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Our "Star Wars" Economy: The Fed-Farce Awakens
Submitted by Charles Hugh-Smith of OfTwoMinds,
The Fed's hubris has led it to the Dark Side.
It's not just a movie, it's real life: the Fed-Farce awakens. Now that the Federal Reserve has finally voted to "restore order to the galaxy" with a tiny .25% rate increase, the true measure of our travesty of a mockery of a sham economy--in a phrase, The Fed-Farce--has been revealed.
Here's a snapshot of the Fed meeting, "restoring order to the galaxy" in a show of unanimous galactic-scale hubris:
If we had to list the fatal wounds inflicted on the economy by the Fed-Farce's financial repression, we might start with: the Fed's flood of cheap credit has not boosted productivity, it’s only boosted speculation. Why is this fatal?
Productivity is the engine of wealth creation. Speculation is the engine of wealth inequality and devastating boom/bust cycles. This is self-evident, but unfortunately the Dark Side can also conjure mind-tricks in the weak-minded (for example, Congress, the mainstream media, etc.): the Fed has successfully conned the weak-minded into believing that speculative frenzies of mal-investment and Fed-fueled asset bubbles are the sources of healthy growth.
A funny thing happens when you give unlimited borrowing power at near-zero interest rates to financiers and corporations: they use the free money not to hire more people (that would be incredibly dumb--employees cost money!) but to buy up shares in their own companies and snap up income-producing assets such as rental apartment complexes.
$1 trillion in stock buybacks creates zero jobs. Borrowing $1 trillion to buy back shares (and thus boost the personal wealth of managers and owners) does not create a single job. Repurchasing the company's stock reduces the number of shares outstanding, which increases your earnings per share without increasing sales or net profits.
In other words, stock buybacks are just another Dark Side mind-trick.
Buying 1,000 units of rental housing and raising the rents 10 seconds after the sale closes also doesn't create a single permanent job. The sale generated a commission, but this is a one-off. It doesn't take even one more person to maintain the buildings after the sale or the rent increase.
As for the rent increase--it's just cheap digital processing and the cost of postage.
The supposed connection between cheap Fed credit and job creation is illusory--it's nothing but a Dark Side mind-trick played on the credulous and weak-minded.
Courtesy of Zero Hedge and Societe Generale, here is a chart of U.S. corporate debt and stock buybacks. Any questions?
Notice anything that looks like a speculative frenzy that subsequently triggers a collapse?
By slashing rates to zero, the Fed ruthlessly eliminating safe returns for savers, pension funds, insurers and the millions of people with 401K retirement nesteggs. In effect, the Fed-Farce has pushed everyone into risk assets--and then played another Dark Side mind-trick by masking the true dangers of these risky assets.
As oil-sector debt blows up, as junk bonds blow up, and emerging markets blow up, we are finally starting to see the real costs of going over to the Dark Side of endless credit expansion and throwing the gasoline of near-zero interest rates on the speculative fires of financialization.
The Fed's hubris has led it to the Dark Side, and now its Death Star of impaired debt, phantom collateral, speculative frenzy and bogus mind-tricks is about to blow up.
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Well then, "let's blow this place and go home."
Is it me or did ZH simply ignore the COP 21 crap that happened in Paris?
The Fed was BORN in the dark side. It can't exist any other way.
political funding
enforcing fraud!
We're too busy freaking out about the Dow being off 500 to worry about that.
Everbody is ignoring COP 21 as the massive circle jerk it was......
They passed new laws.... Not sure how that is a circle jerk...
They did not pass any laws. There was no treaty outline of any kind, but a lot of vague promises......
And without ratification by congress any treaty is worthless.
Of course, congress would ratify a bill authorizing the use of your children as commercial livestock, so...
99% of what is being written about the "rate hike" is a load of steaming &*it.
Credit is useless to the average Joe. Thats why its cheap. Nobody can use it. Regulation, taxation, licensing and legal tort threat has shut down all small business competition to the big boyz. That's precisely the way the big boyz want it.
The "rate hike" is simply the fee Fed.Gov is charging the big boyz for having kicked out the competition and helping to implement their monopolies.
that's all.
Another DEATH STAR is BEING BUILT:
Home mortgage lenders easing up on home loans7 Mins AgoCNBC.com
Scott Mlyn | CNBC .
The new year may bring new opportunities for consumers hoping to get a home mortgage.
More lenders are reporting easing credit standards, according to Fannie Mae, and expect standards to ease rather than tighten in the near future. This could help affordability in the housing market, which has been suffering under both tight credit and tight supply of homes for sale.
The share of lenders who expect to ease standards for government-backed loans rose to 16 percent, and the share expecting to tighten fell to 2 percent, according to a Fannie Mae survey. This is across all types of loan products.
A total of 213 senior executives completed the survey from Nov. 4 to 13, representing 194 lending institutions.
"These current practices and expectations toward easing among lenders compares to a historically relatively tight mortgage credit standard base," said Doug Duncan, senior vice president and chief economist of Fannie Mae.
Duncan, however, points to several challenges to improvement in the housing market in 2016, affordability for first-time buyers topping the list. There are still very few starter homes on the market, and home price appreciation is lapping household income growth.
"Lenders' thoughtful easing of credit standards should help mitigate some of this affordability decline," he said.
The potential for rising interest rates, which would narrow the field of customers for loans, may increase competition among lenders and force them to ease some of the extra safeguards they added after being sued by the government for billions of dollars over bad loans dating back to the last housing boom.
<p>Are you in tune with mortgage rate moves?</p> <p>If the Federal Reserve hikes interest rates this Wednesday, consumers want to know how the move affects mortgage rates. CNBC&#039;s Diana Olick has the details. </p>Government-sponsored enterprises Fannie Mae and Freddie Mac as well as the Federal Housing Administration have been clarifying lender liabilities for bad loans and have been pushing lenders to ease up as well.
Borrowers may also benefit from a new credit scoring model. Fannie Mae announced recently that it will start using so-called trended data in looking at mortgage applicants. This is a wider look at a borrower's credit history, which could help boost some scores.
Using trended data, the percentage of consumers in the super-prime risk tier would increase from 12 percent of the population to 21 percent, according to a recent study by TransUnion. These consumers generally have the greatest access to new loans at the lowest pricing.
"We are a long way from returning to prerecession levels in terms of mortgage accounts, but changing consumer preferences for housing also may play a role in this slow recovery," said Steve Chaouki, executive vice president and head of TransUnion's financial services business unit. "If the economy continues to perform well, we believe the net number of mortgages will increase over the next year."
Despite the potential easing in credit, about two-thirds of consumers surveyed by the National Association of Realtors think it would be very or somewhat difficult to get a mortgage today.
Another survey by Berkshire Hathaway HomeServices, a network of real estate brokerages, polled 2,500 homeowners and potential buyers and found 67 percent of potential homebuyers thought mortgage rates today were either "average" or "high." Today's rates are actually very close to record lows.
One little problem, if it blows up you have no home.
How much is a Death Star in seasonably adjusted terms?
I'm not sure, but I do know Paul Krugman cheers with glee each time a Death Star blows up. BULLISH!
"I find your lack of faith disturbing".
https://youtu.be/F1xAUfdK9FE
"All too easy."
https://www.youtube.com/watch?v=X8PyTo6NyXA
“I am altering the deal, pray I do not alter it any further…”
https://youtu.be/jsW9MlYu31g
"Rember Japan, Luke. Remember your failure in Japan!"
https://www.youtube.com/watch?v=infZSKB5L9I
(You know I have an addiction to this sort of thing yet you persist in goading me into a quote-off. Why do you do this to me?)
https://youtu.be/rLgjo4JDlKA
'You don't know the power of the printing press"
The RobotChicken version was much, much better.
https://www.youtube.com/watch?v=WpE_xMRiCLE
"This is not the collateral you are looking for."
"Fear is the path to the dark side" i.e. Mainstream Media
"Fear is the mind killer."
https://www.youtube.com/watch?v=kJsYKhEV6o0
ZH, thank you for not posting an image of Jabba The Hutt with a bikini clad Princess Yellen.
You mean like this?
https://www.google.com/search?q=jabba+the+hutt+and+princess+leia&rlz=1C1...
Yep, Princess Leia in a bikini is always a crowd pleaser. But Princess Yellen, not so much.
This is a job for WB7.
We here on the Eckles Death Star can keep this Hubris fueled contraption in orbit far longer than you can imagine! Just look at Japan! Those clowns have a ten year head start on us, and they are still printing and promising better days ahead, with a debt to GDP of 230%. We have you believing that our's is only 80%!! So, we have a whole lot more printing to do!
What is assisting in our far flung plot is the fact that other desperate central planners are printing and circle jerking by buying our paper!! one hand washes the other!!
So, don't fight the Fraud, just BTFD! Markets to close higher today. Reality will die another day!! By then, I will be annointed as the next maistro! and will be giving speeches at $500k a pop.
Green chutes
Free my son Martin "Shkreli" Fellen
Love your avatar. Will it change with the seasons/celebrations?
By the way, it's Eccles. Let's make sure we correctly identify our traitors.
Oh please help us Obi Ben! The markets will fall and fail without MOAR QE...
Yes, feel the hatred flow through you
Exactly, "The Fed's hubris has led it to the dark side" is sheer nonsense. They began on the dark side in 1913. I don't usually think much of C H Smith but this is really crap. He should know better.
Meh. Just FOBs for certain "familial estates" and rogue occupied states.
Government survival is the FED`s mandate......
Puerto Rico will be the shot heard around the world from the first dropping of bailout ordinance from Janets helicopter.....
As several other comments have already pointed out, the Federal Reserve Board has NOT been "led it to the dark side." The effective privatization of the public money supply was ALWAYS EXTREMELY EVIL, since it amounts to governments enforcing frauds by privately controlled banks, which makes the government become more and more blatantly the biggest form of organized crime, controlled by the best organized criminals, through that structure of the privatized MAD Money As Debt system, which MADNESS inherently must, and did, grow at an exponential rate!
The article above was typical of the superficially correct analysis usually presented on Zero Hedge. The deeper problems are that civilization necessarily operates according to the principles and methods of organized crime, because the death controls necessarily back up the debt controls. The Federal Reserve Board exists due to the ways that POLITICAL FUNDING ENFORCES FRAUDS. The effective privatization of the public "money" supplies is, by definition, the supreme achievement of organized crime. That was accomplished through persistently applying the methods of organized crime through the political processes, in every legal and illegal way, from bribery and intimidation, to assassination of those who could not otherwise be bribed or intimidated.
The DEEPEST PROBLEMS are due to the inherent nature of the death control systems having their most extreme form as the murder systems, which were most socially successful when done in the most deceitful and treacherous ways possible. MONEY IS NECESSARILY MEASUREMENT BACKED BY MURDER. The public murder systems failed to prevent the international bankers being able to drive vicious spirals of deploying every possible means of funding both legal and illegal political activities. Instead, not only has the public money supply ended up being almost 99% privatized, the public murder systems are increasingly following the same pattern, such that I would roughly estimate that the public murder systems have already been effectively privatized about 75%.
The latest installment of those trends was reviewed in this article: CISA Is Now The Law: How Congress Quietly Passed The Second Patriot Act.
These days, I mostly base my guess that the public murder systems have become about 75% privatized on the basis of the degree to which "security clearances" are exercised through private companies, rather than through public entities. The de facto policing and military forces of the USA, that together are the public murder systems, have become roughly 75% privatized, following after the public money systems having already become about 99% privatized.
It is difficult to fully comprehend how the American systems led the way towards the currently established globalized systems of electronic frauds, backed by the the threat of force from atomic bombs. Most people want to continue to think about the world AS IF that was still merely paper frauds backed by gunpowder weapons. However, the real situation has become quite surreal, since what actually EXISTS are globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs, all of which are way too criminally insane a REALITY to be fully comprehended by anyone, anymore ...
Regarding the popular use of Star Wars' movie mythology to make political points, see my comment under this article: The Road To Galactic Serfdom - Libertarian Lessons From Star Wars
While Hugh-Smith's phrase "Fed-Farce" is cute, that continues to rely too much upon Hanlon's Razor presumptions. The privatization of the public money supplies may seem today to be the result of the incompetent stupidity of political puppets being voted for by enough of the muppets, however, there is an abundance of publicly available information to demonstrate that the privatization of the public money supplies was due to a deliberate plan, with malice aforethought, by the international bankers.
E.g., historian Carroll Quigley:
Those international bankers were behind how and why we have ended up with systems of POLITICAL FUNDING ENFORCING FRAUDS, which are the excessively successful control of civilization by the methods of organized crime becoming runaway criminal insanities. The previous systems based on paper frauds backed by gunpowder weapons have been replaced by systems of electronic frauds backed by atomic bombs, which have become literally trillions of times more capable and powerful.
While, superficially, the various manifestations of that may appear to be a Fed-Farce, actually the combined longer term consequences of excessively successful systems based upon ENFORCING FRAUDS are headed towards becoming so EXTREMELY EVIL that those can not be fully imagined, since those consequences quite possibly include the eventual extinction of the human species, due to civilization becoming too criminally insane.
Every particular decision made INSIDE of fundamentally fraudulent financial accounting systems (such as those outlined as being made in the article above) are actually taking place INSIDE runaway criminal insanities, based on the excessive successfulness of controlling civilization through systems of organized crime, which require those being controlled to NOT WANT to understand how and why money is necessarily measurement backed by murder. Rather, all of the established systems are dominated by the best available professional hypocrites, so that everything gets done through twisted, oblique ways, inasmuch as the murder systems that back up the money systems, which dominate and control everything else, are actually being executed using the most entangled combinations of deceits and treacheries that are humanly possible.
Hence, the excessive successfulness of controlling civilization by applying the methods of organized crime is what made and maintained the existing institutions like the Federal Reserve Board, as integrated into mostly globalized systems, which are currently attempting to consolidate their global hegemony. However, that kind of social success based upon being able to back up lies with violence, manifesting primarily through vicious spirals of POLITICAL FUNDING ENFORCING FRAUDS, overall results in civilization becoming more and more criminally insane ... As the ruling classes become increasingly psychotic psychopaths, while those they rule over become correspondingly worse Zombie Sheeple, the combined effects of all that are civilization based upon ENFORCING FRAUDS overall behaves in ways which are worsening criminal insanities, from the perspective of the longer term survival of any technological civilization, or even the human species as a whole.
At the present time, the Fed-Farce is almost infinitely worse than anyone can fully imagine anymore ... The international bankers that were the best organized gangsters, or the banksters, that were able to make and maintain the previous systems of paper frauds backed by gunpowder weapons, were also able to make and maintain the current systems of globalized electronic frauds, backed by the threat of force from atomic bombs. HOWEVER, there are no longer any groups of human beings that fully comprehend or can control those systems of electronic frauds, backed by atomic bombs.
There is NOBODY who is in control of the runaway systems of globalized electronic frauds, backed by the threat of force from atomic bombs. While the results of the Fed-Farce are superficially the way that authors like Hugh-Smith, and many similar others, present, the situation whereby MAD Money As Debt is backed up within the context of MAD Mutual Assured Destruction, is far more MAD than merely being due to some apparent Fed-Farce.
THE DEEPEST PROBLEMS are how to operate the human murder systems after the development of weapons of mass destruction. Given that those weapons have become trillions of times more powerful than ever before in human history, and are headed towards becoming quadrillions of times, so far, nothing within the realm of the currently established political systems are coping with that, except by attempting to freeze those into the history of the precarious balancing of MAD Mutual Assured Destruction.
However, that hyperbolic murder system, whose increasingly crazy control has been effectively privatized, continues to back up the MAD Money As Debt systems, as fundamentally fraudulent accounting systems, that are directing every economic decision that is being made within that MADNESS, such that every economic decision made inside systems based upon ENFORCING FRAUD is made through the most evil deliberate ignorance and willful blindness possible, because systems based on ENFORCING FRAUDS are based upon deliberately ignoring and misunderstanding the basic laws of nature. Human laws are only connected to natural laws through the ability to back up lies with violence. To the degree that the dominate political processes are controlled by the best available professional hypocrites, they are NOT actually being "controlled," but rather, are spinning out of control ...
To the degree that the biggest bullies get away with their bullshit social stories, such as to the degree that institutions like the Fed get away with their Fed-Farce, civilization is being "controlled" in ways which are based upon deliberately ignoring the principle of the conservation of energy as much as possible, while also deliberately misunderstanding the concept of entropy in the most absurdly backward ways possible. The results of human beings and civilization being able to operate through backing up lies with violence, while never having to face those facts, but rather, always getting away with bullshit about that (expressed through the standard dualities of false fundamental dichotomies and related impossible ideals) are that those human beings and that civilization becomes more and more criminally insane, and collectively suicidal.
The degree that the Federal Reserve Board gets away with publicly presenting itself as anything else than the single biggest institutionalized form of enforced fraud is the essence of the Fed-Farce. However, the few who begin to perceive that then still tend to be stuck inside of thinking about that in silly ways, AS IF it would ever be somehow possible for the only connection between human laws and natural laws to become anything else than the power to enforce frauds. The only things that exist are the dynamic equilibria between more or less organized lies operating robberies. The Federal Reserve Board is the single greatest particular institution operating within the banksters' globalized systems. I.e., the Fed is the American King of Fraud, within the globalized systems in which the BIS is the King of Kings of Fraud.
Moreover, all of those phenomena take place within the overall situation that human beings and civilization operate as entropic pumps of environmental energy flows. As soon as we perceive and define human beings as separate from their environment and each other, then they must necessarily live as gangs of robbers. The history of civilization was driven by the history of warfare, as manifestations of organized crime on larger and larger scales. There was no point at which the Federal Reserve Board was not based upon triumphant organized crime. Therefore, it was inherently built into the structure of that MAD Fed system that debt slavery generated numbers which have become debt insanities, which appear to be headed towards provoking death insanities.
Some of the comments above were quite superficial regarding that, because they are still thinking about the situation in the same ways that used to be used to think about paper frauds, backed by gunpowder weapons. Indeed, a lot of comments published on Zero Hedge tend to adhere to old-fashioned views regarding the significance of gunpowder weapons. Since the vast majority of people continue to think that way, there can be various popular movies that are like cowboys with ray guns, despite how silly that actually is. Using the childish, comic book, morality manifested in movies such as Star Wars, in order to discuss that runaway MADNESS driven by a civilization which has made prodigious progress in physical science, while achieving no progress whatsoever in political science, is actually more part of the problem, rather than any path towards genuinely realistic resolutions of the real problems.
Describing those problems as merely a Fed-Farce, that resulted from the Fed having gone over to the Dark Side, is a childishly superficial view of those problems.
Rather than that, I REPEAT:
The deeper problems are that civilization necessarily operates according to the principles and methods of organized crime, because the death controls necessarily back up the debt controls.
THE DEEPEST PROBLEMS are how to operate the human murder systems after the development of weapons of mass destruction. That is imperative not merely because what now exists is the MADNESS of electronic frauds backed by the force of atomic bombs, but moreover, money is necessarily measurement backed by murder.
However, rather than that being done publicly, that is more and more being done through the effective privatization of the public powers to rob and to kill to back up that robbery. Hence, the current runaway criminal insanities, whereby the biggest banks, and the biggest corporations that have grown up around those banks, are engaged in runaway frauds, as symbolic robberies, which are being backed up by increasingly privatized murder systems.
Therefore, the superficial perception of the Fed-Farce is more like glancing at some of the tips of an iceberg of runaway criminal insanities. Meanwhile, continuing to use the superficial dualities, based upon false fundamental dichotomies, and the related impossible ideals, such as are popularized by famous movies like the Star War series, is merely another illustration of the ways in which there are growing Grand Canyon Chasms between the progress in physical science, which is not being integrated and surpassed by progress in political science.
The EXISTENCE of globalized electronic frauds backed by atomic bombs was due to series of profound paradigm shifts in physical science. There are no other theoretically possible ways for a technologically based civilization to perhaps survive than for its philosophy of science to advance, in ways whereby profound paradigm shifts are made in political science, in ways which integrate and surpass those already achieved in physical science, so that political science begins to more systematically use unitary mechanisms, similar to how physical sciences already have done.
In my view, most of the content published on Zero Hedge, including the article above, along with many of the previous comments, continue to way too much take for granted being able to still think about the world AS IF the situation was still the same as when there were paper frauds backed by gunpowder weapons. That the combined effects of electronic frauds, backed by atomic weapons, add up to being trillions of times greater means that the old combined money/murder systems are radically different than the currently EXISTING combined money/murder systems.
Human predators ARE the dark side... whether they are predators-DBA-centralbank, predators-DBA-government, or just some random individual human predator.