Oct 302014
 October 30, 2014  Posted by at 12:18 am Finance Tagged with: , , , ,

John Collier Street Corner, Monday after Pearl Harbor, San Francisco Dec 8 1941

Janet Yellen today solemnly stated that the Fed has killed QE because the jobs outlook has improved. These are the guys and gals who have more and better access to more and better data than any of us have. And we all know that the sole reason the BLS unemployment rate has fallen is that 90-odd million working age Americans are no longer counted as part of the work force, and a huge part of those who are still employed moved to worse-paying jobs and/or had their pay and/or benefits cut.

To claim that QE improved the jobs picture is either very stupid, and I’ve never thought that gang is stupid, just perverted, or it means they don’t have the proper data, but we already saw that they do. So that jobs thing is bollocks.

And I haven’t seen anyone come up with a satisfactory answer as to why the Fed really quit QE the moment they’re doing it. Here I’m thinking that’s an interesting question, and all the pundits and experts leave that question alone. Then again, I have of course tried to answer it, a number of times, with the help of some other people’s observations, and noted that Wall Street banks saw their profits slip because everyone was on the same side of the wagers as they were. They were still getting the free money, but they couldn’t make it work for them anymore the way it once did. And something had to change.

Does anyone outside the Fed want to claim that QE had a positive influence on the American economy, other than through boosting prices of stocks and homes that could only happen because people started seeing things that weren’t really there? I guess there’s plenty of you out there who think the jobs picture actually has improved, and that those $4 trillion or so actually had something to do with that, but that only leads us right back to the beginning:

Why does the Fed cut QE now, when in reality nothing has improved in the American economy if you wipe the smoke from the mirrors, and they know it, even if they say the opposite? And if their view remains as distorted as it is today, why wouldn’t they raise rates much sooner than everyone seems to presume? QE never had anything to do with the real economy (even Greenspan said as much in the WSJ), so there’s no point in keeping rates low to save that real economy. QE has created a perception only, and no substance. And if they take away the perception, there still won’t be any substance, so why not do it?.

When you see Greenspan being paraded in public like he was in the WSJ this morning, you know everything must be scripted. That’s no coincidence. You know, just in case you hadn’t figured that out yet. The Oracle is pushed onto the stage to confuse the ranks a bit more, just so as much money as possible stays invested in the very things Wall Street wants them to be invested in. Greenspan’s job is to say the things Yellen cannot. His words are published the morning of the day she’s set to announce the death of QE.

He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy. “Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”

Too many questions there to mention. Asset prices are high but there’s no demand, to sum it up. Which raises that one question again: if “effective demand is dead in the water”, why kill QE? Or: if QE boosted asset prices, what will its demise result in?

Asked whether he regrets not doing more with Fed policy to stop the financial-market bubbles that preceded the crisis, Mr. Greenspan said “no.” He observed that history shows central banks can only prick bubbles at great economic cost. “It’s only by bringing the economy down can you burst the bubble,” and that was a step he wasn’t willing to take while helming the Fed …

Greenspan effectively admits he created a bubble in those words, plus he doesn’t regret it. And he realizes the only way to burst the bubble, which, he also admits, has grown to behemoth proportions through QE, is by bringing the economy down.

There’s tons of people claiming QE4 is just around the corner. I’m certainly not one of them. I think the Fed is going to do what Greenspan said there: bring the economy down. And justify that by saying that it’s the only way to burst the bubble and make it healthy again. Raise interest rates and declare that they’ve been too low for too long. Pump up the dollar and claim it’s been undervalued too long because of the global impact of QE’s flood of cheap credit.

Low interest rates don’t work to improve the real economy. Neither does free credit for Wall Street. So now that more people are finally figuring that one out, they’re going to let go of these manipulations that pose as policies, while supporting their member banks in making the biggest possible profits off of the impending changes.

And don’t think that every move they’ve made over the past years has not been as scripted as the Greenspan interview. The Fed doesn’t react to – changing – circumstances, it scripts them. And it’s not about Greenspan or Yellen or Bullard or even Jamie Dimon, they’re hand-puppets; it’s about the wizards behind the curtain. Pretty clear cut. You just have to pay attention. Or you’ll lose your shirt and then some.

Home Forums Everything The Fed Does Is Scripted

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    John Collier Street Corner, Monday after Pearl Harbor, San Francisco Dec 8 1941 Janet Yellen today solemnly stated that the Fed has killed QE because
    [See the full post at: Everything The Fed Does Is Scripted]


    Of course everything is scripted in politics. And yes, the Fed is a Political animal.

    “Management Of Perception Economics.”

    But, what of the comment the Maestro made on gold?


    The Fed ended QE because it has finally become widely known that the only effect of it is to inflate financial asset prices. In the inexact parlance of the chattering classes it caused ‘income inequality’. The idea that it did was the view of a few insane nut jobs 5 years ago. Then it slowly was accepted by all financial insiders and in 2 years everyone will know that it did. Which has made it politically impossible for the Fed to carry on. They do have to maintain some fig leafs worth of cover for themselves politically. Well they don’t really but they think they do.

    They can and do whatever they need to do to keep those asset prices high. To wit 3 weeks ago during the little stock market swoon an erstwhile haw Open Market Committee member was gabbing about continuing with QE. So we know they will if the next little swoon is much over a 10% fall in stocks. Which will make the purpose as plain as day and to do so will be a humiliation but they will do it anyway.

    That will be the moment I think when a bit of anarchy will begin to take hold in the US.

    Formerly T-Bear

    Paraphrasing a well known observation concerning insanity:

    Believing repeated deceptions to be true, expecting truth each time, is a form of insanity

    How long will it take for people to immediately react to such deceptions as being just another lie not worth the air it arrived on, or the bog-paper it was written on.

    V. Arnold

    @ Formerly T-Bear;
    “How long will it take for people to immediately react to such deceptions as being just another lie not worth the air it arrived on, or the bog-paper it was written on.”
    This doth come to mind…
    A Little Boy Blue come blow your horn,
    The sheep’s in the meadow the cow’s in the corn.
    But where’s the boy who looks after the sheep?
    He’s under a haystack fast asleep.
    Will you wake him? No, not I – for if I do, he’s sure to cry



    World energy demand is to increase 50% by mid-century when fossil fuels should decrease close to 80% by then to stave off run-away climate heating. To increase green energy 40% by 2050, we would need 200% more copper with current ore concentrations as low as 0.4%. We would need 150% more aluminum and 90% more iron at the same time it starts to cost too much money to send the trucks that far down into the pits.

    Ugo Bardi explains why mining ore grades below energy break even costs screws green energy up.

    We can’t have hi-tech green energy without producing thorium as a costly radioactive waste usually discharged into tailings (lake sized) ponds. China is planning to get carbon free energy from thorium to pay for the minerals we need to produce our information green energy dreams.

    China has produced over 6 gigatons of cement in the last 3 years.
    U.S. has produced over 4 gigatons of cement in the last 100 years.
    China’s banks have produced $15 trillion of debt in the last 5 years.
    U.S. commercial banks have produced $15 trillion of debt in the last 100 years.
    China plans to build 500 nuclear plants in 35 years.
    China and India are in a crash course program to produce thorium energy forever to sell us computers, solar panels and wind turbines which wear out in 25 years.

    Golden Oxen

    But, what of the comment the Maestro made on gold?

    Hi Professor, It is the same comment made by Gold Bugs for generations.

    “Buy the only world’s currency that the governments can’t print more of.”

    Who knows better than Sir Alan about currency debauching?


    Yeah, why not trust Greenspan on gold?

    Golden Oxen

    Yeah, why not trust Greenspan on gold?

    In Gold we trust.

    It’s four thousand year history of outlasting all fiats is testimony to it’s worthiness in this regard.

    Greenspan is just another witness to history.


    You ain’t got 4000 years.

    Ken Barrows

    Fed has been buying up collateral. The banks aren’t loaning extravagantly with the credit received from the Fed. So why keep doing QE? As long as the system knows the Fed has its back if necessary, it’s all good. The private sector can create its own money/credit (for stock purchases) in the meantime.

    Golden Oxen

    You ain’t got 4000 years.
    What’s my lifespan got to do with Gold’s historic role as money?
    Waiting for another deflationary bust in a fiat currency can be quite time consuming as well, can’t it?
    We would all be right for a while if we could be around for four thousand years. “Just A Bit Early in my Predictions” as they like to say.

    Formerly T-Bear

    @ Raúl Ilargi Meijer #16237

    In Thomas Piketty’s “Capital … Twenty First Century” (Chapter 10)he reports the growth rates (estimated) from antiquity (A.D.). Nowhere until the establishment of manufacturing did that growth rate exceed about 0.1% or 0.2%, manufacturing increased economic growth to about 0.5 % and the further development of industrialization to about 1.5 to about 2.0 %. At the higher growth rate, gold had become incapable of providing the resources needed then, fiat currency was developed in parallel to supply the required liquidity for commerce. Beginning with the buildup that led to WW 1, gold lost its utility other than an accounting device, even the British Empire abandoned gold in about 1931 after severe problems crippled that economy, leaving France and the U.S. as the sole major hoarders of gold as supporting their currencies. Breton Woods (as written by Washington) established the U.S. dollar as the reserve currency as a substitute for the direct hoarding of gold. Nixon, faced with growing debts from Viet Nam and Chas. de Gaulle’s willful conversion of dollars to gold put an end to the gold connection of the dollar. It also fully liberated the American economy from monetary constraints imposed by the gold standard. Only the imposition of the OPEC embargoes upon the economy put a serious constraint upon economic growth but that was blowback from the slight of hand policies that freedom from gold allowed. The effects of those days are still reverberating in the world markets today. Had gold remained standard, the economic instability that would cause would be incalculable, just the rate of growth needed to recover from the world wars and great depression would assure that. Listen to the gold buggers at your existential peril.

    Golden Oxen

    Given the excitement that Thomas Piketty’s new book, Capital in the Twenty-First Century, has stirred up within the political left, the French economist probably should have titled it Fifty Shades of Inequality.

    In Capital, Piketty presents a painstakingly researched case for doing what progressives ranging from Paul Krugman to Barack Obama want to do anyway, which is to raise taxes and expand the power and reach of government. Unfortunately for liberals, Piketty gets almost everything wrong, starting with the numbers.

    Piketty claims that capitalism is in crisis, because the importance of capital in our economy is growing, the “Top 10%” owns most (70%) of it, and the “Bottom 50%” owns almost none (5%) of it. However Piketty’s numbers ignore the capitalized value of Social Security, Medicare, and our other welfare state programs. These programs are huge, and they disproportionately benefit the “Bottom 50%.”


    Formerly T-Bear

    @ Golden …

    Your § 1: That certainly states an opinion, where did you find it?

    Your’s again § 2: Sounds like the beginning of another conspiracy theory with the universal bad-guys, the progressives taking over the lead from the liberals – Oh! wait, you did get in a shot at those evil liberals at the end. How very Libertarian can you ever get. I don’t know Piketty gets almost everything wrong; I do know you do.

    Finally your § 3: Not so sure what Piketty’s claims are, most references seem to be making claims for or about the author as you are. Certainly the inequality in an economy is nothing new and at present is only beginning to resemble that of the opening of the 20th century. Wasn’t that a glorious time to be working class? Not everybody had the resources to put together a railroad and rape the benefits as is your dimensionless imagination.

    What your comment provides is a collection of opinion, nothing more, none of which is original, nary a hint of useful, but linked to another opinion (Forbes! Really!) that reflects your own – how nice you were able to find such in the vastness of the internet. Have you ever had an original thought of your own? However it did refresh an old opinion as well. Nothing has changed with The Golden Bollix.

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