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The End Of The Fed's Self-Deluding Feedback Loop Of False Information
Submitted by Howard Kunstler via Kunstler.com,
The economic picture manufactured by the national consensus trance has never been more out of touch with reality in my lifetime. And so the questions as to what anyone might do can hardly be addressed. How can I protect my savings? Who do I vote for? How do I think about where my country is going? Incoherence reigns, especially in the circles ruled by those who guard the status quo, which includes the failing legacy news media.
The Federal Reserve has morphed from being a faceless background institution of the most limited purpose to a clique of necromancers and astrologasters, led by one grand vizier, in full public view pretending to steer a gigantic economic vessel that has, in fact, lost its rudder and is drifting into a maelstrom.
For more than a year, the fate of the nation has hung on whether the Fed might raise their benchmark interest rate one quarter of a percent. They talk about it incessantly, and therefore the mob of financial market observers has to chatter about it incessantly, and the chatter itself has appeared to obviate the need for any actual action on the matter. The Fed gets to influence markets without ever having to do anything. And mostly it has worked to produce the false narrative of an advanced economy that is working splendidly well to the advantage of the common good.
This is all occurring against the background of a larger global network of economic relations that is quite clearly breaking apart. The rising tensions between the US, Russia, China, and the Euro Union grew out of monetary mischief “innovated” by our central bank, especially the shenanigans around debt monetization, which have created dangerous distortions in markets, trade, and perceptions of national interest. Nations are rattling sabers at one another and bluster is in the air. The world is bankrupt after thirty years of borrowing from the future to throw a party in the present, and the authorities can’t acknowledge that.
But they can provide the conditions for disguising it, especially in the statistical hall of mirrors that once-upon-a-time produced meaningful signals for the movement of capital. Instead of reality-based choices and decisions, the task at hand for the people in charge has been the ever more baroque elaboration of a Potemkin economic false-front, behind which lies a landscape of ruin scavenged by desperate racketeers. That this racketeering has moved so seamlessly into the once-sacred precincts of medicine and higher ed ought to inform us how desperate and perilous it has become.
The latest installment of the disinformation game was Friday’s employment release from the US Bureau of Labor Statistics. It was a “blockbuster,” implying blue skies everywhere from Montauk to Malibu. Except that no one with a remaining shred of critical faculty can be expected to believe it. 80 percent of the new jobs numbers were attributed to the mystical birth-death model, a pseudo-scientific fantasy of hypothetical new business starts and associated hypothetical new hires. Demographically, the most new jobs went to the over-55 age cohort — grocery baggers and Walmart greeters — and the fewest to men 25 to 54 (that bracket substantially lost jobs). The official unemployment rate fell to 5.0 rate, with no meaningful discussion of the huge numbers of discouraged people who have dropped out of the workforce.
But the perception of an economy on full throttle chug sent the stock indexes up. The Dow, the S & P and the NASDAQ are the only signaling mechanisms that the legacy media pays attention to, and the politicos take their cues from them, in a feedback loop of false information that begets more delusional positive psychology in those same markets. I suspect the sentiment that reigns now is about nothing more than getting through the holiday season without a financial accident.
But this Fed now finds itself in a trap of its own making. Having so interminably yapped about the interest rate hike, the central bank will have to put up or shut up in December. Only the year-final BLS employment figures might give them an out, if the numbers don’t look so phosphorescent. I think the truth is, this phony baloney economy can’t withstand even a measly quarter-point benchmark interest rate hike. For one thing, it would blow up the operating models of Fannie Mae and Freddie Mac, the buyers of home mortgages who are keeping the construction industry on life support, as well as the parallel rackets in securitized auto and student loans. Imagine all the derivatives bets that would go south. In reality, the Fed knows that it will have to shovel more ZIRP money into the debt-saturated maw of a dying financial leviathan. It can do that, of course, and probably will in the coming winter of 2016, but when that time comes, it will have absolutely no credibility left. And the leviathan will be a little closer to heaving up dead on the beach.
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Dump the FED
The law of physics of connected vessels will eventually prove true again and the water will recede to show that the emperor has no bathing suit on.
Just live you life, stay out of the Wall street casino and it will come. Prepare accordingly however.
There is no "end" to terminal feedback loop. That is why is call "loop". Also is why "loopy" is apt terminology for believer in credibility of Federal Reserve and other fiat currency regime.
In other news, Boris is find state sponsor CC Cam in bathroom. Whatever is get you thrill on - Boris is salute with hairy nipple and effervescent bubble in bath tub.
A quick look at company debt will scare most away from many stocks. It will be hard to service it much less reduce it.
Yup, "Debt service" will be the dying gasp from many a company before long. They have all assumed exhorbitant levels of risk that will accomodate no hiccup in revenues.
Boris, Why do men have nipples?
i know i'm not boris but i have the answer.
i'm just not ready to tell you.
Nipple is vestige of ancient man-possum when male of specie is carry offspring on back.
ok, since you have been so patient, i will
explain and i know this to be the truth cause
i am making it up as i type.
the structure of the nipple is not gender
specific or related at all. it is merely
an essential mammalian form/pore. one could construct
reproductive related psychological lines of
reason that claim, perhaps, the male gender is
equipped with puny little nipples to incite "his"
mind for the wanting and lust for the real thing;
a big freakin' nipple in a big mouth full of breast.
.
you see, the nipple structure is just a form,
incapable of function without the more complex
context, that is the way reproduction and life works.
it is like music, or music is like it. i guess it
is all about the milk and honey, the birds
and the bees, man.
.
that is why men have nipples.
.
either that or there is a fall back mechanism
at play in the case of extreme emergency. the nipple
being merely some sort of specialized and structurally
modified pore. over the generations, dedicated genetic
fun business.
.
A FATHER AND SON & RUFUS IS A TIT MAN - LOUDON WAINWRIGHT (Live 1998)
https://www.youtube.com/watch?v=BoC_8rwE1uM
Gee, thanks for clearing that up.
Men have nipples so they can find their cigarettes when they're drunk.
Loudon Wainwright "Rufus Is A Tit Man"
https://www.youtube.com/watch?v=46EbjMkeghE
.
oral jawboning. " come on and lactate a while." lw III
"Why do men have nipples?"
God thought that if men produced milk, they would bond better with their children. Then He realized that men wouldn't bond with women if they didn't have something big to suck on themselves. So He abandoned the project midway through.
The breast is history.
To make a little harder and more confusing tell difference between Russian man and Russian woman.
what does boris know? of course there
is "end", that is why the loop is called
"terminal". good one with the
"Boris is salute with hairy nipple and effervescent bubble in bath tub."
imagery, salute.
you can't have credit without credibility,
not for long. (temporal restrictions apply)
Hmmm, maybe you are right, but "Terminal Loop" is contradiction of term. Maybe "death spiral" is more better describe situation of current fiat monetary regime...?
contradiction of term is the technique they
use to oppress, suppress/critique and deride the
articulations of the "owned" foolish and less than
articulate many sheeple.
.
what boris or blindman know?
.
Father Guido Sarducci - Talks to "Letterman" (late 1980s)
https://www.youtube.com/watch?v=l6tEWWmdOyI
.
(man goes to hell and lives to tell about it.
the difference between earth and hell is that in
hell, dogs can whistle; and then the fig newton thing.)
Even if they raise a 1/4 point, they will reverse at the next opportunity and then on to NIRP.
Spoken like a true sage. We try to run this rat race. We should be watching it go by, we have no control of what they do. Family, friends, life, kids, cigars and a fine aged rum is good enough for me.
ZIRP 4 eva.
Or until NIRP takes over the controls. The EU is gonna go all-in NIRP in about 3 months. I don't see how the Fed can raise even a quarter point with that party going on next door. Best they can do is hold -- they'll come up with an excuss.
At some point they'll quit trying and quit talking about it at the same time. Just go autistic on us. Then you guys will get what you wanted all along but I don't suppose for an instant you are going to like it.
Thought experiment: What if Fed raises a quarter point and EU goes full retard? Dollar goes up big time, and lots of debt around the world is dollar denominated. Fed has to pump out dollars to banks all around the world to keep enough of a supply out there. Or else countires that borrowed in dollars get pinched.
Thought popcorn.
Fucking Bunch of Liars... When you going to raise the Interest Rate?
December? SWEAR TO GOD?
Those hell bound sons of bitches swear to tell the "truth" on a regular basis, then lie their asses off!
Banksters Inc. does not give a shit!
Their god is not your god.
There satan worshipers for the most part.
I thank God for the greater judgment.
Pinkey Swear?
it is all passed into the realm of insanity and the only cure is for a total reset which will require governments and the world monetary system to collapse.....
Followed by a bigger insanity known as war.
Ah ha! And a reset allows them to start the game all over again.
https://www.youtube.com/watch?v=ZKpFFD7aX3c
The underlying problem is that the global monetary system has failed with too much debt in existence.
The current monetary system has the following characteristics:
1) It is debt based, new money can only be created from new debt
2) It uses compound interest
Compound interest is an exponential function that, without prudent lending, will run away to infinity at some point.
When money creation lies with banks, there is always the over-whelming desire to increase profits by lending out more than would be prudent (their profit comes from the interest received).
The temptation of jam today, makes borrowers forget about the penury tomorrow.
The system relies on prudent lending by bankers who are purveyors of the debt products, e.g. loans, mortgages, etc ...
The temptation to increase profits though increasing interest payments and debt was too much and they developed ways to take no responsibility for repayment of loans through things like securitisation and complex financial instruments. In the sub-prime fiasco we saw NINA (no income, no asset) loans as no one cared if the money got paid back.
Individual players can post profits and collect bonuses by issuing bad debt but their actions together will bring down the debt based monetary system as the compound interest repayments overwhelm the system.
For the last seven years we have seen rock bottom interest rates, the last ditch attempt to keep the compound interest mounting up under control.
For all intents and purposes the global monetary system has failed already, the FED rate rise will show us once and for all if we really have maxed. out on debt and cannot take even a 0.25% rate increase.
Worry wart. Things are awesome.
"I think the truth is, this phony baloney economy can’t withstand even a measly quarter-point"
That's why I am past sick and tired hearing about is pathetic bullshit in regards to a rate raise.
If the douche bags do, it will be brief.
Then on to NIRP! Count on it!
The excuse for having the FED is to prevent damage to the real economy...(two branches in the State of Missouri....could someone please explain that?! California wants to know!).....by that criterion, a fail. So then, what's the point?
Because Kansas City has great barbecue, and St Louis has lots of people. So the people in SL" need a FED branch so they can borrow lottsa money and go to KC to buy the BBQ, and the BBQ joints need a FED branch to deposit the $$$ in and then they send it back to SL. It's probably where the term FEEDback loop came from.
Guess lies and perception of the recovery the last 5 years is finite.
New York Fed Head, William Dudley, will have to push more buttons tonight to ramp up the S&P and DOW futures tonight.
Good article and good also that you switched to the Fed clusterfuck. Hey, what ever happened to the peak oil mantra?
There are many mantras. That too is a sign of the times.
the stealing will continue till
morale improves.
BS
We are in no way borrowing from the future. We are diluting the value of president day money. Out grandchildren will not pay for this, we will. One day the value we think is held by our dollar will start to vanish...then we will all see who gets the bill...check please.
And the leviathan will be a little closer to heaving up dead on the beach.
ha ha, that is freaking awesome writing!!!
So, when is the Winter of '16? This December or next December???
You guys might hate me for this, but I'm hoping Hitlery wins the Prez. I would hate for this debacle to come to a head on the shoulders of somebody decent.
Spoctor Din,,,
January-March 2016.
Eeek!!!
;-D
I am totally 100% convinced the Fed is buying stocks covertly through their primary dealer banks in order to prevent the market from collapsing and ruining Obama's recovery legacy.
The cognescenti know about Lord O'bama's recovery legacy and the sheeple won't have a clue until the droplets of shit start spattering on their window. By then, the storm will be upon them and they will be unwashed away.
It's up to the 3% and the 1% to settle this.
Spoctor Din,,,
Lester,
Every swinging dick and puckering pussy on this blog agrees with you.
But then what?
The Fed is like a 1,000 lb gorilla with unlimited cash playing all the tables, and slots in Vegas. The rest of the retail players eventually go home, and the fucking gorilla is the only player left. After a hour or so, the gorilla can't hide his losses and buys the fucking casino hoping the retail traders come back and drink the vodka laced cool-aid to prop up and pretend there is a market.
But what happens if they don't come back to the rigged games?
The markets are dying, not because of the phony elevating in equity prices, but due to low or no volume.
Soon, the fed will have to buy from itself. And the game will really be over, and those fuckers at MSNBC will have to find real jobs.
$43.30 serves as an important level to create a new bullish momentum. The RSI and other indicators are all lining up nicely for when the support at $43.30 holds.
http://tripstrading.com/2015/11/09/oil-daily-43-30-level-as-trigger/
Fuck off, asshole.
Self deluding? Ha!
Correction, they are borrowing from the future to fund a clique of elites to have control over a fast forture.
>> The world is bankrupt after thirty years of borrowing from the future to throw a party in the present, and the authorities can’t acknowledge that.
For every borrower there is a lender. "The future" is not a lender.
Someone, someones, somewheres, creditor(s), in the present, owns these debts. It needs to be defaulted on because the loans could not possibly have been made in good faith towards the end by the now-creditor/owners of the wealth. As simple as that. It worked before to dishonor wampum money, it can work again.
A moment of seriousness assholes...
Beyond the purple prose above that states the obvious, we need to build serious models to show when and how this shit system breaks down.
Is the next meltdown a snap event, or a longer-term cancer?
It must be beyond the capacity of the central banks to juice with moar cash. Which we know they will try. But what stops them, or makes their juice ineffective?
Is it debt load driven? Which presumes a default, or several defaults, a contagion, and a domino effect (like 2008/2009).
Is it an EM exodus which drive the dollar higher and higher until the multi-trillion dollar carry trades collapse?
Is it planned so there can be a war related reset where all soveriegn debt is wiped out, billions of people die, the world's a fucking mess and the new world order can be established? or,
Is the status quo simply doing what is necessary to hold on? (probably).
Seriously. Fuck the .25 point interest rate hike devil that echoes through the hazy green trance mantra of the phony financial media. That pencil dick hike will have its own short-term reaction, because the lemmings are fixated on it.
But this is not the big story, or the real black swan events that most are not watching for. There is something that the eggheads at the Fed never considered in their models.
I don't have all of the answers and certainly most of the blog authors do not either.
What do you think?
a clique of necromancers and astrologasters, led by one grand vizier, in full public view pretending to steer a gigantic economic vessel that has, in fact, lost its rudder and is drifting into a maelstrom.
"The fair breeze blew, the white foam flew,
The furrow followed free;
We were the first that ever burst
Into that silent sea.
Down dropt the breeze, the sails dropt down,
'Twas sad as sad could be;
And we did speak only to break
The silence of the sea!
Day after day, day after day,
We stuck, nor breath nor motion;
As idle as a painted ship
Upon a painted ocean."
In reality, the Fed knows that it will have to shovel more ZIRP money into the debt-saturated maw of a dying financial leviathan.
"And some in dreams assurèd were
Of the Spirit that plagued us so;
Nine fathom deep he had followed us
From the land of mist and snow.
And every tongue, through utter drought,
Was withered at the root;
We could not speak, no more than if
We had been choked with soot.
Ah! well a-day! what evil looks
Had I from old and young!
Instead of the cross, the Albatross
About my neck was hung."
- STC 1834
“The world is bankrupt after thirty years of borrowing from the future to throw a party in the present, and the authorities can’t acknowledge that.”
Ah, so modest.
“Borrowing from the future”? It sounds so benign. Who should care? Or, better yet, who is the “future”?
Answer this question and a civilized man should react with almost blind rage.
The future is comprised of our children, grandchildren and untold Americans yet unborn. The method and measure of this cannibalism is governmental debt and obligations.
Then, when you consult lessons of history: in this case, the historical fact that only the white race has built or maintained civilizations, the situation takes on more profound complications. Only the white man has maintained civilizations until he has invited into his society members of non-white races and given them access to organs of influence and power. Non-whites can’t really be blamed for this; for, they are the result of thousands of years of genetic engineering that reduced them to a mass of rotting slaves; and we can’t justly blame them for conditions of their birth.
And so, by cannibalizing our posterity for the next few dozen generations, we assure the inauguration of the next Dark Age; and, owing to the magnitude of monetized government debt (directly and indirectly), its length will far exceed the previous one.
Until the white man learns lessons of American Founders, all we can do is watch a mass of rotting slaves cannibalize our children.
Hurry! Your Mozilla FireFox is in need of a really great virtual update. CLICK HERE! sucker.
This article waxed a bit too poetic to be credible, and for me not to use this space to advise the wary about someone who keeps posting with a virus attached to his avatar, which is trying to infect everyone's computer.
The best way to avoid it when it pops up on your screen is to immediately shut down your computer and reboot.
I just close the box. Only I think the one I get is really from Mozilla. But I ignore it anyway. None of what they want to "fix" or "upgrade" applies to me anyway. My system is essentially a typewriter and primitive email machine that posts on the internet.
I don't facebook, I don't twitter, I don't watch videos, etc. The day they send me a mandatory "fix" or "upgrade" is the day I go to Obuntu or a relative of same. I'm an old fart. command line doesn't scare me a bit.
OK, this is a little misleading.
For individuals, debt equals borrowing from the future, locking up future earnings for immediate benefits or purchase. Just as of an individual, printing his own money equals increasing his own wealth.
That is not because printing money is creating wealth, but doing so, he will allow himself to access more goods and services available on the market, cheating the system.
(I strongly advise against printing your own money, as it might be illegal, and yes, the financialization of the economy has the same effect in a disfunctional but absolutely legal way…).
At a systemic level it is different, however. An excess of debt does not imply going broke, nor necessarily borrowing from the future. With a major reset, the system can re-calibrate its debt to its real worth instantly. It is crazy to say, but due to the fact that the money is in the hands of very few people now, paradoxically those guys are the ones that are trying to avoid the reset because it would imply a wipe out of most of what they are nominally worth…
Cool ain’t it?
So the game for now, which is not going to work for long, is who will be stuck with the ugly consequences of a reset, and trying to spread these… let’s call them “losses”… on as many people as possible, destroying in the meantime also the healthy part of the economy, the real productive one. It is not a conspiracy of course. It simply how human greed plays out… there is no master plan. It just happens this way. We just have to sit down, get a snack and watch. It is like a symphony of stupidity that plays out totally spontaneously in amazing sync, but without an orchestra director to direct it...
Yet the idea that we are borrowing from the future and preserving the status quo at a systemic level it does not really stand… especially for governments that follow the borrowing according to lex moneta. It is a little bit more complicate for those governments borrowing in foreign currencies. For those, the creditors will do anything in their power to prevent a major reset.
Furthermore, remember that for every debt there is an outstanding credit. We are induced into thinking of one side of the equation only, which is in terms of bad debt always. The opposite is equally true, when we talk about bad credit. The point of view is not trivial. While with the bad debt the idea of wealth is preserved (its illusion at least) with bad credit the reset takes place. So ackowledging bad credit is really the reset that one day or another will happen. This is the illusory time gap that separates what we think we are worth with what we really are worth. Bad debt considered as borrowing from the future can stand only untill we can postpone the credit revaluation (the reckoning)
;-)
"printing his own money equals increasing his own wealth."
Wrong. Printing money, his own or anyone else's is simply the creation of non-specific debt. So printing his own money is simply creating debt - ie "borrowing" against future wealth, unless the printed "money" is backed by something of value in which case the printed "money" becomes the equivalent of a stock certificate, conveying interest in the base thing of value (gold, silver, etc).
If you re-read... I stand correct... from the individual point of view, if you print your own money you do become rich, not because you are printing money per se or creating any real wealth, but because it entitles you to buy things that you would not be able to buy otherwise. It modifies the allocation of the wealth of the system without increasing it, except for you at the expenses of someone else of course.
The printing of money is not affecting the wealth of the system from the systemic point of view. In the last decade people have lost the ability to separate systemic thinking with individual thinking. They are two very different beats, not even remotely the same, they have different objectives and different implementations.
For real...
;-)
PS for the record, the creation of money also at a systemic level, can indeed modify the allocation of wealth in a disfunctional system like ours. Picket took 800 pages to explain something that a 10 year old child would understand. If you have a cake (and the cake is not growing) and you write paper cards that entitle a kid to a piece of the cake, if a small group of kids is able to grow/multiply those paper cards, they will be entitled to a bigger portion of the cake, the more they multiply, the bigger their share becomes, leaving the other kids with ever shrinking portions...
As simple as that...
Now it is interesting also to see how the game of the cake unfolds. If the kids that are cheated, get smart and rebel against the cheaters (it seldom happens in real life) you have what looks like a small revolution to redistribute the cake as it was supposed.
If the kids that are cheated remain victims, the cheaters get smaller and smaller benefits from printing more paper cards, and start fighting against each other to get more more and more (this can get very vicious as power kids know no limit to their lust for cake and have no mercy to get more). Eventually some of those cheaters, realizing that the game is not sustainable, might join the cheated and use them to change the system (this is more likely to happen).
Or in the best case scenario, the cake goes back to grow, for any reason what so ever, and things could fix themselves, or the game last a little longer...
I love allegories...
This game was played so many times in previous millenia that is not even fun to watch anymore, except that nowadays power kids have access to nuclear devices... or maybe also this scenario already played out before?
:-D
In the real world, intelligent people know that there is only so much cake. It doesn't matter how small you cut the pieces. If the "cheaters" make more cards, each card will represent a smaller piece of cake since you cannot have more card than cake. True the non-counterfeiting cake eating wanna bes will get more cake than the clueless card holders UNLESS the cards are denominated according to cubic inches of cake. Then the cheaters end up with progressively smaller divisions of cake, while the non-cheaters maintain the same cubic footage of cake. It would really depend on how the cards are divided and the rules of card redemption.
And certainly another critical question would have to involve the thickness of the frosting. Especially if it were chocolate frosting.
Stood in line at taco bell. A dead eye loser and his boyfriend were in front of me. He looked around and had the slack eye lid give a shit expression I think is symbolic of America. A creature of self important disdain for everyone except the circle of like minded mutual admirers and buggery practitioners.