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The Fed is Already "Testing the Waters" For NIRP
The US Federal Reserve is obsessed with market reactions to its policies. Because of this, anytime the Fed plans to announce a major change in policy, it preps the markets via numerous leaks and hints… oftentimes for months in advance.
An excellent example of this concerns the Fed’s decision to taper QE back in 2013.
At that time, the Fed had been engaging in two open ended-QE programs… programs that had been running for over six months.
Rather than simply beginning to taper the programs, then-Fed Chairman Ben Bernanke, hinted that the Fed was contemplating a taper in June.
The markets reacted sharply with bond yields rising.
The Fed then spent six months allowing the market to get used to the idea of a taper, before the actual taper finally began in December 2013.
Put another way, the Fed gave the markets a full six months to adjust to a change in policy, before actually implementing said change. This only highlights just how focused the Fed is on market reactions to its policies.
In the simplest of terms: the Fed will NEVER surprise the market. This is particularly true now that the Fed is in the political cross hairs due to ample evidence showing its policies have increased wealth inequality.
If the Fed is planning on something new, particularly something that might have political repercussions, we’ll see numerous hints and suggestions well before the actual policy is unveiled.
With that in mind, we need to consider the number of Fed officials who have recently been hinting at Negative Interest Rate Policy or NIRP.
1. First we find that a Fed official hinted at NIRP during the Fed’s September 2015 meeting.
2. Then, on October 9th, Fed President Bill Dudley stating that negative rates were “an option” though not a “relevant conversation” right now.
3. This statement was followed up by Minneapolis Fed President Narayana Kocherlakota stating point blank that the Fed should “consider negative rates.”
The Fed has never once hinted at or discussed NIRP during its policy meetings. Then, in the span of three weeks, we’ve not only had an anonymous Fed official state that he or she believes NIRP is coming to the US, but two highly visible Presidents have called to NIRP consideration.
This is simply part of the Fed’s larger War on Cash.
For six years straight, the Fed has been trying to “trash” cash.
First it cut interest rates to zero… making it so that savings deposits produced almost nothing in the way of interest income. Consider that at current rates, a retiree with $1 million in savings earns a measly $2,500 per year in interest income.
The Fed’s hope was that by making it painful for savers to sit in cash, said savers would move into risk assets such as bonds and stocks. This has worked in that stocks are now in one of, if not THE biggest bubbles in history… while bonds are trading at yields never before seen outside of wartime.
However, the Fed overlooked two outlets for investors who didn’t want to be forced into risk. They are: Gold bullion and physical cash.
The Fed has been dealing with bullion via clear manipulation of prices for years (that’s an article for another time). And now it is moving to make physical cash obsolete.
This is just the beginning. Indeed… we've uncovered a secret document outlining how the US Federal Reserve plans to incinerate savings in the coming months through NIRP, and possibly even by outlawing physical cash.
We detail this paper and outline three investment strategies you can implement
right now to protect your capital from the Fed's sinister plan in our Special Report
Survive the Fed's War on Cash.
We are making 1,000 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
Best Regards
Graham Summers
Chief Market Strategist
Phoenix Capital Research
Our FREE daily e-letter: http://gainspainscapital.com/
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So now we can foresee a spectacle in which someone obtains a dozen or more $1000 cashier's checks from Wells Fargo or Bank of America and sells them at public auction for cash, and cash only.
Great publicity that!
Phoenix Capital and Secret Documents; like the FED, a real SCAM. Why ZH allows this specific crapper is beyond understanding.
ahhhh. I saw the name of the author too late.
I managed to avoid any of this carp for the last year, but today I stepped into the Phoenix Capital Research trap.
Need to be more carefull again.
What is all this "ban cash" bullshit? You think the average Joe has to worry about the Fed going after his $15,000? Believe it or not the politicians are scared shitless of the little guy. Why else would they keep trying to buy them off with freebies? The Free Shit Army is not to be screwed with. Take their little bit of cash and the streets will make the French Revolution look like Mardi Gras. The big corporations/hedge funds/private equity, etc. types will have a problem but fuck them.
The Free Shit Army ? Ahh , yeah you mean the fraudulent banks and corporations that were bailed out in 2008 with trillions of taxpayer money ? So now those same taxpayers are going broke because of that fleecing and so they now need loads of Free Shit as well .... From the exact same source of ultimate wealth and value creation - a glorified Xerox printer.
Funny - it was so-called "Capitalists" that agreed with these bank bailouts. True Capitalists would have let them fall by the wayside, by now - 8 years later we would have a brand new functional system instead of a fucking parasitic Zombie.
By free shit army, you must mean the millions of "middle class" people who depend on the goverment for their jobs and social security welfare checks. This is all that remains of the former system in the United States.
But if you think that there are millions of people getting rich off of welfare, you are mistaken. Besides, most of the people getting food stamps are working. It's not a matter of obamaphones and cadillac welfare queens. It's a matter of not feeding your kids without help, because your slavemasters do not care to create work for you. They only create makework paper pushing jobs for their special chosen acolytes.
I mostly agree with you. You are absolutely right about the majority of people getting some type of government benefits. But the 20% to 25% of them who are just milking the system are killing us. And they have no incentive to ever get off the government tit under our present system and attitude of "gimme dat". We're going broke. One way or the other it will eventually stop. You and I just don't want to be around when it happpens.
The only time Fed officials talk about negative interest rates is when they are asked specifically about them. Kocherlakota is considered an erratic oddball by most observers. The movement of short term treasuries to slightly higher yields in the last few days is an indication that the Fed is preparing to raise rates in December.
"raise rates in December."
Yeah , December 2145
Because NIRP has worked so well in other places. Worked well to steal from the poor and give to the rich, that is.
They are screwing the wrong people ..when CD rates were 5% my folks went out to dinner twice a week bought their kids things and their grandkids stuff ...now they are feeling poor ,always complaing about property tax ...even the price of stamps ! .They haven't gone out in over 3 years and are driving a 7 year old car .They have pleanty saved but without that quartly income they feel poor and are overly worried ...the fed is screwing the wrong class
NIRP should lead to a $0 gold price if the pattern remains the same.
That would be so cool. Lawn ornaments of 24 carat gold! House siding that lasts forever! The possibilities are endless!
At the bank today, there was a handout that said ID was required to make cash deposits. It has started.
NY consumes a ton of heroin/cocaine per day and something like 10 tons of weed. How and where will those deals go down? Just asking
They won't go down. Thats how the Feds will get rid of cash, telling us its needed to finally win the war on drugs. Once cash is gone, the junkies will get their fix using their Obamacare insurance, and the money won't go to El Chapo, it will go to Pfizer.
They will simply legalize it.
Historical inflation rates are something like 3%. So we have been in NIRP for a while now.
We've had effective negative interest rates for savers at the bank for a very long time now. If they are coming out with a statement on the subject, what they are saying is that they hope they can talk their way to a result they can't get with what little action left to them.
What they need to do is get off the brake and put their foot on the gas, in their terms. They just have their interest rate theory reversed from reality. But they won't take the one action that could prolong their regime? How funny is that?
Are you sure you're not the NSA collecting email addresses?
"In the simplest of terms: the Fed will NEVER surprise the market."
In the simplest of terms, that is not true. If the stock market were to make a major dump, the FED would make a surprise announcement that they are going to do X starting today.
In early January 2001, the FED held an emergency meeting and made a surprise announcement of a 1/2% cut in the rate.
What will NIRP do to real estate? 30-fixed is at what, 4% or so?..will banks be willing to lend at 2%? How are consumers likely to react to negative rates at the retail level? I assume it's moderate to high income people that will care, since the low end has no money.
The more NIRP, the faster the death of all fiat.
Fine. If bankers and financiers really want to shot themselves in the fucking head, I say, let them.
They have fallen between a rock and a hard place.
To instigate NIRP will cause the outcry, but can you see this is what they want.
Immediately they will implement the totalitarian state to retain control and blame it on the protestors.
That puts them into the only secure position they can achieve for a time, after that comes real organised civil unrest potentially leading to civil war.
It is the modus operandi of the elites for all eternity and they know no other way because to go another way means they start losing worth.
So who will be lucky enough to get paid to borrow money? Anyone wanna guess?
If savings are taxed, cash is penalized or removed from the system, I would think that folks would dump everything they have into anything resembling a quality asset. If mortgage rates went down too, you'd think that the RE bubble would be blown even bigger, rigth?
These fuckers are crazy.
I think all the regular people have already removed their savings from the system a long time ago, at least in the main. These policies were designed to do that, they even admitted it when they put their interest rate crap out to the media awhile back.
This just shows they were successful and don't care what regular people do with their money now. It's all about the big institutional holders of money and debt.
If RE values get pumped up even higher, then all those tapped-out, underwater homeowners can again refinance and/or pull more "equity" out of their homes again. Should be good enough to boos the Dow/S&P to another all time high, eh?
what everyone seems to miss in that famous fed chart interest rates would normalize in two and three years. so NIRP is like QE, a short term solution. most people dont see it that way, and they saw ZIRP as far as the eye can see, now they see NIRP, and so the fed has to go easy here. the massive repverse repo is the policy to watch, that gives them total control of interest rates and they are going to need that, because inflation will by pushing them. i expect the fed to announce their 2% targer then raise 1/4 point and everyone can go HUH? and then the Fed is where is likes to be, behind the curve.
They want to start a revolution in this country then go to NIRP. The middle class is already being wiped out by Obamacare, new regulations and ZIRP. Tell them that they will have to pay to have their money in the bank and see what happens...........
LOL, no, sadly they probably wont revolt, mostly because the average American, with fees exceeding any interest made, is already paying to have their money in the bank.
They will gladly pay the bank until this thing blows up in their face. Such is the grip of propaganda in the US, that the majority of the People have no clue what's about to hit them.
Right again. The MSM will work overtime trying to convince the American people that it is a GOOD THING that they pay banks to hold their $$. And since most people these daze have NO SAVINGS, only the "Rich" will be impacted. And if protest, then you are a facist, racist, homophobic a-hole who is on the wrong side of history.
My prediction: most of the sheeple will take it. But many will not stand for it. Just how many will determine if the Government survives or falls.
"Tell them that they will have to pay to have their money in the bank and see what happens"
I beleive that's why the plan to ban cash, so that people can't stuff in thier mattresses. If People can cash out and cash paychecks it would implode the US banking system as deposits vanish. However even with a ban on Cash, Banks are still likely to see deposits vanish, as savers figure out other ways to stop using banks for deposits.
You have water bills normally based on usage as much as anything else.
Buy bottled water, even batteries to store energy in. All enable you to invest your money out of the banking system offsetting costs elsewhere that cannot be touched.
You just offset living costs in other ways to stop the bankers stealing it.
Because everything can be converted to a monetary value NIRP will probably create some rather amusing and absurd economic concepts.
Another one might be totally wrecking the abilitiy for banks to lend money in loans in the long term because ordinary people will do it a heck of alot cheapoer if they are losing money through NIRP.
Rather good that ... banks just found everybody else is prepared to lend money way cheaper although you might find people will not want to trade if it means taking ownership of money. Stuff that not trading ... have something I want or no deal.
Hence I reckon NIRP is being pushed to create unrest, civil disobedience to then apply a clampdown on populations. GOVERNMENT INSTIGATED!
This is actually the argument they are using for saying that NIRP will "boost the economy." In reality, the conomy is not a GDP number. It's scarce resources being used or saved for later use. If they really do go NIRP people will still withdraw everything from the bank and hoard, except it's going to be food, building supplies, and ammo, as opposed to cash.
Yes there will be a short-term GDP boost but since no one will want to hold money that overtly loses value, the monetary value will drop, which means prices rise. Fast.
Interest rates are a LAGGING indicator ,
The Fed has to follow the market , if there is high demand for money to be loaned into existance then rates go up.
If there is low demand for money then rates go down , if there is negative demand for money then rates go negative.
LOL!!!! "negative demand for money".... LMFAO!!!
You are a special kind of stupid son.
So long as there are 7+ billion people and growing that want to do business with one another, there is plenty of demand.
Of course, you might want to rethink your definition of money.
All fiat money is loaned into existance
That means if more debt is being paid back than is being loaned out that means there is overall a negative aggregate demand for money. The amount of people on the planet is irrelevent , not sure exactly what you mean by that, sure everybody wants money but the same would be true for 100 or 100 billion people. Quite simply if more debt is being paid down than new loans being issued then the money supply shrinks. i.e. Negative Demand.
That also means deflation , i.e. the money supply is shrinking , that translates into negative aggregate demand for money.
All they can do in this case is make rates go negative.
Relax. That's fonestar the village idiot.
If there were a free "market" that would be true, but the only thing keeping interest rates near zero, and fueling talk of negative interest rates is 20 trillion dollars of US debt!
The US would default in short order if rates were even a few percent higher. Hell, the only reason they're talking negative interest is we're on the verge of defaulting even with zero interest. We can't even afford to pay the freaking principle payment.
Raising rates would be Armageddon, a nuclear reaction that would through contagion take out the entire western financial system! We are caught in a vortex and going down fast!
Yup--I've been saying this for years. This is the primary reason for NIRP. The Government will actually MAKE $$ from it's debt. It will be the only way to keep the Entitlement State afloat. NIRP is aking to a wealth tax, except it will be levied by fiat. No politician will vote for it (directly). It will also cause massive misallocation of resources. Make no mistake: we are slowly becoming a Communist society and NIRP is the way they will impose redistribution of wealth.
The thing is, it will *at most* only buy a little more time.
Money is a proxy for resources. Making money by borrowing means that you are first taking resources from someone by borrowing, and then not even giving them all of what they lent back.
It's like I lend someone my truck, and then they drive it like mad and blow the radiator before giving it back. Even if for some bizarre ideological reason I keep lending stuff to them, I will eventually bankrupt myself trying to prop such an irresponsible person up. It's not like I or the most of the country are sitting on massive piles of wealth to confiscate, and bankrupting the Walton family wouldn't get the whole country that far, either ($100 billion = $300 per American).
ZIRP is the event horizon. We are gone, even if we haven't hit the bottom of the black hole yet. Now it's just a question of how far we will be able to distort this economy before it is finally annihilated.
Default is good, it cleans out the bad debt and punishes bad behavior!!
Oh wait, that would end the ongoing fraud...
get long sharecropping and guillotines because these fuckers will never indict themselves.
or converserly you can restrict credit causing rates to go up. the important thing for the fed is to make it seem as though its not their policy but the outcome of economic forces which they are reacting too or some such bs. clearly money velocity is not working mostly because these is too much money in the system relative to the economic demand.they could roll back all that phantom collateral they prinited but the owners used it to buy stocl certificaites, ooops, so conversely credit will get tight and mostly on main street
The Banks (The Fed's owners) won't let it happen because they would then have to pay interest on their excess reserves or, God forbid, actually lend those reserves into the real economy in the old-fashioned way...