Zerohedge.com showed this chart of US Treasury holdings through November 2013: Over the course of a year, the two major holders of Treasuries not named the Federal Reserve increased their holdings by about $200 Billion. China and Japan purchased about 20% of new US government debt. The Fed purchased 2.5 times what they did. The other entities shown on the [...]
Inflation is the cruelest hoax of all. Ben Bernanke and the Fed argue we need more of it, yet they never provide reasons why. So why do we have inflation and the desire to increase it? The Great Inflationist himself, John Maynard Keynes, explained it rather succinctly: By a continuing process of inflation, government can confiscate, secretly and unobserved, an [...]
What does the recent Fed taper mean? That is the question that pundits are masticating about on noise machines like CNBC. Perspectives differ, but all explanations are colored by the immediate market action. Few expected the Dow to react plus 300 points on the day of the announcement. It did and post-decision reaction has to rationalize this fact. Monday-morning quarterbacking must [...]
The situation with the Federal Reserve (and other central banks around the world) is not very different than what prevailed in the early 1920s and ended in Germany’s horrendous hyperinflation. The notions that “this time is different” or “it can’t happen here” are naive. It is happening here. It just hasn’t metastasized yet. It can and likely will, as it [...]
” … years ago … the Fed was holding a burning match. This remains true today, only it is a bomb with a short fuse. Thirteen years after the overlevered U.S. equity market collapsed, 11 years following Bernanke’s speech, five years after the overlevered housing bubble burst and four years into the necessary onset of global zero interest rate policies [...]
Does the Yellen era improve things?
A very long and relevant talk was given by David Stockman at Harvard. His conclusion is that the problems are political and irreversible, two common themes of this website. Imagine how this bastion of liberalism must have taken his analysis? His talk follows (the emboldening in mine). SUNDOWN IN AMERICA: THE KEYNESIAN STATE-WRECK AHEAD Remarks of David A. Stockman at [...]
There is no way that stimulus can repair the economic problems. What we are looking at is a Fed policy that will never end, at least it will not willingly be ended by the Fed. The world and the US continue to deteriorate. What the Fed is doing now is throwing its version of a hail Mary pass. The game has been lost unless some unknown and unlikely miracle occurs. Economics does not believe in miracles although desperate economists sometimes do.
At the last Fed meeting, Bernanke’s decision to not taper even a little bit damaged what little credibility he and his Fed have left. If one discounts stupidity (not something that should be relinquished easily when dealing with government decisions), then what remains for an explanation of such strange behavior? As I see it, the most likely justifications and the [...]
Economics used to drive markets. The growth of government and its pervasive interventions has displaced economics, at least as the primary short-run determinant of market values. Short-term performance is now dominated by the actual and expected machinations of large, clumsy government and its agencies. No agency is more powerful than the Federal Reserve, a once quasi-independent agency tasked with ensuring [...]
A recent post on this site described the Federal Reserve (not Goldman Sachs) as the true vampire squid. A Predator By Intent At the Fed’s founding, a few astute critics saw the Ponzi Scheme that it represented. Congressman Lindbergh had this to say: This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this [...]
The gap between the reputation of the Federal Reserve and its actual value to the economy is perhaps greater than any other institution extant. It is a myth that the Fed is necessary and an even greater myth that it is beneficial to society. As Charles Hugh Smith observed: In a system that depends on lies and the credulity of [...]