The Federal Reserve Is Hillary Clinton's Secret Weapon

Tyler Durden's picture

Submitted by Tommy Behnke via The Mises Institute,

Say what you want about Donald J. Trump, but he is correct about one thing: the Federal Reserve has, with near certainty, been holding interest rates down for political purposes — namely, to aid Hillary Clinton in getting elected president of the United States.

In September’s first presidential debate, Mr. Trump said:

We have a Fed that’s doing political things. … The Fed is [being awfully] political by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves [office], and goes out to the golf course for the rest of his life to play golf, [is the day that] they raise interest rates. … The Fed is being more political than Secretary Clinton.

The Federal Open Market Committee's (FOMC) September meeting minutes, released on Wednesday, have proven Mr. Trump’s assertion to be true. As the 2016 election season draws to a close, the Fed has suddenly become more bullish on the prospect of raising interest rates — and this precipitous change-of-heart has come despite there being few notable signs of hope in the US’s economic data.

The meeting minutes detailed one FOMC member’s worry that low interest rates are unfairly hurting investors, particularly those with pension funds and endowments, and that these easy-money policies may be “depressing” economic growth:

One participant expressed the view that prolonged periods of low interest rates could encourage pension funds, endowments, and investors with fixed future payout obligations to save more, depressing economic growth and adding to downward pressure on the neutral real interest rate.

But the buck didn’t just stop here. Others repeated the (false) assertion that the Fed’s easy-money policies will inevitably tighten the labor market:

A few other members were concerned that, without a prompt resumption of gradual increases in the target range for the federal funds rate, labor market conditions could tighten well beyond normal levels over the next few years, potentially necessitating a subsequent sharp tightening of monetary policy that could shorten the economic expansion.

Remarkably, members even feared that continuing with these artificially low rates will generate too much debt and fuel unsustainable economic bubbles:

A few participants expressed concern that the protracted period of very low interest rates might be encouraging excessive borrowing and increased leverage in the nonfinancial corporate sector.

Don’t get me wrong: the fact that the Fed has finally demonstrated some hawkish instincts is relieving, but why did the FOMC fail to express concern about any of these consequences earlier in the year?

The FOMC meets regularly — this year, it has met in January, March, April, June, July, and September. If you have read through all of the meeting minutes like I have, you have noticed that while the committee has maintained that it will likely raise rates by the end of the year, there have been very few times in the previous five meetings that members have said anything negative about the Fed’s current low-interest rate policies.

Instead, Fed officials have given excuses to prolong the day of reckoning — among them: low inflation, slowdown in China, and a collapse in oil prices. These excuses have led the four predicted rate hikes for 2016 to decline to just one that may conveniently come in December — right after the November elections.

Economic analysts should find the Fed’s tune-change regarding its easy-money policies odd, especially given the fact that there have not been any significant upticks in the Fed’s leading economic indicators — indicators that the Fed once said a rate hike was dependent upon.

The Atlanta Fed recently reduced its estimate for third quarter GDP to 1.9 percent, just half of its earlier 3.8 percent prediction. “This is the weakest three consecutive quarters of this so-called recovery, yet now is when the Fed is supposedly set to begin raising rates?,” asks Austrian investor Peter Schiff.

Moreover, the Job Openings and Labor Turnover (JOLTS) report — Janet Yellen’s favorite indicator of the labor market — was also released on Wednesday and showed that US job openings have fallen to their lowest level in 8 months.

“Everything about that report was weak,” said Schiff. “If this is Janet Yellen’s favorite number, and if the Fed didn’t raise rates in September because they wanted more data on the job market … [well] now they got the JOLTS number, which was much worse than expected. Why, then, is every Fed governor now talking about rate hikes?”

So what gives? Why the significant shift in opinion among committee members?

Clearly, the Fed has known all along that Mr. Trump is right — we are living in a “big [economic] bubble” that must be popped. Rates should have been raised a long time ago, but Fed officials have been using a fraudulent data checklist to hold them down, possibly in order to give Democrats like Hillary Clinton — the darling of the Federal Reserve — the upper hand in the November elections.

It is no secret that the Fed — a so-called independent central bank — leans left. Two weeks before the 2014 elections, Janet Yellen gave a passionate speech on income inequality, then a major talking point of Democrat candidates. This year, Hillary Clinton received over four times more in donations from Federal Reserve officials than every other Republican and Democrat presidential candidate combined. Fed Governor Lael Brainard — who many believe may have a potential appointment waiting for him in the Clinton administration — has donated the legal maximum to the Clinton campaign.

Fed officials feared that a tightening of monetary policy before November would create some semblance of a market correction mechanism, leading to some short-term economic pain. This would have given Republicans the fuel that they needed to blast the Obama administration’s reckless fiscal and monetary policies, as well as criticize his phony economic recovery.

The Fed argues that this isn’t true — they haven’t refused to raise rates for political reasons; they’ve merely been trying to better assess the labor market. In fact, when asked on Friday why the Fed hasn’t raised interest rates yet, Fed chairwoman Janet Yellen said, “the events of the past few years have revealed limits in economists’ understanding of the economy and suggest several important questions I hope the profession will try to answer.”

Even if this is true, and the Fed has failed to raise interest rates not for political reasons, but because the body lacks an adequate “understanding of the economy,” this begs another question: should a handful of imperfect bureaucrats in Washington really be in charge of setting the rules related to money and credit for our nation?

Still, the timing of the Fed’s sudden change-of-heart on low interest rates does seem rather odd. Just a few weeks before the November elections, Fed officials are now defying their old data standards by proclaiming that they will raise rates “relatively soon,” while nearly 74 percent of economists believe that the Fed will raise rates come December — the first chance that they will have to do so after the elections.

Coincidence? Mr. Trump thinks not, nor do I. Fed officials are oftentimes wrong, but they are far from stupid.

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south40_dreams's picture

The corruption and rot is terminal.

Money Counterfeiter's picture
Money Counterfeiter (not verified) south40_dreams Oct 20, 2016 4:23 PM

It will be so much fun when we get to hang these MF'ers.  These Zionist MF'ers drive you nuts.

Boris Alatovkrap's picture

Fed is WMD, weapon of monetary destruction.

Creative_Destruct's picture

 

 

"A few participants expressed concern that the protracted period of very low interest rates might be encouraging excessive borrowing and increased leverage in the nonfinancial corporate sector."

MIGHT be ????? -

These pandering sychophantic shills don't even have the minimal intestinal fortitude to definitely state the OBVIOUS.

The handlers of the WMDs of mass destruction aren't even smart enough to avoid exposure to the financial Plutonium.

toro's picture

The Federal Reserve is the real center of power. Ask JFK.
https://goo.gl/2SIIh0

philipat's picture

Hey toro, previously mofio then santafe then Aristotle of Greece then Gargoyle then bleu then oops then lance-a-lot then most recently Loftie.

You are a serial spammer and a serial pain in the ass. Might I politely suggest that you go fuck yourself? And get a life.

PS. You might have noticed that my attempt to expose you for what you are is always the same. That’s because your Spam is always the same (Using fake links to your BS site which has no connection to your comments; which are deliberately dramatic to mislead people into responding or clicking on the fake link) so it seems only fair that my exposure of your crap should also always be the same. An eye for an eye.

NoDebt's picture

OK, so the Democrat-supporting Fed is going to throw a big steaming pile of shit in Hillary's lap as soon as she takes office?  I have SERIOUS doubts about that.  Maybe if it was Trump they would do that but Hillary?  Hillary will have Janet's head on a pike (literally) so fast the FOMC's collective heads will spin.  One thing you do is NEVER cross the Clintons.  And that would absolutely be seen as an act of betrayal and treason by Hillary.

Sorry.  Not buying this line of logic.  I think it's dead wrong.  If anything this is more reason to "extend and pretend".

Has the national debt gotten any smaller?  No.  And that still needs to be serviced at ever low rates to prevent the exponential effect of compounding interest from crushing the government's budget.

Oh, and by the by, does anyone think the Feral Government is going to get any smaller or cost less under a Hillary presidency?  No.  Somebody's gotta finance all that extra deficit spending at 0% to make the numbers work.

 

 

GreatUncle's picture

As the real economy shrinks in relative size it is going to get harder and harder to service the debt.

Who they going to take it from?

Pulled the plug now, writing is on the wall, dropped out of the system prefer free lance on the grounds you can hide anything and everything and even being bought a meal to consume instead of payment with NIRP is preferable.

Removing cash has an advantage it will heighten the demand for an exchange of services and barter system like never seen before and no cash means they don't get any. So your income get shelved 50% bartered away and 50% they can see ... going to have to start rapidly increasing taxes for the ever growng shortfall.

Creative_Destruct's picture

No WAY these Fed pukes raise rates. ZIRP ( and soon, possibly  NIRP, despite its DEMONSTRATED failure in Europe and Japan) is and will continue to be REQUIRED to continue rolling over and servicing past debt and for doing same to the new and ever increasing debt. To raise rates significantly, would throw government financing in to a "debt death spiral". THAT spiral would be either met with monetization (potential hyperinflation), or with repudiation. So, the consequences of raising and normalizing rates to any significant degree, would be lethal( a TOKEN 25 basis point rise might not be lethal). The monetization route would be lethal to the populous. The repudiation would be lethal to the government.

I vote for repudiation. KILL the fucking government ( aaahhh, dreams are nice).

 

LetThemEatRand's picture

Agree 100%, NoDebt.  I would add that Fed policy is about making money for bankers, and keeping bankers in control of the world.  Their political leanings are about which candidate is least likely to interfere with their rent seeking, oligarchic behavior.  Currently, that candidate is Hillary.  

sixsigma cygnusatratus's picture

Exactly.  The Fed's dual mandate is to protect select bankers and .gov Since certain bankers have been made too bigger to fail, they have effectively been made another branch of .gov

Delving Eye's picture

Absolutely correct, NoDebt.

When the bubble bursts and the global economy crashes -- sometime in 2017, I think -- it'll be interesting to see what Hill and Janet resort to. Probably ZIRP, then, when that fails, NIRP. That's when the 99% get plowed under for good.

chiaroscuro's picture

So is massive debt just hidden hyperinflation?

Antifaschistische's picture

I've said it before...

The ladies in the Bitter Ugly and Therefore Angry At Men club stick together like glue.  These are the ladies that also have a deep seeded hatred for attractive women, and are behind all the fat is beautiful campaigns.

And these two ladies....although, not the founding mothers of the club, but they are certainly head cheerleaders.

remain calm's picture

She, Bernanke, and Greenspan will be hung for their reckless treasonist behaivor.

AViewFromDublin's picture

Bernanke, and Greenspan

 

Are they Yeminite Arabs by any chance?

GUS100CORRINA's picture

The American people have a choice in this election and the choices are clear.

If Americans want themselves and their families to be PILLAGED, PLUNDERED, RAPED and PERSECUTED as SLAVES under a totalitarian dictatorship, vote LIBERAL. If they want to be PROSPEROUS and have LIBERTY and FREEDOM under the RULE OF LAW, vote CONSERVATIVE. It is that simple!!

We are a government of the PEOPLE, by the PEOPLE and for the PEOPLE.

So what happens when the PEOPLE bocome ignornant about America's heritage? In a word: DISASTER

NO ONE IS WILLING TO STOP THE EVIL THEY SEE BECAUSE THEY ARE EITHER DECEIVED OR SCARED. BEING STUPID AND FEARFUL IS NO WAY TO GO THROUGH LIFE.

TRUMP/PENCE 2016

adanata's picture

 

The "Fed" isn't "left"; the Fed is a private money grubbing power mad branch bank for the Bank for International Settlements; as are all the global central banks. Their agenda is very clear; destruction of the United States; the end of soverign nations; global 'governance' through the U.N.; one world 'currency they control and so on. This is a yuuuuge machine and we must stop it or it will end us.

Repost: “There's a time when the operation of the machine becomes so odious—makes you so sick at heart—that you can't take part. You can't even passively take part. And you've got to put your bodies upon the gears and upon the wheels, upon the levers, upon all the apparatus, and you've got to make it stop. And you've got to indicate to the people who run it, to the people who own it that unless you're free, the machine will be prevented from working at all.” Mario Savio

thesonandheir's picture

Lael is a she, I think.

DavidC's picture

Correct! Lael Brainard is a SHE, NOT a HE!

DavidC

Roving reporter's picture

M 0 R P H = Management Of Rates President Hillary

Boca's picture

Drain the swamp!

 

Duc888's picture

 

 

 

I love how everyone who writes about trump stars off as "say what you want"...or other such bs.  The guy is spot on with 90% of his POLICIES.  That's a lot higher hit rate than his scumbag opponent.  I don't have to like the fucking guy, it's not a personality contest, just get in there and make an attempt to actually FIX shit and undo some of the last 20 years of total fuck ups.

Shit is circling the bowl so fast now that we can not even afford to get someone in there that'll hold the line.

Snípéir_Ag_Obair's picture

The influx of unskilled labor and skilled white collar types on H1B visas likely has more to do with the fucking of the real economy than 25 bps one way or another.

There are so many East Indians on H1Bs at least in metro Boston (which has a college or two where in theory Americans can learn these jobs) that at some stations Indians with backpacks are 1/3-1/2 of the commuters.

Which party was going to address this stuff?

Oh that's right, someone just need whisper 'anti immigrant' and all cogitation ceases.

... Which is why we can't have nice things.

LawsofPhysics's picture

No matter.  Such "let the majority eat cake" monetary experiments have been tried before. This time it is simply being tried on a global scale.

Hedge accordingly.

NEOCON1's picture

I buy bullets.

GoldHermit's picture

Ya think???? Just watch what happens when they start raising them. BBS = better be stacking

pitz's picture

With GDP growth barely above zero, just how is keeping rates low helping Hillary?  I don't understand. 

coast's picture

I agree, but its more than that...The fed cannot rise rates until they are ready to bring down the system.  It is impossible to raise rates and keep the economy from collapsing...So, shame on me for just a minute, just a moment of weakness.  I hope hillary wins, because the banksters will hold off the economic collapse...I need two more friggin months to prepare...Whereas, if Trump wins, they will crash the economy, start war with russia and I still need the economy intact for just two more friggin months.  Selfish bastard is what I am this moment, but I will get over it and not be a selfish bastard..Just had to do it for a minute.  I need the economy intact for just two more friggin months damnit :-)

A82EBA's picture

upvoted you but if hillary wins she will start war with russia,,she hates Putin's guts, he's getting in the way of their global dominance aspirations, or mericun  intrests

coast's picture

you are 1000% correct, but hillary does not get in to office until january...  lol... just foolin around, I do hope hillary loses, but she has mainstream media, the banksters, wall street, money changers, indoctrination system they call education, soros owning many of the voting machines etc...dear lord...and the U.S. goes to war to promote democracy...wtf world do we live in?

Stan Smith's picture

I agree with the sentiment that its obvious the FED is helping not just Dems, but government in general. If the whole shebang collapses --- and it will at some point regardless --- It's not going to matter who's in office.

JailBanksters's picture

The only reason they would raise rates is to break Wall St and the Ponzi Scheme

 

A82EBA's picture

if they let gold rise to $10k the system will hold for a lot longer

back to basics's picture

THERE...ARE...NOT...RAISING...RATES.

EVER!!!!

(I hope this helps)

Peak Finance's picture

Theres room for a token bullshit .25 to keep critics at bay. 

silverer's picture

They will, if only for a month, to demonstrate to the sheeple that they voted in the wrong person. That's how miserably vindictive these people are. Then comes the headline after rates are dropped again "Yellen Saves Trump's Ass". You know what I mean.

daveO's picture

I expect another Watergate-type media storm to oust him, at best. Assassination, at worst.

Peak Finance's picture

Completely clueless fuckers, This is going to backfire big-time.

If I am a big holder, and I KNOW rate hikes are coming after the election, and i KNOW the Fed is backstopping EVERYTHING

This monday morning, I SIMPLY SELL FUCKING EVERYTHING

knowing, for a fact in just a few weeks (After a Nov hike), or at most a month and a half (Dec Hike) I will buy it all back on the cheap, after the rate hike dip.

So, unless they are literally ready to print TRILLIONS between now and the election they can't stop a market crash. 

the grateful unemployed's picture

nobody wanted 2008 all over again, you know some bush suggesting the elections would be cancelled, etc etc. then you had the fed chief doing ILLEGAL things at the behest of a Goldman man operating under guise of sec of Treasury, threatening congressmen? he should have hanged, along with bernanke, and obama allowed to sit if hepromised to ignore the criminal wrong doing and continue the fed policy of wealth inequality. nobody wanted to see that again, so if the fed did error on the side of caution, and investors hedged to their eyeballs throughout, maybe it wasnt such a bad thing. now of course its back to the real world

zerohedge25's picture

I made a video at the place which gave birth to the IMF and the USD being the central world reserve currency today. Here in the White Mountains of NH at the Mount Washington Hotel. I hope you find it interesting!   https://www.youtube.com/watch?v=XeUUAniPB94

silverer's picture

I guess if you want to call pissing in everybody's lunch a secret weapon...

Ms No's picture

I think Hillary is the Fed's weapon.  They are just paving the way for their hound of hell.

daveO's picture

Exactly. She's their(dual citizens) puppet, always has been.

spqrusa's picture

Why the big surprise? The Fed was created by a DEMONCRAT, Woodrow Wilson (D)...

The FED has "helped" every demoncrat in office since then in its worldwide quest for war, pestilence and hatred.

To be clear, the Republican Party really died with Teddy Roosevelt... The UniParty has reigned since 1900.

 

SwmngwShrks's picture

Whenever I read articles like this, I'm reminded of Jim Clifton, CEO of Gallup, calling out the media and white house for the employment rate lie. He then retracted his statement the next day, for fear of his life.

The employment rate has been held up as a barometer for the economic health, and it is a number we all know is manipulated. If the FED is knowingly using manipulated data, then who do they work for, if not for itself? The private institution is perpetuating its own conceptual failure with its arrogance and insanity.

http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx
https://www.newsmax.com/Finance/unemployment-rate-big-lie-barack-obama-g...