from himself

http://www.bbc.co.uk/programmes/p035smr0

Sat, 10/31/2015 - 00:07 | 6733334 MontgomeryScott
MontgomeryScott's picture

"George Thorogood And The Deleware Destroyers", re-living the moment when 'Bevis and Butthead' 'Helicopter' Ben Shalom Bernanke appeared on the BBC channelling device:

https://www.youtube.com/watch?v=M1i32RiGgwY

BBC 'HARDTALK': WTF is THAT? Does this 'programming show' come on right before the 'news' where they talk about Manchester United Soccer scores and the denial of pre-knowledge of the events of Jane Standley's 9-11 reporting, and 'kittens being rescued by firemen from Farenheight 451 division? Do they CUSS at you while they tell you that it 'probably' won't 'hurt' (as they ram thier cocks forcefully into your 'assets')?

It WASN'T Benjamin Shalom Bernanke's fault, you know. He was simply like 'Mongo' ('Mongo, innocent pawn in Game of Life'). Alex Carras's estate approves this message. Or NOT.

KICK THE TIRES, AND LIGHT THE FIRES!

Fri, 10/30/2015 - 23:44 | 6733297 The Dogs of Moar
The Dogs of Moar's picture

I think the real confusion stems from the accepted terms: Hawkish or Dovish.

It sounds like Israelis voting for their Prime Minister.

 

What ever happened to the good old terms of art: Greed or Fear?

Sat, 10/31/2015 - 00:32 | 6733373 Aussie Battler
Aussie Battler's picture

This is it. The Fed's optimal strategy is to say everything is great and we will start to normalise soon.

That way it keeps;

A. Its credibility, and

B. The financially engineered bubble.

It will keep playing this tune for as long as it can get away with it.

Sat, 10/31/2015 - 00:52 | 6733396 Yen Cross
Yen Cross's picture

  FWIW Tyler. I'm liking the Euro/USD chart.[ euro index-vs USD}

  I'm going to get bludgeoned.

 Moar smmoke and mirrors?

Sat, 10/31/2015 - 01:11 | 6733415 SHsparx
SHsparx's picture

If the economy slows down? lol

Sat, 10/31/2015 - 01:42 | 6733440 Nobody For President
Nobody For President's picture

And please remember, this whole shit show is about a astounding, amazing, one quarter of one percent (maybe). 

ONE QUARTER OF ONE PERCENT - and the whole shittery is gonna come down?

Just THINK, for a fraction of a second, how fucking ridiculous this whole pile of crap has become.

One quarter of one percent, grumble grumble grumble...

Sat, 10/31/2015 - 04:50 | 6733535 JailBanksters
JailBanksters's picture

Who needs interest anyway when you have a hidden QE.

If what I've been reading is correct, the usual suspects are selling treasuries they don't own 40 Bills per day !, they can't sell them so they go to the FEDS repo window and trade them in for some fresh digital money. Maybe they ran out of belly button lint for collateral.

This would put the fraud at about 1 Trillion per month !

 

 

Sat, 10/31/2015 - 07:11 | 6733630 new game
new game's picture

goes on a balance sheet that means nothing, whilst enhancing wealthy fucks. simple stuff made very confussing to average idiot...

Sat, 10/31/2015 - 08:28 | 6733690 Eyeroller
Eyeroller's picture

Why not?  They know that CONgress doesn't have the guts to do a proper audit.

Sat, 10/31/2015 - 05:52 | 6733567 The best Sun
The best Sun's picture

I have recently found that my boundless, incoherent rage upon hearing the poisonous drivel of that mealy mouthed harpy (mother Yellen) can be easily vanquished.

All I do is close my eyes and envision her screaming, daubed in pitch and sprinting, on fire, from a burning hut with no less than eight barbed, heavy spears hanging out of her back (must be the viking ancestors). Burning people always run. Seems counter productive to me but then, it must be instinct. Like lying is instinctaul to the political, priestly and banking classes. Happily this image works equally well for bath house, Mcstain, or an almost limitless number of other such filth.

 

Try it. Feel free to add your own variations. Enjoy.

Sat, 10/31/2015 - 12:13 | 6734361 Cthonic
Cthonic's picture

Just imagine them as being old, pauperized, and bereft; isn't that what they are spreading, isn't that what they truly fear?  Yellen isn't even worth institutionalizing.

Sat, 10/31/2015 - 07:32 | 6733645 falak pema
falak pema's picture

A good read--historically contextualized-- on how the US banking took over the government and treasury and how it differs from the Euro CB  system; although both now bow to the banks who run the politicians :

http://www.nakedcapitalism.com/2015/10/michael-hudson-how-the-u-s-avoide...

Sat, 10/31/2015 - 08:40 | 6733705 J J Pettigrew
J J Pettigrew's picture

The Fed enabled the last Budget Deal, the two year deal.....with few if any restraints on spending.

Imagine a free traded bond market....imagine the interest rate impact of such a deal.  The rates would ramp up, thus penalizing the government for irresponsible action.  But that has been done away with via the Fed's policy.

It will always be a case of "pulling away the punchbowl" and the longer it goes on, the more people reach for puny returns on their money, the more damaging the rate rise.....Janet, the longer you wait the tougher it will be....so, you wait....

Bernanke left you a hand full of SH!T ..... read his article from 2009 July WSJ about how he is (would) exit....it was folly and fluff then, and 7 years later it is clear he was full of BS.  He is a genius if this can ever get back to "normal", until then he is just a guy who got to pixelate money trilions at a time...anyone could do that.  It is the GETTING OUT of the mess created that requires the genius.  And Ben and Janet apparently arent.

 

Sat, 10/31/2015 - 09:39 | 6733836 VW Nerd
VW Nerd's picture

The USD system is clinically dead....on life support in the form of central bank printing.  Ditto ECB and BOJ.  These central banks are relegated to covertly monetizing EVERYTHING.  Bond market, stock markets, Social Security, gov't pension systems, etc.  Global trust in the USD died a long time ago.  It has been backed by military and economic force for the past few decades which is now waning.  The petrodollar is being forced off it's throne and the FED doesn't like it.  Hence the current war on Russia, China and Gold.  Right now with the dollar on monetization mode, time is it's enemy.  Putin, Xi and their regional partners understand this and it is making Yellen furious!

Sat, 10/31/2015 - 10:15 | 6733937 Who was that ma...
Who was that masked man's picture

"You can fool some of the people some of the time............. etc.

But you can fool greedy stock investors any old time

Sat, 10/31/2015 - 10:43 | 6734047 VW Nerd
VW Nerd's picture

JJ Pettigrew--Yes, Bernanke handed Yellen a handful of shit.  Same thing Greenspan handed him.  Nobody wants to be left holding the shit.  Can't pass the buck anymore....the buck has turned to shit! 

Sat, 10/31/2015 - 10:48 | 6734063 Jack Daniels Esq
Jack Daniels Esq's picture

As some crazy Brit said - that ugly dumb fat sweaty daft cunt

Sat, 10/31/2015 - 12:58 | 6734564 MagicMoney
MagicMoney's picture

Yes the Fed is pretending it will raise rates when it has no intention to. This is very obvious. Fed very well knows the economy can't handle rising interest rates, whether it is a sharp raise, or a gradual increase. They don't want a recession, or make the recession stronger if it does hit, so thinking in the Keynesian way, keep the supports going and contemplate more stimulus. Stimulus doesn't work to jump kick the economy. It's like trying to get a puppet to work when it's a inanimate object. You stick your hand in there, and make it work, but you remove your hand out of the puppet, goes back to inanimate object. 

 

A economy has recessions and depressions for a reasons. Such events is a clearing house of bad investments and spending habits, but to a Keynesian there is no such thing as bad spending. All spending, any spending is good. There you go. For the Fed it's also political and credibility issue. If their tools can't engineer a recovery that works in for a good time, then their whole profession as being economy engineers falls into question and people are faced with the idea that the Fed is a failure.

Sat, 10/31/2015 - 13:06 | 6734588 Not My Real Name
Not My Real Name's picture

" ... just as the party gets going."

That's a good one. If you're on Main St. the party never started. If you're on Wall St. the party has been raging for 7 years now.

Do NOT follow this link or you will be banned from the site!