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ITG's Quick Take On The FOMC: The Fed's Tea Party Dissent
From Steve Blitz of ITG
Quick Take on FOMC Statement: No Change, No Change Until 2013 - The Fed's Tea Party Dissent
We have been seeing this brewing in the FOMC minutes for the past year, a growing divide in how various members see the world and the Fed’s impact on it. Divisions have always been part of the FOMC, no news there, but the divide has hardened. The Tea Party crew within the FOMC firmly believes that inflation is still the primary risk facing the economy as a result of a monetary policy being far too easy for far too long. Bernanke in his testimony before Congress and, more directly, in the minutes of the June FOMC meeting, essentially said that the unemployment problem was being viewed as structural and that for the Fed to ease further it would take the return of deflation risk.
In the statement released today, the Fed moved closer to stating deflation risk is back by writing: “The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.”
We got the expected downgraded assessment of the economy, totally expected, with only business spending on equipment and software holding up GDP – and that growth rate slowed in the second quarter. In addition, the Fed is finally walking away from blaming the whole slowdown on the supply disruptions from Japan – “supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity.”
For the equity markets they are on their own, the economy is where it is, and until the three dissenters can be convinced deflation risk is back on the table, Fed policy is going to stay right where it is – regardless of slow growth or high unemployment. The re-pricing of risk markets to the economy we have should continue. If the dissenters can be convinced deflation risk is back we will have a necessary but not sufficient condition for the next round of ease. In that case look, as we have been saying, for some effort to shore up bank capital instead of quantitative ease – something the dissenting three might find more to their liking.
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It's all that damn Tea Partys fault... spending trillions of dollars
When government - in pursuit of good intentions - tries to rearrange the economy, legislate morality or help special interests, the costs come in inefficiency, lack of innovation and loss of freedom. Government should be a referee, not an active player.
- Milton Friedman
“The greatest fear of those who want the economic subjugation of all mankind via socialism in any of its forms – communism, socialism, fascism, naziism – is restoration of the Constitution’s limiting provisions…as the supreme law of the land.” – John F.McManus, Financial Terrorism: Hijacking America Under the Threat of Bankruptcy, 1993.
That is why the Establishment has increased to a fever pitch its knee-jerk virulent reaction to the Tea Party.
The Congress is the key to corralling in an out-of-control, debt-wielding government before America becomes yet another of history’s fearful masters over a once free people. Only Congress can make the laws; the President’s only job is to execute them faithfully.
The Tea-Party-created-effect is, at last, the people’s response – the people’s answer – to taking back control of their destiny by restoring representative government in the Congress. The Congress and the Presidency in present-day America have totally broken away from their constitutional restraints and gone wild issuing policies built around debt, deficits, inflation, taxations and free-market stifling regulations… simply ignoring the restraints placed upon them by the Constitution.
Before the Tea Party, this meant the people, according to McManus, “had effectively issued a wide-open invitation for the government to confiscate their property and destroy their liberty,” on a Debt Plan culminating in the New World Order.
Says McManus: “When there’s no funding for all of this imperial power, government will cease being the distributor of wealth and the controller of the people.”
Today’s economy is on the ropes because of Socialist Keynesian policies of spending, debts and deficits. The Federal Reserve and the government literally have killed an economic miracle that was the most precious ideal in the history of the world. Their reason is to build an economic control over the nation as a certain route to enslavement of the American people through an arrangement of “the economic impoverishment and bureaucratic regimentation of the American people.“
Their goal is a world government that becomes the receptacle of wealth and the rewarder of wealth -- whereby it leases it back to the people who can use it at the pleasure of the master.
Their method will be gradualism, avoiding the chaos of hyperinflation in America, using only the threat of it, using instead “the continued steady erosion of the nation’s financial well-being… that will propel America into the new world order – more taxation, inflation, deficits, controls, regulations, and bureaucracy…” i.e., monstrous debt that leads to bankruptcy.
Spot on.
... it's the Koch Bros "answer" you "useful idiot!"
rotflmfao
@srv-es339
The Koch brothers? Wow you take it all in don't you. Aren't there any left wing bogey men? I mean besides Obama
Only Congress can make the laws; the President’s only job is to execute them faithfully.
That certainly turns the Balance of Power concept on its head. I'm sure if you could re-write that sentence, you would. Of course, the President has many jobs other than to execute the laws of Congress faithfully. And I'm sure you know that they become laws only if the President doesn't veto them (or the Congress has enough votes to override his veto).
The poster looking for a $1776 gold price just had a wish come true...
http://finviz.com/futures_charts.ashx?t=GC&p=m5
H&S pattern unconfirmed on the 5-minute, very stretched gold:silver ratio (by recent standards), very non-inflationary Fed policy statement, and everybody and their grandmother screaming "buy".
I smell a top.
Perversely bending the true supply/demand curve, destroying Main Street, inflating or resuscitating toxic asset bubbles, punishing savers & engaging in the largest kleptocratic transfer of wealth from taxpayers to zombified banks and Wall Street friends of the New York Branch of The Federal Reserve Bank, since 2006:
Well said.
no wonder jpm called for 2500 gold..
looks like they are calling for it on the heels of deflation.
Convincing the Tea Party?
That's gonna leave a mark.
"look kids!, it's a libtard!"
... at least you got the "kids" right
Even the FED is raising the white flag?
retaliation is best left to men.
Even tho, no QE3 but the FED hinted on further QE.
Take a look at today's tape and tell me that there was no Fed intervention with a straight face. Go ahead. I dare you.
It's about time the FED stayed out of the way. How could they possibly have helped in a meaningful way?
No QE3 = Stealth QE3? Any reason why we're surging like a rocket to the highs of the day?
Yeh sure. Welcome to VSA 101.
High volume on the lows doesn't make sense. Check few post earlier where TD pointed out a 400K sell order that went trough ES at 6.10PM yesterday...
VSA: High volume on the lows in a downtrend = professional money buying.
Common sence. Just hit the stops from the losers who where long ( Explain the huge volume )
That creates chain reaction for lower prices and in the meantime buy some up.
So, this is how the market works. your loss is other gain. VSA 101.
This post is so 7 minutes ago.
On the way back down again....
Oh, no. Up. Maybe.
It was a 50/50 bet. If QE had gone through the bettors could have been first at the trough.
Yep. What he said.
"In that case look, as we have been saying, for some effort to shore up bank capital instead of quantitative ease – something the dissenting three might find more to their liking."
S&P has them on a short leash. Maybe we will see some azz hat Pols wake up and attempt to pass a budget within their (our) means... Nah, too much to hope for... Next big monetary or fiscal screw up brings us a brand new credit rating... but lower than the last.
Unforseen consequences?
Okay, either our Bankers have abandoned the politicians or they are setting the stage to crash Europe and bring those folks to our fair and efficent markets.
I'm going with the 'crash Europe' angle. The Bernak will let them print a while. When they run out of ink the Bernak will pick up the slack.
Bloody hell, who just juiced the 30-year treasury futures (UB)... spiked all the way to above 147.
ZH is going to need to quadruple server capacity.
Unique visitors and page views must be warping time & space.
so do we need another 20 pct drop for qe to commence?
The Tea Party analogy doesn't hold up.
Fed is trying to save it's own credibility at a time when everyone on earth thought they would print to infinity.
A coyish high-school girl being asked out on a date is the better analogy: Fed wants us to beg for QE, and wants to keep us guessing. They're also playing up to China.
ZIRP forever is proof enough that the depression will continue as scheduled. And the Fed has now signaled for the second time that they are divorcing themselves from the dual mandate: that's what they mean when they say unemployment is "structural". In code, that means "not our problem, it's a fiscal problem for the politicians, not bankers".
Look for further tanking in the housing market, unemployment to creep up, wages to decline in real terms and the market to go nowhere.
Look for further tanking in the housing market, unemployment to creep up, wages to decline in real terms and the market to go nowhere.
Agree with everything except the last. The market is going somewhere, alright. Down. Tanking. Dead cat bounces along the way, but the trend is now down. IMO.
I agree. True Tea Party fed members would be telling them to open the meeting to the public and quit dicking with the print button on the money machine.
Quite a bounce the market just took there. Looked completely organic to me.
so if the fed pins down the short end at 0 for 2 years would they prefer pushing the long end higher, creating a spread the banks can nurse on? This assume they gave up on real estate which is dead anyway. Would a spread widening curb inflation and steal money away from the hard asset hedges ? *jumps back down in my fox hole* you can rip me a new one now.
This ought to get a rise outa somebody here:
http://www.creditwritedowns.com/2011/01/reasoning-behind-ninety-percent-marginal-taxes.html
So much for QE3...
Tea Party....hoho...where R U? R U happy now? U need to take charge from here and onwards with 64 votes!
Have a guess whether stocks will rally now? 10 yield @ 2%....hahaha...where to go....gold? give me a break; Cash? nop.
What's going on with ZH? Fail to pay the e-bill? Did you guys burn through that $17.76 I send you a couple of months ago already?
No QE but the Plunge Protection Team will pick spots to intervene, like an hour ago ...
The Bernank will still by Treasuries out of its own cash flow.
The dollar swap lines to the EU are still open ...
The dollar carry trade is still on (which is a reason to push on the dollar).
So far no hunt for cash: $2 trillion already sloshing around since 2008 should be enough one would think. This means no (much needed) deleveraging.
so we arent going to get the kids to pay for it
25% slide will get you QE-3!
That is a small price to pay for FREE MONEY!!
Thank God for the Money Hole!! http://www.youtube.com/watch?v=JnX-D4kkPOQ
The Corporate Dollars Behind Congress' Push For A Huge Corporate Tax Holiday
http://www.youtube.com/watch?v=WgwkJLnj8p8
http://www.opensecrets.org/
Wake! Up!! the Lobby Whores are ASS RAPING YOU AGAIN!
They are NOT! Job Creators!! Stop falling victim to cute, market tested ONE LINERS! Like "Job Creators"!
http://www.colbertnation.com/the-colbert-report-videos/392261/july-18-2011/colbert-super-pac---campaign-finance
We the people elected representatives to take diligent care of our interests. For the past 40-50 years, we the people were generally too busy raising families, running businesses, getting degrees, etc. to carry out diligent oversight of the actions and the results of the elected officials. We trusted they would execute their duty well.
In the past year or two, something happened to awaken enough people to closely examine the job results of our representatives. Our representatives have failed miserably in their appointed tasks. The representatives have not acted on our behalf and have in fact acted against us in many ways. We gave them wide responsibilites. That range will be severly curtailed. I will now spend less time growing my business and with my family and much more time overseeing my elected officials....simply because they sucked so miserable at a relatively easy task.
Simple as that.
"until the three dissenters can be convinced deflation risk is back on the table, Fed policy is going to stay right where it is"
The three dissenters were the dovish ones--they wanted to keep the language the same, rather than introduce the 2013 sunset language.
Equity counter trend short covering rally begins from very oversold levels.
http://stockmarket618.wordpress.com
I have never met the Koch brothers. I have gone to a Tea Perty meeting. I tend to want to see for my own eyes and not the pundits. I was surpirsed. There we old people there , black, white, asian, and even repubs and dems. They were not hooting and hollering. The media was there in force. They actually put out some good information. They were well mannered and answered all questions politely, even those there to disrupt them. They want what alot of you want here smaller government and the freedom to make tons of money, and elimination of the fed bank. Before you judge them hit a rally then make a decision. I was surprised and left there with a different point of view.
"Of course, the President has many jobs other than to execute the laws of Congress faithfully. "
- Ummm... name one, please.
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