Skip to comments.The Fed Is Beginning To Remove The Punchbowl… Are You Ready For What’s Coming?
Posted on 02/10/2013 10:26:58 AM PST by blamEdited on 02/10/2013 10:35:32 AM PST by Admin Moderator. [history]
The Fed Is Beginning To Remove The Punchbowl… Are You Ready For What’s Coming?
Consider its recent FOMC minutes released on January 3 2013.
With regard to the possible costs and risks of purchases, a number of participants expressed the concern that additional purchases could complicate the Committee’s efforts to eventually withdraw monetary policy accommodation, for example, by potentially causing inflation expectations to rise or by impairing the future implementation of monetary policy.
(Excerpt) Read more at marketoracle.co.uk ...
A slow down?
A stock market correction?
Unemployment has gone up recently.
Everything is short term investing for me:(
This is all deliberate and on purpose
Downward spiral in treasuries. There will be a race to the exit. Everybody knows that our federal government will not pay back lenders. The only question is when we default, not if.
Since the unemployment will not be getting anywhere near 7%, fiscal policy should remain basically the same.
They’re not removing the punch bowl.
They have said they will continue to buy 85billion/month of treasuries and mortgage backed securities.
They’re going to do this until the dollar collapses.
They’re in a hole and are keeping on digging.
They cannot withdraw and sell the treasuries because that would collapse the market. Who would buy so much junk? Answer: No one!
We won’t default. And bondholders won’t pull the plug on us either.
We can and will continue to print (devalue). The plan is to slowly inflate our way out. It will work, but how well it will work is still in doubt. It’s a tightrope act. Other currencies have a vote, but we have the big vote, due to our size compared to theirs.
The Euro was created to destroy the dollar, but that won’t work either. The Euro will destroy Europe first. China is about to head into demographic problems that will be much worse than ours.
Japan is about to come out of its demographic-caused depression and may have a decent future under these conditions.
We will all lose another 40% or so of our wealth during this process.
Some who guess right at the right times will lose less, and some will lose more. Like always.
I’m not taking a position of good or bad on this as that is meaningless. As always, the proper reaction to FED/govt fiscal policy is what matters, not whether the policy is “good” or “bad” as that is irrelevant.
You can curse the weather, but in the end only answer is to dress for it.
And yes, I’m ready for what’s coming.
“Theyre not removing the punch bowl.”
They’re definitely not; they’re just adding icecubes to camouflage the floating turds in the bowl.
If they do, the whole house of cards will come crashing down. The only thing keeping maybe 50% of the population afloat is transfer payments from the Federal Government. And that INCLUDES any company or other government organization that depends on Government $$ [so, 50% might be way low].
Think about it. Interest rates have actually gone DOWN as Government borrowing has exploded. This has accelerated in the last 4 years, but is not new—its been happening since 1981. If interest rates increase, even a little, Government borrowing costs explode and the System crashes of its own weight.
The Power-that-Be won’t let that happen. So interest rates will stay low. Ben will print until (eventually) hyper-inflation kicks in big time.
Yeah, maybe in 2015, according to the last whole word on that from the FOMC. Some authors like to cite one or two members of the FOMC, but that’s brought some erroneous information to us before. Caution, IMO, before Bernanke announces real decisions. Shorters and currency warriors have been busy, though. Beware big decreases in revenues from further declines in domestic production and exports, if the dollar continues riding artificially, internationally high in this funny global economy.
BTW, when the Fed does eventually tighten up (not now, IMO), yields will soar, which will put a stop to government’s ability to pay the debt. Bond collapse, interest rates will soar. Activity will stop. Government will begin repudiating large chunks of debt and administering “haircuts” to investors. Austerity measures, including drastic tax hikes. Pensioners will suffer their unforeseen haircuts. Our currency will be adjusted way down to make way for resuming exports, etc. Ugly political consequences. No enforcements against local agricultural or small manufacturing competition/starts.
Other currencies make sense if you want to invest (or more likely speculate) in their economies. The traditional inflation hedges like PMs are mattress money and are the last resort when there is nothing worthwhile to invest in. But the plug will get pulled on the dollar and treasuries because there is no way to realistically restore rates to balance the risk of inflation and default. The Fed has painted treasuries into a corner, either they continue to purchase or the price collapses because as rates skyrocket we have no choice but to default.
So the theory is like you say, the Fed keeps purchasing until the perfect time to stop (40% deval). Reality is that they only make the price collapse more inevitable and more severe doing so.
Basically the Fed has acknowledged there is no real value in treasuries and especially in mortgage securities on strapped American homeowners. They are going to be hard pressed to find a bigger greater fool than themselves. Maybe some extraterrestrials.
The goal has always been for a One World Currency, a One World Government and a One World Religion.
The Fed expires in 2013 and so does the Federal Reserve Note (aka US Dollar). Better to spend them on real assets while you still can.
>> “It will work” <<
About as well as a box of “instant water” pills.
As soon as our ‘creditors’ take the first pill out of the box, they know they’ve been had.
-——when the Fed does eventually tighten up-——
That will happen soon after the next S&P downgrade that will trigger market action.
The DOJ thuggery will not deter the downgrade if things continue. Those with the reins to the markets have more power than the President
the bottom line:
1. uncle sugar is taking away some sugar.
2. uncle sugar will still be spending way more than currenty taken in.
3. commodity prices are increasing.
4. energy prices are increasing.
5. taxes are increasing.
6. obamacare taxes kick in and are increasing over the years.
7. education costs are increasing.
8. jobs in general, and well-paying jobs are not increasing.
9. we are considering amnesty to 11-20 million mexicans here illegally, adding millions to the benefits systems already being told to do more with less.
10. average folks taxes going up through expiring tax policies that helped them, ending deductions and credits/writeoffs.
What is coming is the big squeeze. It’s going to shove what’s left of the shrinking middle class into the poverty class.
The only kink in this scenario is that the largest debt holder of US debt is the Federal Reserve. And they can print their own money ad lib, so no "haircuts" for them.
Yes, and we know that magic funny money is really valuable. The government already paid off the debt with it, because it can do that. ;-)
“We wont default. And bondholders wont pull the plug on us either.
We can and will continue to print (devalue). The plan is to slowly inflate our way out. It will work, but how well it will work is still in doubt.”
I agree we won’t default, that is because our debt is in our own currency.
I agree “the bondholders” won’t pull the plug because the bondholders are two entities, the fed and China.
But I think that IT WILL NOT WORK.
I say that because yes you can rig a market if you are the only participant, but much like the London Whale of JP Morgan, you can never unwind the trades if you are the only participant.
JP Morgan’s London Whale thought he could not lose because he could always rig the game by simply buying more of his underwater positions in an illiquid market. This worked until he could buy no more. Unwinding the positions was a complete disaster.
The federal reserve is thinking that, they can rig the market to zero interest rates and if interest rates tick up a bit, they can deal with that by buying more securities.
However, if they unwind the positions (as they must eventually,) all hell is going to break lose.
The Privately Owned Federal Reserve Bank has a 100 year charter that ends in December 2013. The Fed. Reserve Act is part of a 100 year plan to bankrupt and debt enslave all Americans.
That was repealed about 80 years ago. The Fed has an open ended charter. It is not expiring. Ever.
Here is the link to the Federal code