Fed Is Scared Silly By A Trump Presidency!

Federal Reserve joins Hillary Clinton campaign team

Posted on March 25, 2016 by Sam Rolley

Federal Reserve officials concerned that a Donald Trump presidency could lead to an audit are doing everything they can to keep the economic consequences of their misguided easy money policies from becoming apparent to voters ahead of the 2016 election.

We already know that there’s little love for Trump within the Fed based on campaign contribution data.

As Bloomberg reported earlier this month:

Trump, who accused Fed Chair Janet Yellen in October of keeping interest rates low as a favor to President Barack Obama, hasn’t collected a single donation from Fed employees, according to a review of Federal Election Commission data. Sen. Ted Cruz has received $2,000, while Sen. Marco Rubio has taken in $750. Hillary Clinton, the leading Democratic candidate, has received $18,239 this election season.

In addition to campaign hints that he supports auditing the central bank, the Fed’s internal disdain  for Trump probably also has something to do with its revolving-door relationship with major Wall Street players. The Republican frontrunner has, despite being extremely wealthy, a strained relationship with members of the financial elite that predates his presidential campaign.

The Washington Post recently pointed out:

Trump’s relationship with Wall Street is complicated by decades of name-calling, lawsuits and big debts. He has sued Deutsche Bank, blaming the megabank for the financial crisis, but continues to rely on it to finance major projects. When his companies filed for bankruptcy, he bragged, it was the big banks that endured big losses – not him. He once called the dean of New York bankers, JPMorgan Chase chief executive Jamie Dimon, “the worst banker in the United States”.

More than a dozen Wall Street bankers told the newspaper that they fear Trump’s “unpredictable and combative” nature could cause problems for the nation’s big banks.

Hillary Clinton, on the other hand, is a major friend of Wall Street.

Sure, she’s giving lip service to getting Wall Street under control while on the campaign trail– but that’s only because she’s attempting to co-opt the rhetoric that has made Sen. Bernie Sanders so popular with many Americans.

So far, Clinton has raked in nearly $50 million in campaign contributions from big Wall Street names.

Now, back to the Fed and how it’s attempting to help Clinton win the election.

Last December, Fed officials announced that the central bank would begin raising interest rates with the goal of hiking them to between 0.75 and 1 percent at the end of 2016.

But in the months since the Fed has repeatedly walked back on that goal, blaming global economic weakness.

You can be sure that the Fed decision has little to do with economic conditions. After all, whether it reverses interest rates now or later doesn’t matter– Americans are going to feel the economic consequences of the end of easy money. Prices are going to go up for everyone.

But, as the New York Post’s John Crudele recently pointed out, current economic conditions are prime for the Fed to push ahead.

He wrote:

The prevailing view last week was that the Fed was giving in to the financial markets by cutting back on the number of anticipated rate cuts. And that might be a little bit of the reason.

But the main cause of the “dovish” communiqué from the Fed last Thursday is a realization that business conditions are still weak and that economic statistics that say otherwise are wrong.

If you take the data at face value, the economy grew at around a 2 percent annual rate in the first quarter. That’s mediocre, but still twice the rate of expansion at the end of 2015, when the Fed started hiking rates and vowed to raise them four times in 2016.

Logically, the Fed should be twice as enthusiastic about rate hikes now than it was in December, when it raised borrowing costs for the first time in 10 years.

So why is the Fed holding off?

Because if Yellen acts and raises interest rates ahead of the election, Clinton won’t be able to use Obama’s phony economic turnaround as a selling point to put another Democrat in the Oval Office.

As CNN recently reported:

For the first time since President Barack Obama took office, the labor market is growing at a healthy clip and unemployment has returned to pre-crisis levels. Higher interest rates would increase the cost of everything from home loans to credit card borrowing and could put a damper on economic growth.

With Trump looking more and more like the eventual Republican nominee, the Fed will continue dragging its feet until Obama’s successor takes the helm at the White House. Then, we’ll all see that what they really mean by “recovery” is temporary trickery.

Fed Short Term Solution Could End Up Blowing Up The Economy If It Is Not Unwound Correctly.

Texas Professor Robert Auerbach: Fed Has Built $2.58 Trillion 'Bomb' With Excess Reserves

Wednesday, 04 Jun 2014 07:38 AM

By Dan Weil

Share:

  Get Short Link |

  Email Article |

  Comment  |

   Contact Us  |

  Print  

|  A   A  

• 0
  inShare

The Federal Reserve's massive easing program has led to an accumulation of $2.58 trillion of excess bank reserves, and that's a ticking time bomb, says Robert Auerbach, professor of public affairs at the University of Texas.

"It will be six years in October 2014 that Federal Reserve officials started building the monetary bomb," he writes on The Huffington Post.


"Now that the bomb has reached $2.58 trillion, some reporters and broadcasters have found a problem. Fed officials are now talking about plans to dismantle the bomb with no troublesome side-effects. Some of their announced plans are ineffectual, harmful and ridiculous."

The problem started in 2008, when the Fed decided to pay interest on banks' excess reserves, Auerbach says. "Paying banks to hold excess reserves instead of using the money to make loans to businesses and consumers increased unemployment."

That interest rate is 0.25 percent. It should be cut to zero, Auerbach says. "The Fed must then start selling the securities it has bought from the public before the $2.58 trillion bomb explodes with trillions of dollars flowing into the non-bank private sector."

Peter Schiff, CEO of Euro Pacific Capital, says the Fed will ultimately reverse the tapering of its bond purchases.

"If the Fed actually did what it's threatening to do, completely remove all the monetary props beneath the [stock] market, to wind down QE [quantitative easing] to zero and eventually begin to increase interest rates, then I think the market will head substantially lower," he told Yahoo.

"But I don't believe they'll do that. I still think the Fed is going to end up aborting the taper."

 
Related Stories:

• Ron Insana: Fed's Worry About Housing Weakness May Spark Further Easing
• Fed's Lockhart: Economy Would Have to Move Sharply to Alter Tapering

© 2014 Moneynews. All rights reserved.

Another Indication That The Days Of The US, At Least The Country We KNEW, Is Gone!

America’s Darkest Secret: Barack Obama Is A Pawn For The New World Order

April 23, 2014 by John Myers 

 31 9

 

 2 82

THINKSTOCK

“You’re an errand boy, sent by grocery clerks, to collect a bill.” — from the 1979 film “Apocalypse Now”

The United States has become a stacked game for the mega rich and a sucker’s game for the growing poor. Today, it is President Barack Obama who heads this tragedy — stealing from the middle class to pay off the rich while manipulating multitudes of the millions to become needful and poor, compliant and cowering.

The once proud and independent American middle class is being gutted. And no President has done more to eviscerate it than Obama, whose handlers urge him to build a socialist nation for the ever-increasing number of needful people while at the same time giving power to an oligarchy of billionaires who have ultimate authority and pull the puppet strings on their patsy: an African-American community leader dug up in Chicago, turned into a junior Senator and then made President.

In exchange, Obama has done exactly as ordered. He has made the billionaires even richer while shoveling millions of dollars in aid to the once-proud middle class, who have lost their jobs in manufacturing because Obama and previous Presidents systematically gave away American technology and destroyed the factories that built this Nation.

And so it goes. America’s debt levels soar, as do American stocks. That wealth is not going to the American worker, but to the deal makers and paper pushers who sit in plush offices and live a lifestyle like the French autocracy on the eve of the French Revolution.

But Washington has learned some history. They use the media to make the people afraid of myriad enemies and make us thankful to “eat cake” so long as it comes with booze, lotto, movies and sports and, in some States, marijuana.

And King Barry has something Louis XVI never had — an intelligence network that spies on each and every citizen. There will be no Maximilien Robespierre or Jacobins to orchestrate a march on the White House regardless of what this jester President does.

Why Wall Street Loves Obama

The only money being made in America nowadays is by the geniuses in Silicon Valley, which is deserved, and by the money changers on Wall Street, which is undeserved.

Timothy Smeeding, head of the Institute for Research on Poverty at the University of Madison-Wisconsin told The New York Times:

Almost all of the benefits of growth since the trough of the Great Recession have been going to those in the upper classes. Middle- and lower-income families are getting a smaller slice of a smaller economic pie as labor markets have changed drastically during our recovery.

I spent enough time as a stockbroker that I felt like killing myself. Nothing productive resulted from my efforts or the efforts of anyone else at that office. But there were star money makers there, and in New York there are bushels of stars that gamble trillions of dollars every day and make personal fortunes doing it.

Obama has been ordered to curry favor with Wall Street, despite his initial campaign promise to crack down on the investment banks that took the world to the edge of economic collapse and whose mistakes led the Federal Reserve to the largest monetization of debt in history. Today, the U.S. Treasury begs our competitors and future enemies such as Russia and China to invest in additional Treasury bills, notes and bonds at debt auctions that both Moscow and Beijing understand will one day be worthless.  Yet they play along until there is either a new reserve currency or a gold standard.

Obama was bought and paid for by big money powers, and he has done well at serving the interests of big money. He demanded nothing after putting up $700 billion in the Troubled Asset Relief Program (TARP) for the investment banks whose blind greed and reckless practices drove America toward the worst economic crisis in history. Of course, these are the investment banks that appointed Obama as President twice.

The Way We Were

America wasn’t like that when I got started as a writer more than 30 years ago. My wife bought me suits off the sales racks at Sears because we had a young family and a big mortgage. Back then, I was mostly a proofreader and a researcher. My friends were in the same boat, and we used to say over the course of the day: “What’s the Dow doing?”

Nobody asks that anymore. Maybe that’s because of the Internet, but I think there is another reason. I don’t think middle-class people have the money to invest in the stock market anymore. By the time they pay the bills, the mortgage and car insurance, few can even think of taking a position in the Dow or any blue chip stocks.

I could take a position of 100 shares in a stock for $1,000 or $2,000. That would be a stock trading at $10 or $20 per share. In 1984, a share of Apple (AAPL) cost $20. Today, a share costs well more than $500. Of course, the value of Apple shares has soared; but stock splits have not kept pace.

Do you know anyone who can pull $50,000 out of their bank account and buy a token position in Apple? I don’t. As a result, Apple is almost exclusively traded between mutual funds, brokerage houses, investment banks and the ultra-rich.

Last year, Wall Street bonuses rose by 15 percent. That makes the overall bonus totals close to $27 billion in 2013 or the most since the infamous pig-fest in 2008 when Wall Street got stinking rich while almost destroying the global economy. Keep in mind this is bonus money, not salary money. Bonus money based on performance — how much brokers and dealers sold to unsuspecting suckers even if they were colleagues and friends.

No surprise that Wall Street insiders contribute to the truth that starting two years ago, the top 10 percent of U.S. households made more than 50 percent of total U.S. income.

The Secret War On The Middle Class

Nearly 50 million Americans are on food stamps. That is more than the number of women in the country who have full-time jobs.

The Department of Agriculture lists the annual average number of food stamp participants going back to 1969. That year, there were 2.9 million people on food stamps. Since then, food stamp participants have increased by more than 1,600 percent. In 1969 there were 15.7 million women who worked full-time in the U.S. At the end of 2012, that total had increased by 181 percent.

Obama and previous patsy Presidents have made it easy for tens of millions of Americans to give up, sit back and collect government money. At the same time, the Federal government has done little to help women become wage earners — workers who pay taxes, invest back into America and build a better future.

But on goes the puppet show: the Obamas saying they are fighting against obesity in children while forcing healthcare on millions of people who don’t want it. Then there are others — leaders like House Minority Leader Nancy Pelosi, who holds on to regal power the way Queen Victoria did, and Republican Senator John McCain, who is as bent on empire building as Otto von Bismarck was in the 19^th century.

And who are we to stop them? President George W. Bush begat Obama, and Obama will begat the next patsy President. The wolves of Wall Street will get ever fatter, while we on Main Street are left to starve.

Obama is an errand boy, sent by grocery clerks, to collect a bill.

Yours in good times and bad,

More Challenges Are Coming To The Economy. Will It Survive?

Brown Economists: 'Secular Stagnation' May Strangle Economy

Friday, 18 Apr 2014 09:21 AM

By Dan Weil

Share:

  Get Short Link |

  Email Article |

  Comment  |

   Contact Us  |

  Print  

|  A   A  

• inShare

The U.S. economy may not mend its woes soon and instead may suffer a bout of "secular stagnation," Brown University economists Gauti Eggertsson and Neil Mehrotra maintain in a recent paper.

A deleveraging shock, a drop in population growth, or an increase in income inequality could shift people from borrowing to savings, the economists say. Essentially, there simply aren't enough promising real-world investments, forcing investors to put their money into stocks, junk bonds, etc. — and not investments that create demand for a product. This weak demand results in economic stagnation.

And with a short-term interest rates already at zero, the Fed will be "unable to generate a sufficient monetary stimulus," they assert. The outcome: a "permanent slump in output,"Eggertsson and Mehrotra write.



"It's not a baseline scenario, but I think people should at least be starting to consider the possibility that this could go on for a while," Eggertsson told CNBC.com. 

That could "lead us to be a little bit less optimistic than people have been about re-normalization coming [for the economy] in the next year or two."

GDP expanded 2.6 percent in the fourth quarter and has run at about a 2 percent growth rate since the recession ended in June 2009.

Economic stagnation is commonly defined as a prolonged period of slow economic growth (traditionally measured in terms of the GDP growth), usually accompanied by high unemployment.

The economists base their recent conclusion on the "secular stagnation" hypothesis by Harvard economic professor Alvin Hansen, who contended that inadequate capital investment hindered full deployment of labor and other economic resources. During the Great Depression, private capital investment fell because of excess capacity and lack of good investment opportunities.

Former White House economic adviser Larry Summers is perhaps the most prominent advocate of the secular stagnation theory.

"In its current World Economic Outlook , the IMF essentially endorses the secular stagnation hypothesis, noting that the real interest rate necessary to bring about enough demand for full employment has declined significantly and is likely to remain depressed for a substantial period," Summers writes in The Washington Post.



Related Stories:

• Greenspan: Income Inequality 'Most Dangerous' Trend in US
• Summers: Income Inequality May Push US to 'Downton Abbey Economy'
• Americans Grapple With Income Inequality

© 2014 Moneynews. All rights reserved.

We Will Crash, It Is Only The Date That Is Missing.

The Fed’s Hands Are Tied

April 1, 2014 by The Ludwig von Mises Institute

 14 4

 0 56

This article, written by banking consultant Patrick Barron, originally appeared on the Mises Institute’s website on April 1.

No change.

Oh, you want more? Groucho Marx used to tell a joke on himself that “I wouldn’t want to belong to any club that would admit me as a member.” That pretty much sums up why we shouldn’t expect much from the new chairman of the Federal Reserve System. This Administration and this Congress will never admit anyone that is not of the Keynesian-School-of-economics persuasion. As long as this mentality resides in the political halls of power, our Nation will not get another Paul Volcker.

That means that we should anticipate a continuation of policies that assume that monetary expansion can spur economic growth. It cannot. Monetary expansion can spur phony economic growth; i.e., fooling entrepreneurs to invest capital in projects that will not return a profit. GDP may go up — temporarily. Employment may go up — temporarily. Janet Yellen and her fellow Keynesians believe that the Fed, through money creation, can create software engineers, doctors, nurses, and steel mills. In other words, they think they’re creating real resources. It’s nonsense, yet they seem to be true believers. They may couch this error in highfalutin terms, but that is what they mean on a fundamental level. In the end capital will be destroyed, resulting in an economic bust, and the nation will have wasted years and resources that it can never recover.

Now, Yellen may preside over a gradual “tapering” of the unprecedented “quantitative easing” program begun under Bernanke. But this does not mean that she is different. Remember, that program was unprecedented; everyone knew at its beginning that it could not continue forever. Whoever occupies the Fed chairmanship would have to end that program at some point — we hope. There is no guarantee, however. If rates start to rise, unemployment rises, and businesses start to go bust, the Fed could jump right back into the program, because that is all it knows how to do — print money. The real question is whether Yellen and her fellow travelers will accept a recession that most likely will occur as QE ends. The Fed likes to think of QE as a jump start, a one-time boost, a helping hand, etc. But these are false analogies. QE funds projects that cannot exist in its absence; therefore, when QE ends or even slows down, these projects will be revealed to be unprofitable. No amount of cost cutting will make them profitable. They were born of QE and they will die when QE ends. The only question is whether the Fed will accept the necessary recession or will jump right back into money printing. If it does the latter, we can expect an even greater bust in the future.

The Fed has painted itself into a corner. There is no way that the Nation can avoid either a recession or the collapse of the value of the dollar. We should prefer the recession, then insist on an end to monetary expansion, regardless of the howls from the politicians that the government cannot continue its many programs otherwise. At the core this is a political problem. Only a radical change in the mindset of government can end the monetary madness.