Fed Admits it is the World’s Central Bank – not just the USA Central Bank

armstrong economics ^ | Mar 30, 2016 | Martin Armstrong

[dontreadthis]

Janet Yellen signaled that the Fed is grappling with the problem I have been warning about: the dollar has become the de facto currency and the Fed is indeed becoming the world’s central bank. Yellen has admitted that everyone is lobbying the Fed to surrender its domestic policy objectives for international ones. This is precisely what took place in 1927. Yellen stated that the Fed should worry less about inflation domestically than about global growth risks. She pointed to the slowdown in China and depressed commodity prices, but Europe is a real basket case. She used the words that “caution is especially warranted” when it comes to raising interest rates. This has put most Fed watchers off from expecting any possible rate hike into retirement as they expect nothing before September.

The BREXIT will most likely be rigged because it is exactly opposite of what they are telling the Brits, who have been told that they will be isolated and the economy will collapse if they exit the EU. Nobody mentions that Britain did fine before it joined the EU. They may say it did well only in 1973 or that it is the other way around — with BREXIT, Europe will fail. This heated issue in Britain is most likely the final nail in the coffin. Britain will collapse with the euro and should have just handed its sovereignty to Brussels. Europe will never reform, so it will be a policy that brings everyone down together. The political risk in Europe is tremendous and Yellen cannot prevent that simply with interest rates.

It is ironic that the conditions setting up today were also the case in 1927. The Fed back then lowered U.S. rates to try to deflect the capital inflows to help bailout Europe. The markets eventually backfired and capital shifted. It poured into the USA and doubled the U.S. share market, despite doubling interest rates to try to prevent the crisis they helped to create. This all led to the 1931 sovereign debt crisis and those economic declines resulted in political chaos. In 1933, FDR came to power, but so did Hitler and Mao. That was all made possible because of the collapse in government debt. We are in the very same position today as the Fed is surrendering domestic policy objectives for international concerns.

It is astonishing just how brainwashed society has become. They cheer lower interest rates as if this will eventually work to stimulate the economy and markets. Interest rates decline with economic declines and rise with economic booms. The analysts on TV are just ass-backwards. When a stock is doing well, the price rises because there is a bidding war. Mr. Larry Summers, the father of negative interest rates, admits he cannot forecast anything. Yet, he advocates manipulation, in pure stupidity, without any understanding of the consequences of his theories. He remains clueless as to how history or markets even move.

We can see that the Fed raised rates from 3.5% in 1927 up to 6% in 1929, and the stock market doubled on capital inflows. The Fed cannot lower U.S. rates to prevent a crisis in Europe or to reverse the Chinese economy, no less bring a bid back to commodities when the economy is not expanding. As the stock market rises, Congress will criticize the Fed for making the rich richer, and the Fed will then be forced to return to domestic policy objectives and raise rates to try to stop the rally. Yet, the rally will begin to take off when the public at large begins to realize government is in trouble. This is part of the four elections coming with the Year from Political Hell (see also).

The risks and the reality that the Fed has lost any real ability to manage the economy have become so real that it is slapping people in the face, and still they cannot see it. The Fed has little conventional monetary policy ammunition to counteract a downturn at this time. Larry Summers’ negative interest rates are destroying the fabric of the global economy by wiping out pension funds and the elderly to help bankers who have owned him since puberty. Far too many pension funds are unfunded and many countries in Europe, by law, require they be managed “conservatively” and invest EXCLUSIVELY in government bonds up to 85%. In fact, only Canada and Australia fund pension funds as a rule. The risk of a total meltdown beginning in 2017 is on the horizon.

Yellen has inherited a complete nightmare. This decision to delay the long-awaited liftoff from a zero interest rate illustrates that the world economy is totally screwed. There is a lot of speculation about why the Fed seems so reluctant to “normalize monetary policy.” However, besides the normal issues such as low inflation, weak wage gains, and strong job growth, the real issue nobody seems to look at has been the fact that governments are now crack addicts on life support with negative rates. A hike will increase the federal deficits of all countries globally.

The smart institutional clients who attend our World Economic Conferences have shifted their portfolios and are selling government debt and moving to blue chip corporate. Corporate debt is the only alternative to government debt in crisis and emerging market debt that others bought, thinking they had no risk since it is dollar denominated. When government debt goes bust, you get absolutely nothing and they can change the law at any given moment. They can re-denominate your debt holdings as well as extend the maturity, and there is absolutely nothing any bondholder can possible do.

SELL GOVERNMENT BONDS & SHIFT TO BLUE CHIP CORPORATE BEFORE IT’S TOO LATE

[doldrumsforgop]

so is this a setup for the US being the banker that loans to everyone in the world on the backs of us US taxpayers?

If that is the case, $18 trillion is a drop in the bucket to the debt we will be bearing.

[Iron Munro]

Liberals consider themselves too sophisticated and progressive to be concerned about provincial issues like the national economy, borders, or patriotism.

[Vic S]

This is a big deal. But it will get no press and no mention of by any of the candidates (except maybe Trump.)

The bankers run the country, and it’s only getting worse.

[ground_fog]

the Feds days are dying. The AIIB is ramping up and Russia and other countries are killing off the petrodollar. Dedollarization is happening and the fed is losing control. One day soon they will not be able to evilly manipulate the worlds markets like they’ve done.

it will get a little worse before better but a total dollar collapse is not far away,followed by a asset back currency where congress and the fed cannot print money out of thin air. Their ponzi scheme can’t go on forever

[SkyDancer]

Our money free to the world?

[Vic S]

the Feds days are dying. The AIIB is ramping up and Russia and other countries are killing off the petrodollar. Dedollarization is happening and the fed is losing control. One day soon they will not be able to evilly manipulate the worlds markets like they’ve done.

---

Ya, I’ve heard the bric nations have set up their own swift code type system and are not using the dollar for intl trade.

Let’s hope you are right. When that happens I want an America first President like Trump, rather than a globalist first, like the rest. And it might very well happen in the next 4 years. God help us if Hillary is President when that happens.

[Retain Mike]

I remember the U.S. unilaterally abrogated the Bretton Woods agreement in August 1971 and allowed the dollar to float in relation to the trading whims involving all paper currencies. Through Bretton Woods the U.S. Treasury restarted every country in world after WW II.

When the Treasury in 1964 began producing dimes through dollars without silver, silver coins disappeared from circulation. Until about 1968 people could still trade their Federal Reserve notes for Silver Certificates and trade those for packets of silver from a Federal Reserve Bank. At this time the working careers of a single generation comprise the totality of comprehension for how the international community was to function economically without important currencies emerging from things people can touch and see.

An individual country might think they have a solution, but they know they must also survive during the resulting chaos as all countries seek similar solutions. They see the daunting specter of disaffected holders sending $10's of billions of dollar denominated bonds to the marketplace when there are no buyers unless prices are severely discounted. They are also frightened by the image of a devastated U.S. economy, because feeding the insatiable desires of U.S. consumers has been a mainstay of their prosperity. I imagine something like the final scene in "The Good The Bad and The Ugly". The members of the G-20 and the E.U. are standing in a circle with open graves behind them. They are all contemplating how they are going to successfully outdraw the other members and survive the resulting mayhem, which Lee Van Cleef"s character did not. The only thing needed now is a typical expression of human frailty to commence the cascade to catastrophe.

We are toast.

[huldah1776]

Bmp4L8R...hopefully before the tshtf

[Amendment10]

Note that the state delegates to the Constitutional Convention had considered giving the feds the constitutional authority to regulate INTRAstate banking, but had decided against it. This is evidenced by the following excerpt from Thomas Jefferson’s writings.

“A proposition was made to them to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected, and one of the reasons for rejection urged in debate was, that then they would have a power to erect a bank, which would render the great cities, where there were prejudices and jealousies on the subject, adverse to the reception of the Constitution [emphasis added].” —Jefferson’s Opinion on the Constitutionality of a National Bank : 1791.

So not only have the corrupt feds stolen unique, 10th Amendment-protected state powers to regulate intrastate banking, but if the referenced article is correct they have evidently started to surrender these powers to the World’s Central Bank.

[LucyT]

[2ndDivisionVet]

Who didn’t already know that?

[i_robot73]

But, but...Where are the FR Reserve cheerleaders??

***

So, sooner than later we should start to see a *greater* clamoring for the confiscation of private retirement accounts. They’ll need all that extra $$ to loan out to the world.

It’s in the best interest of the U.S., no? Maybe to win the hearts & minds... /s

[AllAmericanGirl44]

bkmk