And So Begins The Rug-Yank Phase Of Fed Policy

Authored by MN Gordon via EconomicPrism.com,

The political differences of today’s leading two parties are not over ultimate questions of principles.  Rather, they’re over opposing answers to the question of how a goal can be achieved with the least sacrifice.  For lawmakers, the goal is to promise the populace something for nothing while pretending to make good on it.

Take the latest tax bill, for instance.  The GOP wants to tax less and spend more.  The Democrat party wants to tax more and spend even more.  We don’t recall seeing any proposals to tax less, spend less, and shrink the size of the state.  And why would we?

Today’s central planners and social engineers are enlightened and progressive.  They know much more about anything and everything than the rest of us.  In particular, they share a general sense that they know how to spend your money better than you.

At best, the central planners call your money to Washington so they can then distribute it back to your friends and neighbors.  In reality, the lawmakers call your money to Washington where they distribute it to their friends and neighbors – not yours.  This is not a matter of opinion.  It’s a matter of fact.

Is it a coincidence that the top three wealthiest counties in the country are in the shadow of the Capitol in the D.C. suburbs?  What it is exactly that the residents of these counties do that’s of tangible value is unclear.  However, what is clear is that bogus government jobs in Loudoun County and Fairfax County, Virginia, pay big bucks.  But that’s not all…

Garbage In Garbage Out

Further up the eastern seaboard, Wall Street has a good thing going too.  The big bankers and brokers make big bucks extracting capital from Main Street America.  That’s a fair characterization, right?

Perhaps the big bankers and brokers really are efficiently allocating capital to its highest and best use.  Who knows?  But as far as we can tell, they’re gambling with other people’s money – and collecting fees regardless of how their coin tosses fall.  It’s always, ‘heads I win, tails you lose.’  Not a bad fugazi gig, if you can get it.

Of course, the cornerstone of it all is the Federal Reserve.  Through what they call “open market operations,” the Fed rigs the game in Washington’s and Wall Street’s favor.  Indeed, the process is really quite elegant.

Under the smokescreen cover of garbage in economic data, the Fed’s economists produce garbage out bar charts and line graphs.  These, in short, are fabricated depictions of the economy’s growth, consumer and producer prices, personal consumption expenditures, unemployment rate, and whatever other aggregate metrics are deemed to be of vital importance.  What’s more, these fabricated depictions serve as the basis for the Fed’s monetary policy decisions.

Do the graphs show price inflation heating up or cooling down?  What about GDP or the unemployment rate?  Is one going up while the other’s going down?  Is one going down while the other’s going up?

The Federal Open Market Committee (FOMC) deliberates over these questions about every six weeks.  Then the Fed goes to work inflating the nation’s money supply, with the occasional rug yank, for the stated purpose of getting the charts and graphs to illustrate the garbage data to their liking.  What to make of it?

The Rug Yank Phase of Fed Policy

From the outside, the Fed’s economists and planners appear to be esteemed professionals, making decisions with the intent of providing for the greater good of the country.  They even attend economic conferences and forums where they present their latest research findings on abstract topics like liquidity traps.  Some of their studies even include footnotes, as if the professional economists are building upon a concrete knowledge base of human intellect.

Yet beneath this cover of bogus science, the real sausage is made.  Capital is borrowed into existence where it is directed to Washington and Wall Street.  There, having first dibs on this phony money, Washington and Wall Street get to spend it as if it has real value.

However, the real value does not coming from the Fed’s phony money.  In fact, as this new phony money appears on the scene, it extracts incremental wealth from the workers and producers across the country that – through their time, talent, and labor – created the wealth to begin with.

At the moment, we’re in the rug yank phase of the Fed’s monetary policy.  This is where they reel back credit ever so slightly after letting it run wild over the last decade.  This tightening of credit markets has the effect of pulling the rug out from under financial markets and the economy.

Monetary policy, without question, is not an exact science.  It’s rudimentary guess work that’s based on committee interpretations of bogus data.  This week, the FOMC raised the federal funds rate by 0.25 percent to between 1.25 and 1.5 percent.  This marks the third increase this year and the fifth increase this cycle.

Incidentally, Janet Yellen also delivered her last press conference as Chair of the Federal Reserve, though she’ll likely still Chair the FOMC meeting scheduled for late January.  Then Jay “Count Dracula” Powell will take over the helm of the nation’s central bank.  The broad expectation is for Powell to continue the rate increase playbook that Yellen has laid out, which includes three quarter percent hikes in 2018.

We wish Powell the best in his endeavors.  But we suspect he’ll unwittingly pull the rug out from under financial markets and the economy before he completes his first year.  After that, the fun really begins.

Comments

spastic_colon Fri, 12/15/2017 - 10:49 Permalink

why do you think "they" are so bent on a bogus tax reform package??"....Then the Fed goes to work inflating the nation’s money supply, with the occasional rug yank, for the stated purpose of getting the charts and graphs to illustrate the garbage data to their liking.  What to make of it?"yes all is totally goalseeked............

pods YUNOSELL Fri, 12/15/2017 - 11:18 Permalink

Well I make it a point whenever discussing money to inform people as to how money really comes into existence. It really chaps their ass when they "get it."  You can see a light go off in their heads as they get angry for paying bankers interest for they themselves creating money.It really works, and I always start out with a mortgage as an example, but you can do it with credit cards or any type of loan.  People get really pissed off when they realize that the bankers do not have some big pile of money (deposits) that they turn around and lend out to you. I used to get confused when I thought about how banks worked (as I was taught).  I couldn't understand how a bank could lend out your deposit and what happened if you wanted it back (I was young at the time, just started a paper route).  Now that I know the truth, I realize that the whole bank deposit thing is mainly there to make you think the bank functions like they used to a long time ago.  Because if enough people ever realized that the bank has the ability to create fungible credit out of thin air and then charge you interest on it, well it would not be long before bankers would start to disappear.If people really get interested I start to let them in on the exponential nature of that credit money system and how all this "pay off the debt" talk is bullshit.pods

In reply to by YUNOSELL

Radical Marijuana pods Fri, 12/15/2017 - 14:18 Permalink

pods:Interesting insights regarding your experiences regarding "waking up" some people about how the biggest gangsters are the banksters. However, all of my experiences have confirmed that more than 99% of taxpayers are going to deliberately continue to ignore the social facts about how banks were built on bookkeeping tricks, or the magical mathematics of making something out of nothing, which then can return to nothing, as MAD Money As Debt appears and disappears.To the degree that "money" controls people's lives, they can not effectively stop that "money" from controlling them, especially because the police and military depend upon being paid by that "money," which then provides the feedback loops to reinforce that everyone else has to accept that MAD "money" made out of nothing as debts.Indeed, within the entrenched MADNESS, no more debt means no more money. The established monetary systems have become like a totally metastasized cancer, or a parasite almost totally intertwhined with its host. Given that, any possible treatments would most probably kill the patient, rather than cure the cancer or kill the parasite. Globalized Neolithic Civlization is already terminally sick and insane. The only apparent consolations are philosophical ones that the laws of nature are not going to stop working, despite that those laws of nature are going to follow through having driven the development of a criminally insane Civilization toward its own self-destruction.

In reply to by pods

Radical Marijuana Stuck on Zero Fri, 12/15/2017 - 14:04 Permalink

... the top three wealthiest counties in the country are in the shadow of the Capitol in the D.C. suburbs? What it is exactly that the residents of these counties do that’s of tangible value is unclear. ...

After human beings are perceived as separated from their environment and each other, then they necessarily live as reproducing gangs of robbers. However, since the biggest and best organized gangsters dominate civilization, the dominate natural languages and philosophy of science have been made and maintained in ways which enable the best available professional hypocrites to operate systems which depend upon being able to enforce frauds, which act as symbolic robberies.The deeper problems with respect to perceiving that the Federal Reserve Board is based on "theft masquerading as economic science" is that such perceptions are based on taking for granted thinking in ways which use the DUALITIES of false fundamental dichotomies, and the related impossible ideals. "Economic science" operates within the historical context that the oldest and best developed forms of social science and engineering were warfare, whose successfulness was based on backing up deceits with destruction. "Economic science" was built on that history of militarism, as the supreme ideology of the murder systems: MONEY IS MEASUREMENT BACKED BY MURDER.The government of the USA became the most significant component of Globalized Neolithic Civilization, which was developed through thousands of years of being able to back up lies with violence, which became more sophisticated and integrated systems of legalized lies, backed by legalized violence, the most important forms of which became what the Federal Reserve Board represents, as the single most significant institution operating through enforced frauds which achieve symbolic robberies.Indubitably, the Fed does legalized counterfeiting. However, while most people still do not want to understand that, those few who do present superficially correct analyses then almost always collapse back to bogus "solutions" based upon still taking for granted thinking about "economic science" using bullshit-based DUALITIES, which presume that there are some groups of human beings which somehow do not live as nested toroidal vortices engaged in entropic pumping of environmental energy flows. However, all groups of human beings necessarily live as reproducing gangs of robbers. Therefore, groups of human beings in the form of civilizations necessarily live according to the principles and methods of organized crime.It is theoretically possible to develop a relatively more genuine "economic science," which uses UNITARY MECHANISMS in order to understand human beings as manifestations of general energy systems. However, it will continue to be politically impossible to do so for the foreseeable future, since doing so requires recognizing that the biggest forms of organized crime are governments, which, in turn, are dominated by the best organized gangsters, while, because that is the case, the dominate social stories about them are are based on the maximum possible bullshit, which has been built into the dominate natural languages and philosophy of science, which almost everyone almost totally takes for granted whenever they think or communicate about "economic science."The Federal Reserve Board is the single most significant institution within the overall globalized systems whereby the powers of governments are used to enforce frauds by private banks. Since doing so actually manifests as spectacularly successful symbolic robberies, those who are relatively most involved in making and maintaining those systems have become those who most significantly work within, and so, live around, Washington D.C., and therefore, are collectively the most wealthy people, as demonstrated by their home areas being the most wealthy counties.The underlying problems are that about exponentially advancing technologies are enabling the previously existing systems based upon being able to enforce frauds to become about exponentially more fraudulent, which also means that the overall civilization is becoming about exponentially more psychotic. At the present time, there are no reasonable hopes for the future of those runaway social psychoses other than series of psychotic breakdowns. That is especially the case because there is practically nothing but layers of controlled "opposition" surrounding the central core of bankster dominated governments. Those kinds of controlled "opposition" groups are stuck still thinking in the same bullshit-based ways about "economic science."While physical science has gone through series of intellectual scientific revolutions and profound paradigm shifts, political science has NOT been allowed to do so. Rather, whenever political science has been publicly represented as somehow "revolutionary," it was not genuinely so, but rather, tended to follow some relatively better scientific analysis of political economy with collapsing back to the same old bullshit-based "solutions," which were supposed to achieve some political miracles by implementing impossible ideals. Instead, following impossible ideals actually caused the opposite to happen (which made sense due to those "solutions" being the work of controlled "opposition.")Human beings already operate according to the laws of nature. However, natural selection pressures have driven the development of artificial selection systems to become most successful by becoming as dishonest as possible. The most wealthy and powerful people live as the best available professional hypocrites, inside systems based on being able to enforce frauds, despite that those are becoming about exponentially more fraudulent. Social "realities" based on being able to enforce frauds require that the majority of people deliberately ignore and misunderstand the laws of nature as much as humanly possible, in the most absurdly backward ways. The excessive successfulness of controlling civilization through applications of the methods of organized crime is manifesting as the runaway criminal insanities of that civilization, in ways which are spinning out of control ... There are no practically possible ways to either effectively prevent, nor sufficiently prepare for, the vicious feedback spirals of the funding of the political processes automatically getting worse, faster! While on Web sites like Zero Hedge one will find a relatively high frequency of statements which indicate awareness of the ways that the Federal Reserve Board's "monetary policies" are extrapolations of legalized counterfeiting, there is almost never any genuinely profound paradigm shifting in order to account for the apparent accumulating anomalies due to about the exponentially increasing fraudulence which is the foundation of those "monetary policies."

In reply to by Stuck on Zero

sunny Fri, 12/15/2017 - 10:49 Permalink

Cute.  Anyone who thinks that Powell will ever do anything to threaten the stock market is delusional.  If there is any significant drop away from ATHs we'll see QE15 before another rate hike.

ebworthen sunny Fri, 12/15/2017 - 11:19 Permalink

The 2007-2008 crash was precipitated by loose lending post 2001 at low rates, then Greenspan ramping rates mid 2004, then Wall Street fleecing Mom and Pop when the crash came, then the bank/corporation/insurer bailouts.Raising rates means inducing the next crash and fleecing of the retail crowd while they plow money into the highs is underway.

In reply to by sunny

Radical Marijuana sunny Sun, 12/17/2017 - 23:38 Permalink

 ...in the longer term the banksters tend to change gearsfrom money back by murder to mass murdersto reset that money system.http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htmSilent Weapons for Quiet Wars"Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)... They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ... War is therefore the balancing of the system by killing the true creditors (the public ...)Descriptive Introduction of the Silent Weapon Everything that is expected from an ordinary weapon is expected from a silent weapon by its creators, but only in its own manner of functioning. It shoots situations, instead of bullets; propelled by data processing, instead of chemical reaction (explosion); originating from bits of data, instead of grains of gunpowder; from a computer, instead of a gun; operated by a computer programmer, instead of a marksman; under the orders of a banking magnate, instead of a military general. It makes no obvious explosive noises, causes no obvious physical or mental injuries, and does not obviously interfere with anyone's daily social life. Yet it makes an unmistakable "noise," causes unmistakable physical and mental damage, and unmistakably interferes with the daily social life, i.e., unmistakable to a trained observer, one who knows what to look for. The public cannot comprehend this weapon, and therefore cannot believe that they are being attacked and subdued by a weapon. The public might instinctively feel that something is wrong, but that is because of the technical nature of the silent weapon, they cannot express their feeling in a rational way, or handle the problem with intelligence. Therefore, they do not know how to cry for help, and do not know how to associate with others to defend themselves against it. When a silent weapon is applied gradually, the public adjusts/adapts to its presence and learns to tolerate its encroachment on their lives until the pressure (psychological via economic) becomes too great and they crack up. Therefore, the silent weapon is a type of biological warfare. It attacks the vitality, options, and mobility of the individuals of a society by knowing, understanding, manipulating, and attacking their sources of natural and social energy, and their physical, mental, and emotional strengths and weaknesses." THE FINAL CONSEQUENCES ARE FAR, FAR WORSE! http://www.youtube.com/watch?v=5hfEBupAeo4 All Wars Are Bankers’ Wars

In reply to by sunny

bidaskspread Fri, 12/15/2017 - 10:58 Permalink

Taken out of my paycheck or taken out of my purchasing power both are the same..... does it really matter about the taxes right now.....the FED will print more reduce our purchasing power to fund government spending, how is this different than an outright tax.

Sid Davis Fri, 12/15/2017 - 13:45 Permalink

The fundamental flaw is the belief in government management of the economy. This is not their role in a free society, but it is in a fascists/socialists/communists society and the latter is what we are in the process of becoming. We will ultimately pay the same price as the USSR, Cuba, Venezuela, and all others who have adopted something other than freedom. Keynsian economics is socialist economics, and schools still spoon feed it to gullible young minds as part of the Cultural Marxism conditioning which is why so many millinneals have become the enemies of freedom.Get a good supply of ropes and look up diagrams of Madame Guillotine because in your lifetime, unless you already have one foot in your grave, you are going to need them.

JibjeResearch Fri, 12/15/2017 - 11:05 Permalink

"We don’t recall seeing any proposals to tax less, spend less, and shrink the size of the state.  And why would we?" That is the principle of the libertarian, business libertarian.We don't have too many of them.In fact, if we ask ourselves do we cut our household spending when we don't have lot of income?  Most of us would say yes.  See, most of us are libertarian.  However, when we vote, we go for one of the two.  This says that most of us are retarded, most of us don't really know ourselves.

CRM114 Fri, 12/15/2017 - 11:07 Permalink

If the Fed, or the Government, gave even the slightest f#ck about the average American, they would be working at getting realistic data on which to base their so-called science. They are doing the opposite.

Last of the Mi… Fri, 12/15/2017 - 12:36 Permalink

You mean how long before the taper bites and the techno billionaires of the world get it through their ambien and vodka addledl brains that the free ride is over? Would not want to be on the prow of the good ship FANG right now. 

wdg Fri, 12/15/2017 - 13:09 Permalink

Makes sense to me that the fiat injections will stop, loans on margin called in and the stock and real estate markets come crashing down. Why do I think that? First, Powell is a non-Jew after a sucession of Greenspan, Bernake and Yellen who were all Jews. Now some poor smuck is going to be saddled with the mess and it must not be a Jew. Of course Jews setup the Federal Reserve and are responsible for gutting America but they need to be on the sidelines when all the bubbles they created burst. Second, the smart money - think Jewish money - is mostly out of the market after plundering ordinary retail American investors and leaving them holding the bag of crap when the markets crash. 

U4 eee aaa Fri, 12/15/2017 - 14:17 Permalink

Why do people keep associating Fed actions with economics when the actions are about politics. If 'they' pull the rug out will will be to change the regime because they have decided they don't like Trump and want him fired.

abgary1 Fri, 12/15/2017 - 14:40 Permalink

Return the markets back to the markets and return democracy back to the people.-Put an end to the BIS and the central banking system. Allow the markets to determine interest rates.-Recall legislation for politcians-Term limits of 2 for politicians at any one level of government and 8 years contract limits for bureaucrats at any one level of government. Career politicians and bureacrats are the problem.-Proportional representation election process to encourage the creation of more political parties.-Balanced budget laws that require a referendum to repeal.The people and the markets know best.