This is why the Fed’s claim that higher prices are just “noise” is so ridiculous. The Fed is either ignorant or lying. Neither of those is good. Indeed, the only support the Fed has for its claim is that bond yields remain at historic lows... which the Fed itself is causing.
The fact that the economy shrank like this, DESPITE all of the Fed’s interventions over the last five years AND the credit growth in the first quarter of 2014 is proof point blank that the Fed’s economic models are wrong.
For a while now it has been well proven beyond a shadow of a doubt by scientific research (Cornell and California Universities) that there is a phenomenon called ‘emotional contagion’, meaning that it is possible to induce a state of either happiness or sadness in someone, by inducing that feeling and emotion without their knowledge or awareness.
The promises of the master, used as currency to compel and reward our willing participation, can no longer be fulfilled since the economic system that is the ultimate delivery vehicle for those promises is about to sink beneath the waves.
There are some out there in the economic world that believe that banknotes are detrimental to the health of the economy and that they are currently stifling the recovery of the markets. Their solution: burn the damn things and let them go up in smoke. Replace them with electronic money and then the central banks around the world will be able to do more than just providing alternatives that don’t work to revamping the financial markets and boosting economic growth.
These banks derive the bulk of their revenues from non-interest related sources - basically fee income, and then they pay roughly 70% of that out (afer expenses) in compensation. What happens when fees are but below the compensation level?