Posted on 09/20/2015 11:30:44 AM PDT by Jack Hydrazine
Yellen has inherited a complete nightmare.
Thursday’s decision to delay yet again the long-awaited liftoff from zero interest rates is illustrating that the world economy is totally screwed.
There is a lot of speculation about why the Fed seems so reluctant to “normalize monetary policy”. There are of course the typical domestic issues that there is low inflation, weak wage gains in the face of strong job growth, a hike will increase the Federal deficit and then there is the argument that corporations that now have $12.5 trillion in debt. All that is nice, but with corporate debt, our clients are locking in long-term at these levels, not funding anything short-term. Those clients who have listened are preparing for what is to come unlike government which has been forced to shorten the average duration of their debts blind to what happens when rates rise, which will be set in motion by the markets – not Yellen.
The Fed is really caught between a rock and a very dark place. Yes, they have the IMF and the world pleading with them not to raise rates for it will hurt other debtors who borrowed excessively using dollars to save money.
The Fed is also caught between domestic policy objectives that dictate they MUST raise rates of they will bankrupt countless pension funds and international where emerging markets will go into default because commodities have collapsed and they have no way of paying off this debt that has risen to about 50% of the US national debt.
By avoiding the normalization of interest rates (hikes), the Fed has encouraged government to spend far more than they realize because money is cheap. This will eventually light the fire under the economy helping to fuel the Sovereign Debt Crisis. There appears to be no hope for the Fed and they will be forced to raise rates only when they see asset inflation in equities. Then they will have no choice.
This is the worst possible mess and the longer they have waited to normalize interest rates, the worst the total crisis is becoming for they will have zero control over the economy and once that is seen, holy Hell will break loose.
“Hell Is About To Break Loose”
I think it already has in Europe with the Muslim invasion.
Yellen has inherited a complete nightmare.
This is the only falsehood in the article, she did not Inherit this Mess, she was right there from the beginning planning stages until the day she assumed the position.
That is exactly right.
I agree. A Perfect Storm is brewing.
LOL—what a morning. I woke up in Venezuela (or Zimbabwe, depending on one’s point of view). Luckily, I’m not hungover.
What is going to happen to pensions and Social Security?
You have to ask about what’s happening to Social Security? Jeepers.
GONE!!!, they Do Not Exist today anyway, they are all just IOU’s promised with the Fruits of Labor from Future Generations, Involuntary Servitude
I know what is happening to SS now. I asked what will happen when SHTF.
I think when this nation elected a person who couldn’t pass a basic security check to work as a janitor in any federal building was the “beginning of the end”.
She has been a MEMBER OF THE BOARD OF GOVERNORS SINCE THEN!!:
https://www.minneapolisfed.org/publications/the-region/interview-with-janet-yellen
I read that people’s SS payments could be cut by 30% if things really go bad.
I woke up in Venezuela (or Zimbabwe
One hell of a Big Show coming
I think the plan will be to pay 30% not take a 30% cut, probably more like 10% when all is said and done. 10 cents on the Dollar Owed that is.
Right around the corner. For the past 20 years, or more.
All federal payments to anyone/anything not considered “key and essential” will be discontinued, I suspect.
I’d think that there would be too many people in trouble to evict from their homes.
Bad, bad, bad.
Date and time, please.
Otherwise, go peddle your papers.
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