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A dose of hot water today from the Fed
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TOPIC: A dose of hot water today from the Fed
#22310
A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 75
It seems to me like the Fed has demonstrated a longstanding pattern of throwing alternating doses of hot and cold water into the market psyche. Just days ago it was cold water with the Fed minutes. Today it looks like hot water from Fed president Bullard. He appeared on CNBC's Squawk Box and, among other things, said that Fed policy would stay easy for a long time. He also said, referring to the $85 billion per month of QE, something to the effect of, "This is monetary policy that packs a punch." This back and forth rhetoric seems like a familiar pattern to me and a deliberate strategy. For all I know there were other Fed presidents making the rounds today on other cable news outlets that I missed.

www.cnbc.com/id/100484108
agau121
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#22311
Re: A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 21
agau121 wrote:
It seems to me like the Fed has demonstrated a longstanding pattern of throwing alternating doses of hot and cold water into the market psyche. Just days ago it was cold water with the Fed minutes. Today it looks like hot water from Fed president Bullard. He appeared on CNBC's Squawk Box and, among other things, said that Fed policy would stay easy for long time. He also said, referring to the $85 billion per month of QE, something to the effect of, "This is monetary policy that packs a punch." This back and forth rhetoric seems like a familiar pattern to me and a deliberate strategy. For all I know there were other Fed presidents making the rounds today on other cable news outlets that I missed.

www.cnbc.com/id/100484108


Seems like this jawboning is doing nothing for the street - but is keeping the stock market at highs for the past few years.

What isn't clear is whether ANY of this $$ really reaches the street in the way of jobs. Doesn't it all involve exchanges between the Fed/Treasury/Banks....i don't ever read that the banks lend any money out. So...i don't think it reaches the 'street' to help people.
arihalli
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#22312
Re: A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 75
arihalli wrote:
What isn't clear is whether ANY of this $$ really reaches the street in the way of jobs. Doesn't it all involve exchanges between the Fed/Treasury/Banks....i don't ever read that the banks lend any money out. So...i don't think it reaches the 'street' to help people.

You may already understand the process of exchanges that you mentioned above. As I best understand the process it is as follows:

1. Treasury holds auction to sell new debt.
2. Primary dealers (Wall Street banks) buy the new debt.
3. Primary dealers turn around and sell the debt to the Fed.
4. Fed creates new money to buy the debt and credits the bank account of the primary dealers (Wall Street Banks).
5. Primary Dealers (Wall Street Banks) now have fresh cash.
6. At least some of the above-named fresh cash is then deposited by the Wall Street bank with the Fed itself. The Fed is after all a bank.
7. The Fed in turn pays a small amount of interest to the depositing bank. That means the Fed creates money, then holds it as a deposit and pays interest on it. Meanwhile, the Fed is also receiving interest payments from the Treasury debts it now owns, these debts having been originally bought by the primary dealer and then passed to the Fed in exchange for cash as noted above.
8. Some of the fresh cash received by the primary dealers (Wall Street banks) in step 5 as noted above is also used by those banks to invest and speculate in securities markets.
9. Repeat the process outlined above.

What could possibly go wrong? If something does go wrong, we already know who will be burdened with for the damage.

If I'm mistaken or have left anything out, I would certainly appreciate whatever corrections anyone might have. When I was first attempting to understand it a number of years ago, I remember feeling almost dizzy. I also remember that when the light bulb finally went on in my head, I thought I must be mistaken because it seemed too illogical to be true. However, after having read and listened to numerous descriptions of the mechanics of the process, I am reasonably certain that I have it correct or at least close to correct.

I have no way of knowing how much of this "money" is reaching the real economy, but I ascertain from what I've read that at this point very little of it is being lent to the small businesses and homeowners that affect the underlying real economy. The reason given is that the interest rates are so low that it's not worth it for the banks to lend, at least not for the Wall Street mega banks. It's far more lucrative to invest and speculate in the securities markets with the money they receive from the Fed's cash delivery system. This at least partially explains why the stock market is staying levitated.

As you may already know, Matt Taibbi wrote a superb article entitled Secrets and Lies of the Bailout
that recently appeared in Rolling Stone Magazine. He covers some of these topics. He gives an outline of the history of the bailout and, if I remember correctly, more or less brings us up to the present to cover the ongoing bailout activity. It's is definitely well worth spending the time to read. It answered numerous questions I had and cleared up some misunderstandings about the true nature of the bailout. Despite how it attempts to position itself in the mind of the public, I believe that the Fed, and for that matter all central banks, are entities that are of the banks, by the banks and for the banks. People are a secondary consideration, if they are a consideration at all.

The link to Matt Taibbi's article is below. Again, I highly recommend it.

Secrets and Lies of the Bailout

www.rollingstone.com/politics/news/secre...the-bailout-20130104
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#22316
Re: A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 261
AgAu, that is an accurate summmary of how the system (supposedly) worked before. That is not what is currently taking place. Today, we have simple/direct monetization of debt. The Fed is printing money and simply pretending to "buy" U.S. Treasuries.

Understand why the OLD sham was changed to the new open/direct debt-monetization. With the previous sham it was still possible to pretend that the paper "money" was worth something. It was borrowed into existence (literally), and thus this paper was no longer a UNIT OF VALUE (i.e. real money); at least it was a UNIT OF OBLIGATION (an IOU).

But they can no longer afford to even retain this sham-value in our paper currencies -- by first "laundering" this new paper through the Big Banks. Why not?

Hyperinflation.

As you noted, in the previous money-printing/Treasury-buying sham; new money entered the hands of the Big Banks -- which they would obviously/immediately LEVERAGE by 30 - 50:1, and then gamble it all in markets.

While there is no economic utility gained from this gambling (at all), all that new paper flooding into markets DRIVES UP PRICES. Note that previously the Fed (and government) wanted this inflationary effect -- i.e. right after the Crash of '08 caused ALL their Ponzi-schemes to go POOF in a deflationary implosion.

However, with inflation well into double-digit levels (despite the lies); even though "pumping up markets" is the favorite hobby of the banksters they don't DARE release all this new paper into the economy.

So it's now just print-and-buy directly. This "money" (i.e. currency) is no longer EITHER a unit of value or a unit of obligation -- meaning the paper no longer has any THEORETICAL VALUE (let alone practical worth).
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#22321
Re: A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 261
agau121 wrote:
It seems to me like the Fed has demonstrated a longstanding pattern of throwing alternating doses of hot and cold water into the market psyche. Just days ago it was cold water with the Fed minutes. Today it looks like hot water from Fed president Bullard. He appeared on CNBC's Squawk Box and, among other things, said that Fed policy would stay easy for a long time. He also said, referring to the $85 billion per month of QE, something to the effect of, "This is monetary policy that packs a punch." This back and forth rhetoric seems like a familiar pattern to me and a deliberate strategy. For all I know there were other Fed presidents making the rounds today on other cable news outlets that I missed.

www.cnbc.com/id/100484108



Yes, the pattern of "talking out of both sides of their mouth" applies not only to the Fed-heads, but to the entire propaganda machine. And once again (once exposed) these propaganda tactics appear quite simplistic/transparent.

There are several very useful reasons for saying one thing, and then saying the exact opposite a few days later -- especially when the Oligarchs have such tight control over the propaganda machine as a whole. Over the longer term; if the propagandists are on the record as saying exact opposite things about most/all subjects then they are ALWAYS RIGHT.

Because with the short-term memories of the Sheep and the near-instant Revisionism of the propaganda machine itself; all of the incorrect statements are forgotten/suppressed/erased, while the correct versions are then parroted ad nauseum to proclaim the brilliance of the propaganda machine analysts.



But one must also note the nuance of this game. The propaganda which is supportive of the overall agenda (more debt, more money-printing) or the Big Lies (the economy is "growing"; inflation is "low") is SHOUTED FROM THE ROOFTOPS AND REPEATED A MILLION TIMES.



When the propagandists talk out of the other sides of their mouths, however, and say things which contradict their Agenda and/or contradict the Big Lies; they only whisper it -- once or twice.



How this works in practice is that the only people who ever see the whispering are the tiny minority who are already suspicious. Having these people catch a glimpse of The Truth is not especially damaging -- since the propaganda machine has essentially already lost its control over these minds.

The Sheep on the other hand NEVER SEE (or notice) the whispering. Being Sheep, the only thing which gets their attention is when the propaganda machine SHOUTS its "good news" -- and of course the Sheep also enjoy watching the cheerleaders wave their pom-pom's, as the band plays another chorus of "Happy Days Are Hear Again" or its 21st century equivalent, "Don't Worry, Be Happy".



...oh, and I can't forget to mention the pay-off for the banksters. There is one other sub-group of individuals who do carefully watch all the "news": the idiot-traders.

It's lots, and lots, and lots of fun (and very profitable) for the banksters to continually feed these Sheep conflicting information -- as then you can "whipsaw" them again and again and again: get them leaning in one direction with their bets, and then the banksters SLAM markets in the opposite direction with their brute-force manipulation.
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#22328
Re: A dose of hot water today from the Fed 1 Year, 5 Months ago Karma: 75
I had not previously noticed the nuance that you point out, but now that you have, I have had a moment of pattern recognition. My expectation is that in the future we will likely ALWAYS hear the hot water rhetoric quickly following the cold water rhetoric or, conversely, the cold water rhetoric quickly following the hot water rhetoric depending on the objective the Fed has in mind at any given point in time. From now on I will also be alert to observe the shouting versus whispering dynamic as well.

It will be interesting to see Bernanke's follow-on next week when he testifies before congress. I half expect it to be turned into a pretext for follow-on suppression of metals prices. One has to wonder what he would have to say for metals prices to actually strengthen on whatever remarks he makes next week. Perhaps the metal clearance sale will get even better. As you pointed on Friday, it appear that Basher Central, as you refer to it, has signaled even lower prices by raising expectations for stabilization of prices.
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