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Hilsenrath Just Reset Market Expectations: "Fed Is Worried Rates Will End Up Right Back At Zero"
Two weeks ago, we predicted that if the same September storm clouds return, and if December, which is increasingly looking as shaky as August as a result of a return of China deval fears, soaring dollar concerns and - the cherry on top - the collapse in junk bonds, forcing the Fed to have some literally last minute concerns about a rate hike, then the Fed's official mouthpiece, Jon Hilsenrath will be very busy...
If Fed has any doubts about December, Hilsenrath will soon be very busy
— zerohedge (@zerohedge) November 30, 2015
... as he scarmbles to realign market expectations of a rate hike "because the economy is oh so strong", with the reality that a rate hike may just unleash the next Lehman event of the past 8 years.
It looks like Hilsenrath indeed had a very busy weekend with his Fed "sources", as he attempts to readjust the market consensus for a December rate hike lower, warning that the Fed's "big worry is they'll end up right back at zero."
For some inexplicable reason, he also adds that "Federal Reserve officials are likely to raise their benchmark short-term interest rate from near zero Wednesday, expecting to slowly ratchet it higher to above 3% in three years. But that's if all goes as planned." Well, just how many things can take place in the next 72 hours that derail the Fed's "planning?" And just what kind of lift-off is this, if the Fed's decision is quite literally dependent on daily market, pardon economic, fluctuations?
It was not immediately clear what the answer to these questions is. What Hilsenrath did answer, however, is why and how the Fed will proceed to cut rates right back to zero. Here is Hilsy:
Any number of factors could force the Fed to reverse course and cut rates all over again: a shock to the U.S. economy from abroad, persistently low inflation, some new financial bubble bursting and slamming the economy, or lost momentum in a business cycle which, at 78 months, is already longer than 29 of the 33 expansions the U.S. economy has experienced since 1854.
Sounds an awful lot like setting the stage for an imminent, and confidence destroying, rate cut unleashed by, drumroll, the Fed's own rate hike. In fact, so likely is that the Fed's rate hike will be the catalyst for the Fed's next easing cycle, that practically nobody has any doubt:
Among 65 economists surveyed by The Wall Street Journal this month, not all of whom responded, more than half said it was somewhat or very likely the Fed's benchmark federal-funds rate would be back near zero within the next five years. Ten said the Fed might even push rates into negative territory, as the European Central Bank and others in Europe have done--meaning financial institutions have to pay to park their money with the central banks.
Traders in futures markets see lower interest rates in coming years than the Fed projects in part because they attach some probability to a return to zero. In December 2016, for example, the Fed projects a 1.375% fed-funds rate. Futures markets put it at 0.76%.
Among the worries of private economists is that no other central bank in the advanced world that has raised rates since the 2007-09 crisis has been able to sustain them at a higher level. That includes central banks in the eurozone, Sweden, Israel, Canada, South Korea and Australia.
"They effectively have had to undo what they have done," said Susan Sterne, president of Economic Analysis Associates, an advisory firm specializing in tracking consumer behavior.
Here is the bigger problem: what the Fed has done - which is very little for the actual economy - is to push the S&P from 666 to 2100. It is the undoing of that most market participants are terrified about, and what will be to most, very unpleasant.
The pre-emptive excuses continue:
The Fed has never started raising rates so late in a business cycle. It has held the fed-funds rate near zero for seven years and hasn't raised it in nearly a decade. Its decision to keep rates so low for so long was likely a factor that helped the economy grow enough to bring the jobless rate down to 5% last month from a recent peak of 10% in 2009. At the same time, waiting so long might mean the Fed is starting to lift rates at a point when the expansion itself is nearer to an end.
Ms. Sterne said the U.S. expansion is now at an advanced stage and consumers have satisfied pent-up demand for cars and other durable goods. She's worried it doesn't have engines for sustained growth. "I call it late-cycle," she said.
Actually, there is one time when the Fed waited this long to tighten conditions, in fact waited too long: the economy was already in recession. That was back in 1936. What happened next was the second part of the Great Depression and a 50% collapse in the Dow Jones.
Hilsenrath's odd litany of preemptive excuses continues:
Several factors have conspired to keep rates low. Inflation has run below the Fed's 2% target for more than three years. In normal times the Fed would push rates up as an expansion strengthens to slow growth and tame upward pressures on consumer prices. With no signs of inflation, officials haven't felt a need to follow that old game plan. Moreover, officials believe the economy, in the wake of a debilitating financial crisis and restrained by an aging population and slowing worker-productivity growth, can't bear rates as high as before. Its equilibrium rate--a hypothetical rate at which unemployment and inflation can be kept low and stable--has sunk below old norms, the thinking goes.
That means rates will remain relatively low even if all goes as planned. If a shock hits the economy and sends it back into recession, the Fed won't have much room to cut rates to cushion the blow.
This goes to the question of what r* is, or the Equilibrium Real Interest rate, one which as we showed last week, is almost entirely a function of nominal US economic growth rate (very low) and consolidated debt/GDP (at 350%, it's very high). Under current conditions, it is either negative or just barely in the positive, suggesting any Fed rate hike will be followed by an immediate rate cut, something Hilsenrath just acknowledged.
The excuses continue:
Among the risks to the economy are financial booms that could turn to busts. One is in commercial real estate. Another in junk bonds is already fizzling. Each of the past three expansions was accompanied by an asset price bust--residential real estate in 2007, tech stocks in 2001 and commercial real estate in the early 1990s.
Normally in a recession the Fed cuts rates to stimulate spending and investment. Between September 2007 and December 2008 it cut rates 5.25 percentage points. Between January 2001 and June 2003 the cut was 5.5 percentage points, while from July 1990 to September 1992 it was 5 percentage points.
If the Fed wants to reduce rates in response to the next shock, it will be back at zero very quickly and will have to turn to other measures to boost growth.
Yup: such as QE4 and NIRP, which are inevitable, but which the Fed wants to "hike" rates first just so it has the alibi to unleash even more easing. And now even Hilsenrath is warning that this is the endgame:
Fed officials worry a great deal about the risk. The small gap between zero and where officials see rates going "might increase the frequency of episodes in which policy makers would not be able to reduce the federal-funds rate enough to promote a strong economic recovery...in the aftermath of negative shocks," they concluded at their October policy meeting, according to minutes of the meeting.
In short, the age of unconventional monetary policy begun by the 2007-09 financial crisis might not be ending.
Coming from Hilsenrath, it does not get any clearer than that.
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So many of you have the delusion, fantasy and hope that treasuries become worthless - it cannot happen without the entire global human civilization being reduced to Mad Max conditions, and clearly none of you understand why. This is an infinitessimally tiny probability, but if it did happen, then the ONLY thing that will keep you alive is weapons and ammo.
Then I'm good.
"treasuries becoming worthless cannot happen without the entire global human civilization being reduced to Mad Max conditions"
My guess is things will go bad, but a new system will eventually come into being and order will be restored relatively quickly -- those of us with beans, brass and bullion will weather the storm better than most.
That being said, I can see why you choose to think the way you do -- you seem to be heavily invested in the current fraudulent system. Good luck to you.
I am an adult with a family to suport so I invest in whatever earns me income and profits, not zero income and huge losses like gold.
"...everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother." - George Orwell, 1984
"...everything was all right, the struggle was finished. He had won the victory over the tyranny of the Regime. He learned how to profit from Big Brother's manipulations of free markets."
InnVestuhrr, 2015
A rate hike followed by a rate cut MAY act to preserve the credibility of the FED, but at what cost?
If anybody still has a shred of CONFIDENCE in any words uttered by anybody working for them afterwords, then they are absolutely delusional without any ability to think critically about this utter failure of leadership and policy.
This reminds me about General Westmoreland reporting to LBJ that during the Tet Offensive that there was an extraordinary 3.45 to 1 Kill Ratio. But using Westmoreland's own numbers that meant that 120% of all of the NVA and VC were killed...VICTORY!!! Of course, needless to write, the war continued on for 4 more bloody years with almost twice as many KIA as there was since 1965 to that time in 1968.
58,000 US Troops died needlessly due to the lies and insanity of LBJ, Westmoreland, and McNamara. Over 1,000,000 NVA and VC died as a result.
As we needed MOAR troops then in that LOSING ENDEAVOUR, we need MOAR QE NOW in this LOSING ENDEAVOUR?
Did you have confidence after the Tet Offensive in 1968 that the War in Vietnam was somehow winnable?
(Of course I am writing to my generation...as we are the leaders and the stewards of whatever is left of the wealth of this Nation.)
Just how can you have confidence now?
There is an old adage which remains as true today as back in the 1960s...
If you have dug yourself into a hole...STOP DIGGING.
Of course Bernanke, Yellen, Hilsenrath, and Krugman are all playing similar roles. But the death toll of this war will reach into the tens of millions, if not hundreds of millions, before this is over.
Their decisions condemn people to death on a GLOBAL SCALE.
The Tet Offensive was won by the US on the battlefield and lost on American TV.
The numbers reported, by the Pentagon, of NVA and VC dead, were not honest.
It is curious that Tyler just published a Guest Post from Karl Denninger using this as an example...right after my initial post. (I swear that Tyler reads my mind at times.)
Karl Denninger also buys into the reported Pentagon numbers.
But the VC and NVA continued to prosecute a war AFTER the Tet Offensive.
Where did those troops come from
1) Either the numbers of dead VC and NVA were over reported....
OR
2) The initial numbers of VC and NVA troops were under reported back in 1965 and throughout 1966 and 1967, in order to manipulate LBJ into getting into that quaqmire in the first place and staying there afterwards..
OR
3) It is a mixture of Option 1 and Option 2
With 20/20 hindsight, Option 3 is backed by the Empirical Evidence that North Vietnam was able to continue military operations after Tet is the probable truth.
Which means that the Pentagon INITIALLY LIED.
It is not about the FUCKING APPEARANCES ON TEEVEE by Walter Cronkite. It is not about FUCKING APPEARANCES. Damned the the FUCKING APPEARANCE.
The War was ill advised from the very beginning.
The War was initiated under the pretenses of an OUTRIGHT LIE. (Gulf of Tonkin incident which, according to Mac the Knife, NEVER HAPPENED.)
The Ground War was unwinnable from the start and the truthful information was withheld by the treasons advisors to LBJ.
All of this ensured a final defeat and withdrawal...similar to what happened in Iraq and Afghanistan since March, 2003....and before....SIR.
Well TT, before we shed a tear for poor LBJ being lied to, it's worthwhile to recall that he came to power in a coup involving the assassination of his predecessor / boss.
Who is shedding tears for LBJ?
He was involved in the murder. I have little doubt of that.
But who owned Robert McNamara? Who owned General Westmoreland?
The Shadow Government, the MIC, overthrew Kennedy in that coup.
LBJ was just the figurehead. Actually LBJ was more interested in the Great Society Programs and his War on Poverty. Of course the MIC did not want that as they cannot profit from peace.
This racket of War has been going on since before the USA was established.
You know that I know that "War is A Racket." I have read Smedley Butler also.
(For those of you who have not read that book it takes about an hour. It is short, concise, and to the point. Just click on the title in the quotes and it will link you.)
Next Government and fed doubles debt again and faster as baby-boomers retire.
Fed balance sheet goes from $4.5 trillion to $9 trillion! QE4 is assured!
Welcome to Zimbabwe!
But my pension ... oh well.
They will not raise rates. They cannot. It is that simple.
When you convince yourself that your policies have worked... it is easy to convince yourself that you should now raise rates.
Garbage In = Garbage out.
I think this Wednesday will be different and they will raise rates... to do it.
They may want to. They may wish they could. But, they can't. They may tinker with IOER, they may try some other futile maneuver. There are just too many trillions and trillions of recently created fed bucks out there, everywhere. What worked for Greenspan won't work now. They may do something (and it may be short-lived) but it will have no effect on real interest rates or the business cycle. At this point, all they can do is more damage.
Politically she has painted herself into a corner. She will raise rates.
It is no longer about the Economy's lack of health. This is aboout CREDIBILITY.
If she does not raise rates again then she will be looked upon as the proverbial "Boy Who Cried Wolf". Of course we know how that story ends.
Of course I am looking forward to the fallout.
She will maintain her credibility in the short term while sowing the seeds of the oncoming LACK OF CONFIDENCE in the intermediate term.
She will raise them.
The Economy will tank much worse than in 2008.
She will then attempt to save it by asking Congress for a Banker Bailout.
They will have NO CONFIDENCE and neither will the American Public.
Then she Bails In the IRAs and 401Ks.
And then it ends.
They win as they will empty America from her wealth and resources.
This means Grandma is not going to raise the FF rate by 0.25%, or she'll raise the rate by a smaller amount, like 0.1%.
Probably because they cannot drain liquidity fast enough.
If she raises rates, people across the glob earching for yield flood the US with dollar casuing inflation and numerous rate increases afterward. If she does not raise rates the dollar sells off and never recovers. Welcome to the reset
The FED and the other Central Banks have not only re-created massive bubbles in asset prices from equities to real estate, but now realize their zirp has created a massive derivative contagion seem in stock buybacks, takeovers, and junk bonds. They have destroyed everyone but the 1% whom feed at their trough by destroying lifetime's of saving which now earn nothing. The real problem with all of this manipulation is now being felt when the 1% dancers in the room are screaming about taking away the chairs from the party. The Titanic built by the Central Bankers will hit the iceberg of human misery they have created no matter what course they choose at this point. War has always been the way to eliminate the masses of the dis-satisfied majority. But what if the majority finally realizes it can turn the tables? Russia & China seem intent on undermining the Central Bank Cabal in various cooperative ways, eventually underming the $ and destroying the printing presses.
The dollar collapse will fix price discovery inhibition.
FED needs to wake up, if you are at an equlibrium point if you attempt to force the rate higher and the market starts to collapse all investor confidence is lost again. Putting them back to 0% won't be enough, chances are you will have to go -% to try and lift the market to where it was.
Then the doozy on markets, whilst at this -% everything adjusts to this rate if sustained for any period like we have had with near 0%. So then you will be trying to lift the rate from -% to 0% and generating it all over again.
Of course the FED beng masters of the universe will ignore all of this so expect -% rates soon after the small increment next week of course.
The goal is to get rid of the markets of real investors via theft with only "players" being the ones that keep the illusions; like Congress being there to give the illusion their is a Constitution. We live in a surreal and illusionary world. There is but one source of truth and the proof is all around us, in our yards, our parks, the sounds around us, in our mirrors, in the skies, but like the person who cannot see a tree in the forest; so it is like the creature cannot comprehend he has a Creator.
Mefo’s economic plan. Maybe some brain dead economist at FED will take head? Nah – they are immersed in their false all- money- is bank credit worldview.
Since nobody asked me. An economic plan for America
1)
Tell the FED they are to accept new MEFOBILLS onto their double entry ledgers. They are to accept these instruments as if they are debt paper.
2)
Mefobills are a three party instrument with defined channeling. There is an issuer, a recipient, and payee. Issuer is a legal body brought into being by law to do said issuing.
3)
In order to undo criminal housing bubble and student loan bubble, the future needs to be unburdened from debt. The way to do this is with exogenous money. The FED will be forced to be the exogenous creator (see item number 1).
4)
All property owners, especially those who were victimized by bubble economics, are to get a Bill. Said bill will be signed over (like a check) and aimed at households. Each household will have to redeem the bill at a bank. The bank is instructed by bill to pay the mortgage holder X amount of dollars and this money goes straight into paying down mortgage. The Bill is then passed to FED, who then pays mortgage bank.
a.
A family will receive their mefo bill, and it will be credit at first and will channel toward said family. When it is redeemed, new money will issue out of FED’s keyboard, and the effect will be to decrement principle of family’s loan.
i.
This action unburdens the future, thus undoing future profits of banksters, and allowing future money to circulate rather than being recalled to ledger.
ii.
The FED has something to swap and hence double entry mechanics are allowed to work. The FED cannot re-sell the bill back into the market, but must hold it.
iii.
Mefobills are credit at first until redeemed; they reduce principle. Upon decrementing ledger the money disappears – hence it is non-inflationary.
5)
Recipient of Mefo Bills must accept new rent taxes, especially to keep land prices from increasing. Rent taxes go after unearned income, taxing away free lunches. Recipient of Mefo Bill must agree that near future will have income taxes removed in exchange for proper Georgist style property taxes (an easy sell). Also as part of Mefo contract, recipient agrees to allow transition to a proper sovereign money system in future. Never again should debt instruments be created by private banksters to then control society.
6)
Those that don’t have property will get MefoBills for buying targeted American goods, or paying off of Student loans. Each Bill will be examined to make sure it is spent properly, otherwise it cannot be redeemed. Private bankers will earn fees for doing this examination service and working as an economic agent – not as a predator. No MefoBill converted to General Purchasing power is allowed to channel into Chinese crap, or American companies on the predator list. New money is to have a renewal effect.
7)
Those that have no pressing needs for American economic goods can invest their MefoBills in approved industry as a trust. This trust may pay interest as targeted industry takes-off and becomes productive. For example, if American’s want to reclaim Solar Cell industry from China, that could be targeted. The scope of MefoBills could be increased to reclaim former industry lost by the Wall Street/China gambit.
8)
After the future debt problem is reduced in this way, then a sovereign money system can be introduced. By then the public may have some faith that economists are not retarded.
If their is a property tax in existence, then no one truly owns their property. If draconian laws restrict the use of said property, then one has no real authority over their property...conclusion...go back to the rock from which you came. Just kidding on the latter.
God, or natures god created the land. People are mere tenants on earth, they don't own it. That said, rights to the land can be codified in law. In other words, one can easily pay land rent taxes if the economy is efficient. Maybe something like a 100 year lease and easy transfer to ones progeny is equivalent to ownership. More laws can be had to prevent predatory government from encroaching.
With income taxes, people choose not to work.
The earlier ZH article on San Francisco are a perfect example of what happens when there are improper taxes.
In Russia, Putin is suggesting that those who don't grow food and just sit on their land, sell it so it can be put to use.
Most people in the United States do not leave assets/land to their progeny; they leave debts and pollution.
See: US Federal Debt, General Obligation Bonds, Public Service Pensions,...
See: radioactive waste, spent fuel rods, South Pacific Gyre Rubbish, Chernobyl, Superfund Sites, landfills and dumps, etc...
Bravo very good.
I really appreciate your plan and think it would be very workable.
"Mefo’s economic plan. "
Endorsed/seconded.
Those who live off of unearned income in varous ways from the debt/credit usury/ponzi will of course defy the remedy relentlessly; but, parasites give little thought as to the health and happiness of their hosts when feasting upon them...
IMHO, your posts are some of the most reasoned and mathematically sound presented within these commentary threads.
It pains me deeply to see the ignorant and corrupt abuse you for offering what may be one of the only non-violent and non-expropriative resolutions to the perpetuation of the present system of frauds, corruptions and oppressions.
Best regards and wishes that you and your's enjoy prosperous, safe and happy holidays.
Aw, jeez Edith...
The grim reality is however that every month there are fewer players in "the market" with larger and larger positions.
For all the ivy leaguer economists it comes down to musical chairs and real markets operate on information which is now being dispersed to fewer people that "matter."
The fewer people needed to be consulted and assured the more likely a surprise move where the few insiders swing for the YOLO fences and bet against prevailing wisdom - the Muppet Show.
It's just like that crazy movie the Matrix. You can balance the equation all day long yet there is some "remainder" that has to be accounted for.
You can live in a crystal palace of quants and algos, but eventually the entire system will hinge on a conservation between two middle guys in the men's room betting whether the buttered side of a piece of toast hits the floor.
A butterfly flaps its wings ...
Are you saying the beast eventually has nothing to eat except its tail in the end?
I find it hiliarous there is so much stress over 0.25%. If the economy is great, then this increase should mean -nothing-. A "symbolic" raise to signal to the world the greatness of the US economy and the sheer genius of Ben Bernanke and every decision made during the financial crisis.
The Fed has caused commodity carnage, ForEx carnage, etc. by talking up the US economy over the past year. Each month, non-Zerohedge readers, were bombarded with "rate hike next meeting" * 12. A whole year they have been talking up the market. In that time, the dollar has skyrocketed, oil has crashed (supposedly good), HY crashing, etc etc.
Grab the popcorn... If they raise = carnage. If they don't = complete loss of credibility.
The Feds lost credibility months ago... this is just jawing... big money runs this country.
The market's been DOWN since May...it will continue regardless of what the fed does this week...
Oil prices and commodity prices coming down have only increased the profit margins for many sectors; otherwise we would see the food prices and other items come down, but we haven't..in fact they continue to increase. Many things are very wrong when that happens.
This one goes out to Jon Hilsen-douche and Janet Smell-in ...
(vomit whores all)
https://www.youtube.com/watch?v=2xRAK0GWNLc
Seek help; you are as twisted as the Clintons without the wealth, influence and power...really. If you are the future.."___________"!!
NIRP baby, NIRP.
Wait and motherfucking see.
Just think: Nirples AND cankles.
The expansion bandied about is much like the expansion in my waist as I'm walking out of Chipotle
Neither natural, healthy, nor sustainable
And you all know what comes next
NIRP would be like the flush
So if you ever get into a run in with the U.S. government, you have to deal with "stern letters" from Jon "wet start" MCaine.
The next stage is you figure out that tax refunds expire after 3 years, but tax penalties go on forever. Kinda like the 50th anniversary of the moon landing.
Don't even get me started about the difference between the fed funds rate and the IRS deliquency interest rate.
Along those same lines: if the government wants to get your attention, you get a no-knock SWAT raid and frozen bank account, but If you need to get ahold of them, you get a busy signal.
Security theater takes concentration, dressage, media. That is why you get the busy signal and why I fear fukishima more than the san bernadinaosour people should and will.
sarc: Pay your taxes. Carbon. Income. Hoaxes. Kill ISIS. It will end up good. If we all follow the rules.
Told ya the slimebucket douchewhore FEDscum klepto-cunts would not raise rates.
The story implies they will raise rates as an excuse to bring rates back to zero or negative and begin new QE, which is not new because it has never stopped...print until you can't I say. Stop the printing press..can you..uuhmm? (Yoda)
Going to war; yes we are and who can stop it?
You are right, Crocodile, NATO is prepping for WW3, but the Russian Federation will win on a first strike nuke. And yes, I believe it is unstopable too.
You're the one that sucks Satan's cock Crocodile - you can stop it!
S&P futures were triple digit negative at 2pm Sunday and at 6pm are plus 5, but no shenanigans here..look elsewhere.
BTW "some new financial bubble bursting and slamming the economy" - that implies there is an ongoing bubble bursting or already busted and being patched up..wonder what that could be; junk?!
Someone, except Gartman, please tell me the ETF way to capitalize on the busting of the junk bonds...thank you!!
SJB
Thanks, that was the only one I could find, so who has the most to loose when it blows up (i.e Citi, JP Morgue)?
I may short Citi Group; they seem to be the next Lehman and have been "in favor" in the past, but not in the inner-inner circle...any comments in agreement or disagreement & thanks for answering.
BTW - I see the largest short squeeze coming December 16th through the 18th; your opinion.
Who can tell?
The Federal Reserve's and Janet Yellen's only job is enriching Wall Street, Banking, Corporate Crony and Oligarch criminals by stealing from the American People. The Zero Interest Rate Policy and Money Printing—Qualitative Easings—are so effective transferring wealth from the American People to the Fed's criminal owners that they will never end voluntarily. The political parasites are bribed to not interfere.
Yep - https://www.youtube.com/watch?v=Yl6oT1eGSEc (start at 1:17:40 Dr Willie)
the greatest trick the fed ever pulled was convincing the stupid masses we were in a recovery
"The greatest trick the devil every pulled was to convince everyone he didn't exist", Kaiser Sousa
"The second greatest trick was to get people to be manipulated into going against their own interests" the fed
The Criminals at the Federal Reserve gave about $3.7 trillion at 0% to the bankrupt criminal banking system in Quantitative Easing. The criminal banking system then created 20X to 25X that amount ($74 trillion to $92.5 trillion) in credit at ~0% to blow bubbles in every asset class. There is no way that the Wall Street, Banking and other criminals are going to allow the Federal Reserve and Janet Yellen to collapse their massive asset windfalls by raising their interest rates by even a measly 0.25%.
Hmm seems to me they will hike rates only to have it blow up in their face and they will hit the panic button to not only zirp but down to nirp very shortly after.
Fuck zero, i'm worried about less than zero. We need this to implode asap, it's hard telling what kind of draconian bs they'll come up with in the meantime in order to position themselves for the aftermath.
Fed can raise but then undo the effect with more European QE by the ECB. It's like writing yourself a check for $100 -- no net gain or loss. U.S. companies then just fund their additional stock buybacks by issuing Euro denominated debt.
Oh yeah, this ought to be good...
Though I think they are capable of trying anything, no matter how stupid, I think they'll settle on introducing a new currency. A New Dollar. They will try to keep as much of it digital as possible, but will be forced to print enough for domestic use so as to keep the peace and allow the economy to function. The New Dollar will be every bit as ugly as you'd expect, and will have designs sure to annoy as many people as possible...The Malcolm X dollar, the Dick Cheney ten, the Caitlyn Jenner 20...the Media Moguls quarter series, followed by the SCOTUS Landmark series that features the Roe vs. Wade, Citizens United, and other popular Court decisions. They could issue dollar coins if they want to bestow special honors on some beloved past President...make room in your collection for the new Obama dollar coin! Which will again be the same size as a quarter, because why mess with success?
.
The money will be worthless, of course. But they will try it anyway, out of desperation. The next few years are gonna be a hoot...*sigh* No cathartic 'implosion', just a series of spastic hiccups that ratchet us all slowly downward.
"What do you mean you like the old $20 bill more?! Kaitlyn Jenner is Stunning and Brave and that Andrew Jackson was nothing more than a genocidal, antisemite, asshole!"
So why is any jerk off buying these shit fucked asset markets? Fuck dey ass.
Because the sheep have been conditioned to BTFD...and it has worked. How much longer can it continue? Thats an answer worth more than all QE combined ;)
From what I have read, supposedly when money is printed the way it is now, inflation and hyper inflation ensues and the money becomes worthless.
That is not happening just yet and may not for a simple reason.
Somewhere I read the population of the USA increased 50% since the early 70's. I stand to be corrected.
If the population increase is true, the money supply has to increase to meet the demands of the increased population and past inflation, if that makes sense. They increased the money supply. How much more can it take? If other countries are using the US dollar for its base currency as I believe some are and other countries have a ton of it 'just in case' like Mexico's citizens, the world and in particular the USA can probably isue more coin and get away with it. Who knows when the tipping point will occur.
Because, Bubbeleh, they are more aware than you are of Moses Maimonides' 12th century observation about markets in shitty economies:
BTFD!!!!! I mean really think about it, all the QE and 0% interest, DOW and S&P has to break records before falling. Justing making even of 2007 2008 highs is not enough with all the intervining they have done!!!
Let's do some more model mastrubating.
Just glad to report that Nationstar Mortgage, LLC stock is off 60% for the year. Fortress Investment Group, they own Nationstar, is off 30% for the year. Guess those dipshits aren't so smart of criminals as they thougth.
Ocwen is off 60% for the year as well. Both NSM and OCN are inept criminals that are being exposed....
Twenty five basis points and they are all shitting bricks. Not of gold.
That the Fed will reinstitute ZIRP or NIRP?
Well, the only thing that justified ZIRP was the 2008 crash and market malfunction, which were supposedly one-time things, or at least once a century kinds of things. I hope that means no return to ZIRP by Fed action in the forseeable future.
I thought this was going to be another moan that the market will maintain ZIRP even when the Fed attempts to raise ... which is also nonsense, or if not nonsense, harmless.
What a "shit sandwich",and I love it!
Deflation is deflation, I guess. So we'll see deflation in the credit market too. The 'price' of money heading into the same abyss as all other commodities. Because what else IS interest but the price of money? And what else IS money but a commodity of sorts? Bought and sold, traded, right alongside pork bellies, construction steel and oil futures...
Soon to experience the same free-fall as markets contract. And it's a demand thing, just like the others. When rates stay so low for so long, it's because there is decreased demand for new loan money. Just like there is decreased demand for oil, lumber, steel, gas, consumer goods, real estate, etc...
We're all tapped out, bra.
It is the price of money so as the supply increases then the price will fall given equal demand and that's exactly why zero interest rates really mean free money for a few.
Notice consumers don't get zero rates on credit cards if they did then this would explode instantly.
No it's only free money for a few the rest pay.
It is the price of money so as the supply increases then the price will fall given equal demand and that's exactly why zero interest rates really mean free money for a few.
Notice consumers don't get zero rates on credit cards if they did then this would explode instantly.
No it's only free money for a few the rest pay.
I just wish Dec 17 would get here. Tired of all this bullshit about how a bunch of con artist PhD's are going to screw up the economy worse than what it is. The world has been conned. Cut your losses or continue to be patsy's. That's the choices.
Is that a flock of Black Swans I see descending tomorrow (or Tuesday)?
Que Gollum and ISIS! Stage right!
Its about time these dipsticks realized they don't have the first clue what to do. Mr. Market has run out of patience. It's been fun, but the Fed is done.
who are these "policy makers" and what is the
policy?
Official Federal Reserve policy:
"Max out the kid's and grandkid's credit cards (boomer's cards already maxed out). Falsely claim to have saved the world from our own reckless debt binge. Retire on taxpayer funded pension. Go on a speaking tour and get paid $200K per speech. Let kids and grandkids figure out how to fix our mess later."
And all that back-door buying even after the Fed stopped QE3.
The Ponzi goes on until the dollar implodes.
Central economic planners always manage to shoot themselves in the foot, and this time will NOT be different.
Google, Oracle, Pfizer and Home Depot all pay market interest rates (well above the Fed's central planned zero rate). Only the politically connected like banks and Warren Buffett get to borrow at zero -- that is who might be effected by a Fed decision.
Maybe the Fed normalizes interest rates, and the politically connected are forced to stop gambling with other people's money?
Or maybe the Fed keeps interest rates artificially low and destroys all pension funds, including those of government union members?
Heads the USA loses and gets a massive bailout bill, tails the USA loses and gets a massive bailout bill.
"Either way, Bernanke and Yellen get paid" <-- this is the real problem
Stocks and homes are assets priced in U.S. dollars. Therefore, their
soundly shown price histories are inflation-adjusted ("real").
But such are seldom seen, because: Well apparent therein are our
nation's serial, massive mispricings. I do this
http://showrealhist.com/yTRIAL.html
in order to combat deception by omission done to our citizenry.
"The public be suckered" is both this track record and keeping it unseen.
ZH, I just want to point out a typo... "Among 65 economists surveyed by The Wall Street Journal this month, not all of whom responded, more than half said it was somewhat or very likely the Fed's benchmark federal-funds rate would be back near zero within the next five years."
I believe that was supposed to read... "somewhat or very likely the Fed's benchmark federal-funds rate would be back near zero within the next five weeks."
:-)
I'd say next five minutes
The FED is a propaganda tool to finance wars and instigate crises as it always did. This time it will be massive theft of the pension funds and dollar nominated sovereign funds which as always the remedy will be NegIRP for cronies credit while freeze funding for everyone allowing for larceny to occur in a form of acquisitions.
Take last look on to your retirement savings because soon they will be gone one way (financial scamming) or another regulatory hit.
You should understand that the policy of the US regime is to destroys people's lives via means of poverty and government dependence.
Here is more on that:
https://contrarianopinion.wordpress.com/economy-update/
bernanke believes they raised rates too soon in 36, and advocates lower rates until the economy shows more strength, SO if the Fed demurs on the socalled Dec rate hike it would not be entirely unusual.its entirely possible real rates might go negative, despite a rate hike, but it would just be temporary there is after all a lot of inflation in the pipeline, remember energy is not part of CORE inflation. you should also consider the probability of W2 influenced the 36 recovery. the point is can the fed inplement a policy of gradual rate hikes, and to that i say not likely, and that bothers the market a lot. QE on the other hand released a lot of liquidity into the market which is not going to just disappear. my vote is for muddle on, no disaster, no fireworks, low interest rates low rate of return on stocks.
We just can't have a down year and the Santa Claus rally was not showing up. China is disappearing sellers, ECB is pumping, and FED is shaking in the corner. Strong global economy.
trololololololololololol
" Inflation has run below the Fed's 2% target for more than three years."
Yes! Since 2012 when they stopped using the core CPI and disingenuously switched to the PCE.
Magic!
Hilsenrath and the Fed governors are just a bunch of boobs:
http://annalisajohnson.tumblr.com/archive
A big rat just jumped ship. Metals Diretor, Harriet Hunnable left the CME Group on Friday the 11th. Just flat out resigned. First announcement about it was made on the 2nd of December. Hunnable, formerly with UBS, Merrill Lynch, and NM Rothchild refused to comment on why she was departing. I'm keeping my eyes on Chicago.
i wonder if the 300:1 phyz to paper is looking.. daunting?
The Fed is maybe worried about its "place in history" with unlimited monetary easing for 8 years. How long did Weimar "easing" last? With low interest rates, I've got to see dumb ass businesses like Blue Apron offer to bring uncooked food to your home for 10 bucks a head. How could this be viable in a non Fed fueled world?
666?
Coincidental...
we must raise it to lower it more
Never fear. Dow futures are up 36 pts (as of 10 pm, EST)
Janet...how you doing...busy week ahead? Shit going to hit the fan or is a bunny going to be pulled from a hat? Oh...I forgot...this decision is going to be "data dependent". Funny thing happened in the new normal... those data dependent numbers turned out to be irrational numbers... damn just when you think you have something figured out...something else slips through the cracks...
oh..I just remembered...someone has to analyze the data and come to a conclusion...and another weird thing...after the decision is made I read jibberish...but I will be damned if I can find any data numbers to back up the decision...why don't you show some transparency in providing numbers which we can all read and say "ah-ha" you are so right... well...best of luck and I hope the coin toss turns out right...
Raising rates is the new, "It's in the mail or I won't cum in your mouth" take yer pick.
what a joke! after seeing the handwriting on the wall, the crashing last week... we're gonna ramp on bullshit? this shit has gone beyond comedy now. everything points to more carnage this coming week.. so.. mumble some bullshit through the press.. waalaa.. ramps to the stars, bitchez!~
so predictable
P < P + I
yellin will relinquish command of her warbird just before the next election. she will pump the crap out of stocks while crushing pm's. i think they called it "sherman's march to the sea"
They don't wanna raise rates until a Republican is President.. lol
"Next lehman" on ZH = drink!
You cannot payoff debt with more debt that is getting even more expensive and expect prosperity.
"policy makers would not be able to reduce the federal-funds rate enough to promote a strong economic recovery"
Well, we have been at damned near zero for years and we still havent seen a "strong economic recovery". So I am not sure what they think raising rates will do. They missed that bus years ago.
"The buck NEVER stops here" in the USA
Yes, I"m sure the fed will raise interest rates while going into a recession. After all, that idea is mentioned in exactly 0 economics text books.
Don't you just hate it when the world economy turns to shit exactly 3 weeks before your planned (again, and again, and again) rate hike? That whole society lives on the backs of working people and does everything possible to make it harder. What scum.
As I have ranted forever, rate cut, rate cut, rate cut. They will NEVER raise rates.
LOL, the Fed is really,really, really scared of raising the rate a mere 25 basis points.
Can you imagine when the dollar starts free-falling how far behind the curve they will be be before they react?
Lucy will pull the football once again.....
they should have let the free market take care of itself and not interfere.
I keep hearing that Yellen HAS to raise rates to keep the Feds credibility...surely all credibility was lost a while back with ( Fuck You )
Bernanke?
I still don't think that there will be any raise. More chance of a rate cut and QE4 ever...
I wonder at which Hedge Fund Yellen will be working " part time " next year?
Depends.
Hilsenrath's sources aren't at the Fed..they are at those who give each of the Fed Regional Banks their marching orders.
Knew in March that it was much, much too late to raise rates. They could have done a token raise before then.
Substantively it wasn't going to stick, and everyone always knew it. Everyone knew it because there was no credit-refocus...where overall credit expands by moving in some new direction extending the time until total credit exhausts its ability to continue to expand. And everyone knew it because there was no deleveraging of the old bad credit...as mark to fantasy allowed everyone to 'extend and pretend' such that nothing was fixed in the real economy even temporarily.
What is interesting about the 'To raise or not to raise' debate is firstly how many so-called 'experts' continue to look at the economy as though it were a floating macro equasion isolated from the rest of the world...which is to say they do not calculate the effect of reserve currency status, and secondly how the 'official' compass on the question is all over the map.
It means that the 'experts' on whom the world relies to centrally plan their totalitarian heirarchical society's economy aren't experts at all.
And it means that there are severe splits between the powers that be regarding future policy.
YUP. As I've been saying, if the federal-reserve raises rates, they do so to PURPOSELY crash the markets and accelerate the ongoing crash of economy.
Then they and their buddies can go fishing for bargains with free fiat the next time the SP500 hits 666... or perhaps 555, 444 or 333 this time? Actually, 444 would be very appropriate from a Chinese perspective.
The other reason the federal-reserve would want to crash the economy is to satisfy their urge for QE4ever... which maybe they will call QE4folks or QE4mainstreet to fool the sheeple. Or maybe they won't call it QE this time, since nearly everyone finally admits that QE doesn't work.
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There is also a slight possibility the federal-reserve is becoming afraid Trump might win. I have to assume they'd really rather not have to assassinate another president (so they'd probably take him out while still a candidate). Trump is a bit of a wild-card, someone who might actually say "who needs the federal-freaking-reserve" and shut it down. He would certainly have no trouble selling that idea to the public at large.
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While reading what this fed stooge was saying, it occurred to me that he was essentially quoting recent videos and podcasts by Peter Schiff... almost word for word in fact. Hilarious!
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PS: While I'm CERTAIN the predators-that-be would love to institute negative interest rates, I have a feeling that might not happen [in the nearish future]. The reason is, that leaves physical gold and silver at home looking like the PERFECT alternative to bank accounts... not exactly something they want to encourage. That's why I believe QE4ever is infinitely more likely.
Disclaimer: When they lowered to 0% years ago, I said they'll never raise rates. Even now, two days before they might raise to 0.25%, I still believe that's more likely. And if they do raise, they will be back at zero soon enough. Next stop: collapse, depression, hyper-response, hyper-inflation. 2 years from now, the gold price is $5,000 (if not $10,000 to $25,000). That is, for those bold enough to hold onto their gold when the swarms of gold-seeking locusts arrive. If you're paying attention, you've noticed the swarm in India already.