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Peter Schiff Exposes The Real Problem Facing The Fed

Tyler Durden's picture




 

Submitted by Peter Schiff via Euro Pacific Capital,

Over the past year, while the U.S. economy has continually missed expectations, Federal Reserve Chairwoman Janet Yellen has assured all who could stay awake during her press conferences that it was strong enough to withstand tighter monetary policy. In delivering months of mildly tough talk (with nothing in the way of action), Yellen began stressing that WHEN the Fed would finally raise rates (for the first time in almost a decade) was not nearly as important as how fast and how high  the increases would be once they started. Not only did this blunt the criticism of those who felt that the delays were unnecessary, and in fact dangerous, but it also began laying the groundwork for the Fed to do nothing over a much longer time period. To the delight of investors, the Fed has telegraphed that it will adopt a "low and slow" trajectory for the foreseeable future and move, in the words of Larry Kudlow, like "an injured snail."

I would suggest that Kudlow is a bit aggressive. I believe that if the Fed raises rates by 25 basis points next week, as everyone expects it will, that the move will likely represent the END of the tightening cycle, not the beginning. (As I explained in my last commentary, the current tightening cycle actually started more than two years ago when the Fed began shortening its forward guidance on Quantitative Easing). The expected rate hike this month has long been referred to as “liftoff” for the Fed, an image that suggests the very beginning of a process that eventually puts a spacecraft into orbit. But, in this case, liftoff will be far less dramatic. I believe the Fed’s rocket to nowhere will hover above the launch pad for a considerable period of time before ultimately falling back down to Earth.
 
 
If we believe that the Fed will remain "data dependent", then we should not even expect an increase this month. The latest batch of data, including terrible retail sales figures, an ISM manufacturing number that indicates we may already be in a manufacturing recession, and a much weaker than expected ISM service sector number, show an economy that is rapidly decelerating. Even last week's supposedly good jobs report, that showed 211,000 jobs created in November, included a huge jump in the number of people (319,000) taking part-time jobs because they couldn't find full-time work.(Bureau of Labor Statistics, 12/7/15)
 
This current "recovery," engineered by the largest monetary experiment in history, that has left us with trillions of dollars of new debt that we will likely never be able to repay, is quickly running out of what little steam it had. On average, since the Second World War, the U.S. economy has experienced a recession every six years. Since it is approaching eight years since our last official recession began, time is not on our side. Interestingly, the Wall Street Journal reported this week on its front page that the "junk" bond market is poised to notch its first annual loss since the 2008-2009 financial crisis. Many economists consider distress in these high yield debt instruments as an early sign of a recession.   
 
But rather than admit its rosy forecasts were too optimistic, and risk losing much of its remaining credibility, the Fed is apparently prepared to prove to the markets that it has the ability to deliver tough love with an actual rate hike. But that's the easy part. Although I believe that even 25 basis points may be too much of a headwind for this anemic economy to overcome, it's not something that should really spread fear in a marginally healthy economy. The dollar did not rally by 30% or more over the past year against many currencies based on the fear of a 25 basis point rate hike. What really moved markets and currencies was the prospect of a bona fide tightening cycle. 
 
These fears moved into sharp focus in September when widespread fears of an imminent rate hike had caused the Dow to experience its first 10% correction in four years. That is when Yellen began stressing that it's not the first rate hike that is important, but what happens after. As a result, Wall Street now sees liftoff as a far less significant event, with far more attention being paid to the ultimate flight path.
 
As late as this summer many economists were predicting that Fed funds would be at least 2% by the end of 2017. The Fed’s own forecasters still see rates at more than 2.5% by early 2018, according to its Summary of Economic Projections released 9/17/15. But over the last few months, those predictions have flattened out more than an open can of soda in the sun. The current Fed Funds futures contracts imply a 79% chance that the Fed raises rates in December (Reuters, 12/4/15). That figure is about as high as it has been for quite a few months. But the market also indicates that rates may only rise twice more by the end of 2016. (Reuters 12/4/15) This would put Fed Funds at 75 basis points by next December, presuming a 25 basis rise this month. That pace is less than half of the last rate tightening cycle of 2004-2006, when the Fed raised rates by 25 basis points for 17 consecutive meetings (Federal Reserve Bank of NY). (It's interesting to recall that then Fed Chairman Alan Greenspan was criticized for moving too slowly at that time, and even more so in the aftermath of the bursting of the housing bubble, as many correctly concluded that the Fed's measured pace had allowed the bubble to grow unnecessarily).
 
I believe that when it comes to gold, commodities and currencies, we may be headed into a "buy the rumor, sell the fact" market that might turn the tables on the trends of the past four years. In this case, the "rumor" was a meaningful tightening cycle that would restore positive real rates, but the "fact" is likely to be a symbolic 25 basis point nudge. This "one and done/wait and see" scenario is gaining a surprising amount of support, especially among those Wall Street investment firms whose livelihood depends on perennially positive markets. How else could you explain the 4% rally in gold that had occurred from the lows on Thursday to the highs on Friday last week if not for the fact that markets are coming to expect much more tender loving care from the Fed?
 
I believe that the Fed understands the deteriorating economic data better than it cares to admit. But candor is rarely high on a Fed Chairperson's agenda. (In an interview this week on the Freakonomics Podcast, former Fed Chairman Ben Bernanke blundered by accidentally telling the truth regarding his penchant for painting unjustifiably rosy economic pictures while in office, saying, "I was representing the administration. And you don't really want to go out and say, 'Run for the hills,' right?" In other words, one should expect the same partisan cheerleading from the supposedly independent Fed chairman as one gets from the blatantly partisan White House Press Secretary). This time around the Fed's rhetoric has now backed it into a corner, where its credibility with the markets is at stake. If they fail to deliver 25 basis points in December, as they have failed to do many times this year, then the markets may be shocked by the Fed’s lack of confidence.  As a result, they may reluctantly deliver a rate hike, even though the data they supposedly depend on would argue against it. But if all we get is a symbolic 25 basis point increase, then, I believe, any economic confidence that the Fed hoped would be implied by its actions will be lost anyway.
 
The real problem for the Fed will be how foolish it will look if it does raise by 25 basis points and is then forced by a slowing economy to lower rates back to zero soon after liftoff. At that point, the markets should finally understand that the Fed is powerless to get out of the stimulus trap it has created. But it looks like the Fed would rather look foolish later when it's forced to cut rates, than look foolish now by not raising them at all.
 
Given that we are going into an election year, look for the Fed to be hyper-vigilant in keeping the economy, and the financial markets,  from contracting through the spring and summer. History has shown that the incumbent presidential party fares very poorly in an election year when the economy is bad. Just ask George H.W. Bush, whose post-Gulf War popularity evaporated in the face of the 1992 recession, which turned out to be one of the mildest in memory. Can anyone really expect that the Fed's left-leaning leadership will sit still while a recession gains momentum and, in so doing, run the risk of easing Donald Trump into the White House?  
 
In her testimony before Congress last week, Yellen indicated that if the economy unexpectedly slipped back into recession in 2016, and it turned out that the Fed had raised rates, it would simply reverse course and lower them. She also stated she would launch another round of Quantitative Easing (QE), because the program “worked so well in the past.” But a recession that begins so soon after a 25 basis point rate increase, or even with rates still at zero, should prove to even the Fed’s biggest boosters that its stimuli were complete and utter failures. But in government, nothing succeeds like failure.

 

 

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Sun, 12/13/2015 - 11:36 | 6917296 rccalhoun
rccalhoun's picture

the fed might have to do a few more 25's to prove they are in control, but everyone already knows that 0 or negative is just a few thousand down dow points away

Sun, 12/13/2015 - 11:55 | 6917346 NotApplicable
NotApplicable's picture

If they're lucky enough to have that many meetings before the bottom drops out, that is. Then again, Schiff didn't mention the war card, which wil completely render the current game moot. So really, all they have to do is to survive until that event.

Which... I'd guess is likely her entire game plan.

Sun, 12/13/2015 - 12:12 | 6917405 Buckaroo Banzai
Buckaroo Banzai's picture

I am super excited to start getting 0.1% interest on my savings account, instead of the 0.03% I am currently getting.

Sun, 12/13/2015 - 12:33 | 6917478 Oldwood
Oldwood's picture

Early retirement is at hand...ready or not.

Sun, 12/13/2015 - 12:38 | 6917502 Stuck on Zero
Stuck on Zero's picture

the way the Fed handles the economy reminds me of 'pilot induced oscillation.'  Never a good end-result.

Sun, 12/13/2015 - 12:58 | 6917578 Occident Mortal
Occident Mortal's picture

They will raise rates by 10 basis points, then in 6 months time by another 15 basis points.

Sun, 12/13/2015 - 13:07 | 6917627 Pool Shark
Pool Shark's picture

 

 

...then, in an emergency meeting, they will drop them back to ZERO.

We are ALL Japan now.

If the Fed raises rates this week, it will be just like the BOJ increase in 2007: taken back in short order:

http://3.bp.blogspot.com/-YSy4WuUHC1s/VgR8LM9CipI/AAAAAAAAS10/rNgbgYAkXyw/s1600/Screen%2BShot%2B2015-09-24%2Bat%2B7.41.17%2BPM.png

Our future is NIRP...

 

Sun, 12/13/2015 - 14:08 | 6917913 mtndds
mtndds's picture

When HOUSING prices take a shit is when I know things are getting real.  In the mean time everything else is TRANSITORY.

Sun, 12/13/2015 - 14:44 | 6918043 Tejano
Tejano's picture

Someone has not been paying attention. The fed will not raise "interest rates" in any meaningful fashion. They cannot. They simply do not have the ability. Through what mechanism(s)? The world is awash in a sea of newly conjured dollars over which the fed no longer has control.

 

Whatever they do, it will have no effect on real rates or the business cycle.

 

 

Sun, 12/13/2015 - 12:38 | 6917501 snodgrass
snodgrass's picture

Don't complain. You're lucky they didn't steal your savings.

Sun, 12/13/2015 - 12:49 | 6917543 edotabin
edotabin's picture

.......yet.

Sun, 12/13/2015 - 13:25 | 6917727 logically possible
logically possible's picture

Oh yes, they are stealing your savings. Next to zero interest earned, with the continuing devaluation of our money, the inflated cost of nearly everything, higher taxes, they are stealing anything we are trying to save.

Sun, 12/13/2015 - 14:53 | 6918069 Arnold
Arnold's picture

Yup this^^, but that is .gov's job, not the Federal Reserve's job.

Sun, 12/13/2015 - 18:33 | 6919058 Nobody For President
Nobody For President's picture

Except for the store of value of my PMs, presently (alas) residing at the bottom of a lake.

Sun, 12/13/2015 - 12:48 | 6917537 KnuckleDragger-X
KnuckleDragger-X's picture

The Fed pulled the pin on the economic hand grenade, then threw the pin away. Now Yellen is trying to figure out what to do with a live grenade, besides to hold on......

Sun, 12/13/2015 - 14:40 | 6918025 Professor Fate
Professor Fate's picture

It WAAAAY too late.  At this point, all Yellin can do is run to the end of her chain and bark.  

Fate the Magnificent
"Push the button, Max" 

Sun, 12/13/2015 - 12:11 | 6917399 Escrava Isaura
Escrava Isaura's picture

 

 

A very reserved international banker friend, I mean, very diplomatic, he never says anything negative, told me, to my surprise, that “It’s over. There’s no more growth anywhere but Bolivia.”

 

I was trying to have him commenting on QE and interest rates when he gave that answer.

 

Sun, 12/13/2015 - 12:23 | 6917444 Eeyores Enigma
Eeyores Enigma's picture

"There’s no more growth anywhere but Bolivia."

Long blow ;-}

 

Seems all we need is high interest rates and higher oil prices in order to get the economy back on track...as if.

Truely a Bizarro World.

Sun, 12/13/2015 - 12:26 | 6917460 Oldwood
Oldwood's picture

Corruption and theft is NEVER over.

Sun, 12/13/2015 - 12:30 | 6917475 Latitude25
Latitude25's picture

My wife is from Bolivia and it's funny but true.  The country is prosperous and growing.

Sun, 12/13/2015 - 12:34 | 6917488 Oldwood
Oldwood's picture

Not for long if the bankers figure it out. Parasites looking for a juicy bite.

Sun, 12/13/2015 - 14:34 | 6918008 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

What a stunning idea, put in a Socialist government that gets money into the hands of people who need to buy a new washing machine or get their kids educated, instead we put money into the pockets of billionaires who take it to their private islands or buy art. That's socialism too, but ooooh if Bernie mentions that dirty word then people all over ZH and elsewhere say oh bad evil socialism. What a bunch of idiots. 

Sun, 12/13/2015 - 15:44 | 6918317 stacking12321
stacking12321's picture

the real idiots are those who think it's ok to give government bureaucrats the power to steal from people and also put them in charge of who to distribute the stolen wealth to.

"we" don't put money into the pockets of billionaires, the fed and the corporatist kleptocrats do that.

as far as socialism, yes, it is theft, having armed goons steal from people is not the basis for a just and prosperous society.

Sun, 12/13/2015 - 12:54 | 6917556 Perimetr
Perimetr's picture

The real problem is that the big banks have leveraged the hell out of the carry trades and interest rate-related derivatives, which means that you need to multiply times 30 or 60, in order to arrive at the real effect a 25 basis point rise would have.

Quick, start a *big* war or create a *huge* false flag event.

Sun, 12/13/2015 - 13:30 | 6917753 Consuelo
Consuelo's picture

S&P cascading and blowing past 1800 will not only put an end to any hike, it'll usher in QE4 faster than the deficit rose to $19T...

Sun, 12/13/2015 - 13:42 | 6917803 BlueStreet
BlueStreet's picture

" I believe the Fed’s rocket to nowhere will hover above the launch pad for a considerable period of time before ultimately falling back down to Earth."

 

You gotta love Schiff

 


 
Sun, 12/13/2015 - 11:41 | 6917313 erikaappleihzyjtyeg
erikaappleihzyjtyeg's picture

Pete, it's.....

Buy the rumor sell the news.

Keep your day job.

Sun, 12/13/2015 - 11:44 | 6917322 max2205
max2205's picture

IMO Lift off is below the news importance level of the 4th Greek bailout.

 

Nothing to see here move on

Sun, 12/13/2015 - 11:45 | 6917327 robertocarlos
robertocarlos's picture

He must read ZH.

Sun, 12/13/2015 - 11:46 | 6917330 buzzsaw99
buzzsaw99's picture

Let me be clear that nirp(sic) was not something that we considered very seriously at all today Ms. Yellen said.

Sun, 12/13/2015 - 14:09 | 6917917 glenlloyd
glenlloyd's picture

what about yesterday?

Sun, 12/13/2015 - 14:21 | 6917965 tudemonstro
tudemonstro's picture

+1

Sun, 12/13/2015 - 11:50 | 6917343 Rabbi Chaim Cohen
Rabbi Chaim Cohen's picture

The window for sound money intervention closed over a decade ago.

Sun, 12/13/2015 - 11:50 | 6917344 TrustbutVerify
TrustbutVerify's picture

5 basis points.

Sun, 12/13/2015 - 12:03 | 6917377 didthatreallyhappen
didthatreallyhappen's picture

lol, lets raise it 1 basis point and call it success

Sun, 12/13/2015 - 12:06 | 6917382 buzzsaw99
buzzsaw99's picture

both the above comments are actually pretty damn funny. i had not even smirked today until i read dtrh's comment. kudos.

Sun, 12/13/2015 - 13:24 | 6917724 AGAU
AGAU's picture

That is insane, the whole thing will instantly implode, at the very most they will increase by 1/10th of a basis point but realistically it is just for show, they won't be able to sustain it for long and the next crisis will bring rates back down to more normalised levels.

Sun, 12/13/2015 - 11:56 | 6917349 buzzsaw99
buzzsaw99's picture

as far as politics yellen is from san fran so clearly she has a serious left bent and would love for the democrats to win in a landslide. however, the conundrum, to use greedscam's word, is that the loser lumpen (kunstler word) populace doesn't generally (or even indirectly) benefit from a bullshit stock bubble. so while a crash won't be allowed the bubble probably won't be further inflated much either because it will be harder to control if they do. injured snail indeed. the perfect analogy of the usa.

and so, your life has failed

you've made the progress of a snail

don't worry...

[/tiger lillies]

 

Sun, 12/13/2015 - 12:25 | 6917452 Nobody For President
Nobody For President's picture

Yep, gotta upvote Peter for the 'injured snail' comment, and the follow up that that is optimistic...My Sunday morning LOL

Sun, 12/13/2015 - 11:58 | 6917353 The Pope
The Pope's picture

The REAL problem facing The Fed is it's statistical mathematical demographic ownership & policy making personnel demographics.

 

'One gear' machines, in the end, aren't very flexible or efficient, (especially when they operate at cross purposes to 'larger' &/or bulk demographics). About 98% of the people who read this comment won't know WTF I just said. The other 2%, (or, 9.5% who greedily hover around the hubs of the District of Columbia, Eew York, & Hollyweird), will 'junk' it.

Sun, 12/13/2015 - 12:28 | 6917465 Nobody For President
Nobody For President's picture

What did you ingest this morning, Pope? Is it something you added to your coffee?

Using 'demographic' twice in the same sentence is a little jittery...

Sun, 12/13/2015 - 12:40 | 6917508 Usurious
Usurious's picture

 

 

''''If Jews account for just 2% of the general population, then, all things being equal, there would be a 1/50 chance of a single Jew being selected as Fed Chair. The odds of FIVE consecutive Jews would therefore be 1/50 x 1/50 x 1/50 x 1/50 x 1/50 = 1 in 312,500,000!"''

http://www.zerohedge.com/news/2015-02-25/janet-yellen-freaking-out-about...

Sun, 12/13/2015 - 13:19 | 6917662 The Pope
The Pope's picture

@Nobody ~ This,  "Using 'demographic' twice in the same sentence is a little jittery"...

 

Unless one considers that the double usage was used in the context of differentiatiating 'separate distinct entities', (one being 'ownership' & the other being 'policy making personnel'), within the structure of the aforementioned sentence...

 

But I'll forgive you 4 that because I assume you have not, as yet, imbibed your daily dosage of kosher coffee additive this morning, (which normally, & as in this case, leads towards 'ad hominem' attacks & the resulting message diversions instead of addressing the argument at hand).

Sun, 12/13/2015 - 13:33 | 6917763 wanderer9641
wanderer9641's picture

It is just that they are very good at making profit for themselves and their close friends.

Sun, 12/13/2015 - 12:44 | 6917522 homebody
homebody's picture

I believe that you are correct about "one gear" but err in that there is not just one but several "one gears" in play in the world today.  

Sun, 12/13/2015 - 12:03 | 6917363 two hoots
two hoots's picture

Corporate/private/financial debt will cripple us long before national debt or Fed balance sheet debt, which can be sustained as long as we can print. 

The former needs the immediate attention and must be controlled....but they will likely let some fail as part of the clean-up before propping up their favorites.

Sun, 12/13/2015 - 12:07 | 6917387 i_call_you_my_base
i_call_you_my_base's picture

Correct. Controlled demolition and then negative rates and more QE is likely the plan. My guess is that they will try to induce it from the outside, in asia.

Sun, 12/13/2015 - 13:03 | 6917599 Not My Real Name
Not My Real Name's picture

"Fed balance sheet debt, which can be sustained as long as we can print." 

That didn't seem to pan out for Weimar Germany, Zimbabwe, Hungary, Yugoslavia, and about 200 other governments in the past. I know ... this time is different though.

Sun, 12/13/2015 - 12:02 | 6917368 Fiat agnostic
Fiat agnostic's picture

MSM thinks they will raise rates 4 or 5 times next year. It will be interesting to see who's right. The alternative press said they would never taper but they did.

Sun, 12/13/2015 - 13:31 | 6917757 Government need...
Government needs you to pay taxes's picture

Just like 12 months ago.  The narrative is 'liftoff' but the reality is 'Cant do that'.

Sun, 12/13/2015 - 14:40 | 6918024 Jacksons Ghost
Jacksons Ghost's picture

How do we know they Tapered?  We don't.  No audit of the Fed is allowed.  They have more avenues to inject liquidity then we can imagine or know.  FU they Tapered.

Sun, 12/13/2015 - 12:16 | 6917417 flyingpigg
flyingpigg's picture

I don't understand the pavement stuff Schiff is referring to. I jumped from the empire State building and have been flying like a bird for many, many floors without finding a pavement in my way. It's really fun to fly and I don't allow bears like Schiff to spoil my day!

Sun, 12/13/2015 - 12:17 | 6917418 loveyajimbo
loveyajimbo's picture

So the Bernank admits that the Fed "represents the administration"... and without saying... represents the big corrupt banks... what a FUBAR... too bad the gutless politicians are owned by the banks too.  Easy to tell, whenever an "Audit the Fed" Bill comes up and gets shot down.

Sun, 12/13/2015 - 12:19 | 6917426 arbwhore
arbwhore's picture

No need to start back-peddling on your predictions yet, Peter. Still three more days to come.

Sun, 12/13/2015 - 12:24 | 6917447 SamEyeAm
SamEyeAm's picture

So many f'n popups and ads in this place, it isn't funny.

Sun, 12/13/2015 - 12:25 | 6917455 BSHJ
BSHJ's picture

use an ad-blocker

Sun, 12/13/2015 - 12:36 | 6917496 ---------
---------'s picture

 

 

firefox with adblock plus + ghostery

page loading time in less than 1 second

 

 

Sun, 12/13/2015 - 13:06 | 6917624 Stevious
Stevious's picture

It's sort of sad actually, I'd be happy to support zerohedge if the ads were "quiet."

But pop-ups, sliders, gliders and carousels kill it for me.  So ZH works just fine and I have not seen any ad in many months, none at all.

Thank you Adblock Plus

You'd think marketers would learn and let peeps choose what they are willing to watch.

Sun, 12/13/2015 - 12:27 | 6917462 Latitude25
Latitude25's picture

So many people stuck on stupid believing the same ridiculous story from the media and the FED.  The FED can't raise rates.  

Sun, 12/13/2015 - 12:34 | 6917487 ---------
---------'s picture

 

 

usa needs a war  only a war can help to fix the economy

they are alredy preparing turkey to start a global war, or at least serious conflict

i doubt they will go nuclear and even if, radiation of tactical nukes is eatable, you can fire tactical warheads from tanks

may it will be a war based on conspiracy

fact is

-usa profts from a global war

-eu profts from a global war

-china profts from a global war

-russia profts from a global war

 

israel could profit from a global war the most

Sun, 12/13/2015 - 13:14 | 6917668 IndianaJohn
IndianaJohn's picture

There is no gain in destruction. You are at best a reciting fool, but I do not believe you are at your best. At all.

Sun, 12/13/2015 - 14:37 | 6918014 ---------
---------'s picture

 

 

"no gain in destruction"

not for you

 

it seems you have absolutley no idea what economy is...

 

but im not here to be your eyeopener

im sure you know much more than me, thats whay you are what you are

Sun, 12/13/2015 - 12:44 | 6917521 the grateful un...
the grateful unemployed's picture

Yellen doesnt want to be the Grinch, postpone the hike the markets give us a Santa Claus rally and all is right with the world. Seriously let the wall street traders have their Santa Clause one more year, they'll all be parking cars by this time next year

Sun, 12/13/2015 - 12:57 | 6917574 Demdere
Demdere's picture

My qeustion is why Schiff wants to make it seem that things are normal enough that the Fed will want to or need to lower the rates in the future.

This is end-game.  The FED and its fellow CBs are buying all US bonds  Those bonds will never be paid back, this is all created fiat.  The economy is therefore entering high inflation rates.

$1T/year of QE produced about 10% inflation according to Shadowstats.  Treasury rolls over the national debt ever 4.5 years ==> the created fiat will be $4T+ in rollover + $1T+ in deficits.

Is inflation linear with the amount of fiat created?

Sun, 12/13/2015 - 12:59 | 6917586 besnook
besnook's picture

war! good god ya'll! what is it good for? bailing out the bankers! say it again!

Sun, 12/13/2015 - 13:02 | 6917606 besnook
besnook's picture

raising rates breaks the bank. who suffers the most? the third world led by the brics. who is the enemy? brics. this has to be done now before the brics have their banking system set up to bail themselves out.

Sun, 12/13/2015 - 13:11 | 6917651 Ignorance is bliss
Ignorance is bliss's picture

After the fed destroys the economy and the retirement plans of millions of baby boomers then the Fed will be dismantled by all those boomers looking for a scape goat. Good luck Janet your time in history will be remembered and I suspect history will not be kind.

Sun, 12/13/2015 - 13:16 | 6917675 conraddobler
conraddobler's picture

Please stop talkinng about the FED as if it's poorly run.

Please stop buying the lies people tell innocently or not that this is all a product of some gross incompetence.   It is NOT stupidity it is in fact near flawless execution of the commons in favor of the elite.

Keep your eye on the ball out of chaos comes greater concentrations of power.   That's period.

The FED is an agent of chaos that is flawlessly executing a gameplan it's just not their public gameplan.

Sun, 12/13/2015 - 13:33 | 6917767 Consuelo
Consuelo's picture

 

 

If that's the case, it's pretty damned good Shakespearian theatre they're putting on bud...   Replete with mini-strokes and bumbling contradictions from its members.

 

Brandon Smith...?

Sun, 12/13/2015 - 13:18 | 6917687 atthelake
atthelake's picture

Hang bankers

Sun, 12/13/2015 - 13:24 | 6917719 Jungle Jim
Jungle Jim's picture

I just want to know one thing: which way is the gold price going in the *near* future? I mean, soon. And by soon, I mean in the next few days and weeks. I don't mean in 12 to 24 months, or years.

Sun, 12/13/2015 - 18:42 | 6919109 Singelguy
Singelguy's picture

It will go down...then it will go up,......and then it will go down again. The US dollar remains the cleanest shirt in the laundry hamper.

Sun, 12/13/2015 - 13:26 | 6917737 kizell
kizell's picture

A bunch of hoopla over nothing.   Recession is coming but stock markets will not collapse like they have in the past.  The fed want allow it.  It may allow a small correction but the days of stock market collapses are long gone.  Even if all investors are bailing out, the fed will bail in to save face until it can attract more high yield,  high risk seeking investors. 

Sun, 12/13/2015 - 13:31 | 6917758 Consuelo
Consuelo's picture

Rate hikes, rate kikes...   The only question now is how $BIG is QE-4 going to be...?

Sun, 12/13/2015 - 13:33 | 6917765 Vin
Vin's picture

Schiff is full of shit.  He's know what the real problem is.  It's the takover of our currency and nation by a private central bank controlled by the most powerful international bankers (read: Rothschild Group) for their own agenda.

They've siphoned off this nation's wealth, have used it to buy everything of value (our govt and military, real resources) and now want to consolidate everything under a single world currency that they, of course, control also.

Come on, Schiff, say it!!

Sun, 12/13/2015 - 13:33 | 6917766 Government need...
Government needs you to pay taxes's picture

The paradigm shift away from the USD will occur when the US military suffers a defeat in the sandbox.  It is the US military that presently supports the value of the dollar.  Nothing more.  The petrodollar status is a derviative reflection of the confidence in the US military.

Sun, 12/13/2015 - 13:41 | 6917800 tedstr
tedstr's picture

The Fed is driving an old clunker whose engine refuses to start.  So they will turn the ignion back to "off", then step on the gas again and press start.  They are only raising rates to show they can and will cut again in Spring to try to jump start Q2, that's if the whole thing doesnt blow up in their face on friday.

Sun, 12/13/2015 - 13:43 | 6917807 dondonsurvelo
dondonsurvelo's picture

If the Fed started charging the banks for keeping reserves at the Fed instead of paying banks to keep reserves there, the liquidity crisis would end tomorrow and banks would be forced to lend money.

Sun, 12/13/2015 - 14:03 | 6917897 Bruce
Bruce's picture

This article sums up the situation nicely.  I couldn’t have said it better myself, and so I won't.

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http://bawerk.net/2015/12/11/how-peak-debt-constrain-the-fed-from-moving...

How Peak Debt Constrain the Fed from Moving Rates Higher

We believe the current rate cycle will be short lived as the Federal Reserve is constrained by the heavy debt load weighing on the US economy. Or more specifically, the large share of unproductive and counterproductive debt that drain the US economy for resources.

Since most added debt in the US economy, or the world for that matter, is consumptive in nature it adds nothing to the capital base and must therefore be repaid from legacy asset which were once put into productive usage. However, as the non-productive share increases relatively to the productive part, the system naturally comes under strain and will eventually reach debt saturation through capital consumption.

…, lower velocity of money suggest the economy has reached debt saturation.

…avoiding consequences of reality is never a long term solution.

Several central banks across the globe have tried to escape from this predicament by raising rates without prior debt liquidation. They all had to reverse course as debt saturated economies cannot cope with higher rates without a proper clean up. Refusing to acknowledge, or failing to grasp, that unproductive debt cannot be funded forever, higher interest rates quickly diverted too much resources away from sustainable economic activity,  putting pressure on growth and thus forcing central banks to cut rates soon after they tried to raise them. When the pool of real savings are not there to support the economic structure, all monetary policy can do is to temporary sustain the unsustainable. However, as times goes by, and capital consumption continues, economic stagnation occurs even at ZIRP, NIRP and QE as all these tools can do is to redistribute capital.

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The Fed and Keynesian economics only serves to support irresponsible defict speding by gov'ts.  We all know how this ends, eventually.

"The problem with socialism is that eventually you run out of other people's money [to spend]." – Margaret Thatcher

 

 

Sun, 12/13/2015 - 14:16 | 6917948 cwsuisse
cwsuisse's picture

It is always nice to hear from Peter Schiff. More than a 25 BP hike is certainly not in the cards. That hike will suffice to push the US-Dollar significantly higher in comparison with other major currencies and this currency move will create sufficient problems to thwart any hopes on more hikes. 

Sun, 12/13/2015 - 14:20 | 6917960 red1chief
red1chief's picture

Peter keeps talking about all this debt that can't be repaid. That's not the issue, the Fed will just monetize it.

Sun, 12/13/2015 - 14:51 | 6918037 Jungle Jim
Jungle Jim's picture

Here's what I'm afraid of: the Fed either will or won't raise rates and then ... *nothing* will happen.

It's all going to be a big Nothing, like that BullShemitah business and all that jazz about rust-colored lunar eclipses. Nothing of any importance, anyway.

There will be no grand Eucatastrophic Cataclysm that comes riding in to save the day, or flying in like giant eagles to pluck Frodo and Sam off the boulder in the midst of the lava flow.

The markets *won't* collapse or implode of melt down like the One Ring of Power in the fires of Mount Doom, or anything especially dramatic.

Banksters and venal politicians will go right on getting richer and more powerful. Gold will keep going down, or at least not go up. Everything will go slouching or galumphing right along, the same as before. People like me will go right on circling the drain, but faster.

“Nothing is very strong: strong enough to steal away a man's best years not in sweet sins but in a dreary flickering of the mind over it knows not what and knows not why, in the gratification of curiosities so feeble that the man is only half aware of them, in drumming of fingers and kicking of heels, in whistling tunes that he does not like, or in the long, dim labyrinth of reveries that have not even lust or ambition to give them a relish, but which, once chance association has started them, the creature is too weak and fuddled to shake off.”

-- C.S. LewisThe Screwtape Letters

 

'Eucatastrophe is a term coined by J. R. R. Tolkien which refers to the sudden turn of events at the end of a story which ensures that the protagonist does not meet some terrible, impending, and very plausible doom.[1] Tolkien formed the word by affixing the Greek prefix eu, meaning good, to catastrophe, the word traditionally used in classically inspired literary criticism to refer to the "unraveling" or conclusion of a drama's plot. For Tolkien, the term appears to have had a thematic meaning that went beyond its literal etymological meaning in terms of form.[how?] In his definition as outlined in his 1947 essay "On Fairy-Stories",[2] eucatastrophe is a fundamental part of his conception of mythopoeia.[how?] Though Tolkien's interest is in myth, it is also connected to the gospel; Tolkien calls the Incarnation the eucatastrophe of "human history" and theResurrection the eucatastrophe of the Incarnation.[3]

 

Eucatastrophe has been labelled as a form of deus ex machina, due to both sharing an impossible problem being suddenly resolved.[4][5] However, differences between the two have also been noted, such as its inherent connection to an optimistic view on the unfolding of events in the narrative of the world.'

https://en.wikipedia.org/wiki/Eucatastrophe

 

Sun, 12/13/2015 - 15:05 | 6918137 Junerberno
Junerberno's picture

Schiff writes very well.

Agree with the "criticism" that as a Jew there are certain facts he refuses to relate regarding the Fed and the true goals for its monetary policy. QE is of, by and for the Jews.

Sun, 12/13/2015 - 15:39 | 6918291 coast
coast's picture

Peter is smart and seems like a nice guy, but for some reason, he doesnt understand the most important thing, that makes him useless to me.  I already know everything he speaks of and alot more.  Such as, those involved, (sorry, not a jew basher, but it does seem most if not all are jews), are satanic, luciferian, pedophile, blood drinking entities that care about nothing but total control. History graphs and common sense are out the door.  One of my "go to guys" is Jim Willie.  He understands.  in Jim Willies last few interviews, seems Jim makes a point of giving MAJOR kudos to zerohedge by the way.  Jimmie and Tyler sittin in a tree, lol, you know the rest.  

 

Sun, 12/13/2015 - 19:32 | 6919283 chilller
chilller's picture

My guess is feds will raise .10 at a time and feel out what's happening. Everyone knows what a ,25 will do...

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