David Stockman Warns "Dread The Fed!" - Sell The Bonds, Sell The Stocks, Sell The House

Zero Hedge ^ | 12-18-2015 | David Stockman - Tyler Durden

[blam]

David Stockman
Tyler Durden
12/18/2015

There is going to be carnage in the casino, and the proof lies in the transcript of Janet Yellen’s press conference. She did not say one word about the real world; it was all about the hypothetical world embedded in the Fed’s tinker toy model of the US economy.

Yes, tinker toys are what kids used to play with back in the 1950s and 1960s, and that’s when Janet acquired her school-girl model of the nation’s economy.

But since that model is so frightfully primitive, mechanical, incomplete, stylized and obsolete, it tells almost nothing of relevance about where the markets and economy now stand; or what forces are driving them; or where they are headed in the period just ahead.

In fact, Yellen’s tinker toy model is so deficient as to confirm that she and her posse are essentially flying blind. That alone should give investors pause—-especially because Yellen confessed explicitly that “monetary policy is an exercise in forecasting”.

Accordingly, her answers were riddled with ritualistic reminders about all the dashboards, incoming data and economic system telemetry that the Fed is vigilantly monitoring. But all that minding of everybody else’s business is not a virtue—-its proof that Yellen is the ultimate Keynesian catechumen.

(snip)

In a global economy that is plunging into an epic deflationary contraction, Yellen & Co still embrace mythical and unmeasurable benchmarks for domestic full employment and other idealized performance targets.

(snip)

[central_va]

Exactly. And until there is another currency that can compete and threaten the dollar as the Reserve Currency, the dollar will be the strongest least suckiest in the world.

[blam]

"Exactly. And until there is another currency that can compete and threaten the dollar as the Reserve Currency, the dollar will be the strongest in the world."

I've read that we may see a 'rebound' next year just because investors coming here from worse places.

[Original Lurker]

And the Saudis.

[Lurkina.n.Learnin]

Has this guy done anything except repeat himself for the last ten years?

[notdownwidems]

So what does the prudent citizen do?

[Blue Jays]

Not vote Hillary Clinton into office! LOL.

[yefragetuwrabrumuy]

Unfortunately, Stockman left it at the academic level.

What he needs to do is a “meat and potatoes” analysis of when a crash happens, what *exactly* will happen.

Will the stock market crash? Not likely, at least under the current administration. This is because the market indices are now entirely manipulated - governed - in the real sense of preventing the market from correcting itself.

Say you had 20 billion dollars, that you could insert or remove from the stock market, *invisibly*. You are not trying to earn more money or lose money, just to prevent the market from appearing to crash, by supporting the stock of a limited number of companies.

So how can you have a stock market crash if the indices don’t move lower?

Granted, if Cruz or Trump are elected, the FED might decide to simply *stop* manipulating the market, that would almost certainly cause a market crash.

Okay, so what about Great Depression level unemployment?

We currently are approaching that *right now*. And yet, there are not huge lines leading to soup kitchens. Yes, there are a lot more homeless and poor people now.

What about oil and gas prices? Nothing really special, there. Just getting over a period when gas was overpriced.

http://www.macrotrends.net/1369/crude-oil-price-history-chart

So what is going to happen?

[1Old Pro]

Seeing clouds on the horizon and predicting the exact time it will rain is difficult, however we still know rain is coming.

[Huskrrrr]

I will go out on a limb and predict SHTF the day after a Republican is elected President. Soros and others will pull the trigger.

[notdownwidems]

Well I wouldn’t have done that if the frickin sky was falling; but based on what has happened in the last few days in Washington it doesn’t look like it will make any difference anyway; but seriously, if you have any money is there ANYTHING one can do to protect oneself from the economic catastrophe that is surely coming?

[Mariner]

"Stockman has claimed the sky is falling for five years."

And, he's likely right.

There is no element of the real economy that would suggest otherwise...and certainly, anyone can see these manipulations are at the final, end gasp of our civilization.

Buy, and hold, cash. And weapons.

[Seruzawa]

Wait. Isn’t he one of these guys who claimed that the dollar would crash as soon as the Yuan was listed as a world reserve currency?

[Mariner]

"We are going to have to re-industrialize America at some point"

There is far, far too much industrial capacity in the world today...along with too much labor, too many dollars and too much debt.

Big wars only can fix that.

[Rashputin]

He should put up billboards around the country and warn everyone, "The End is Near", but tell them not to worry, those who subscribe to his newsletter will be evacuated in Golden Huey Helicopters before the SHTF.

[Original Lurker]

Big wars only can fix that.

---

Correct.
America owned the post WWII industrial age as the US had over 50% of the industrial capacity of the entire planet. That advantage is long, long gone.

[noah]

That’s not a good description of Yellen & her FED.
While she’s Keynsian & an Obama supporter she’s
still an economist.
She watches the statistics as they come from the
govt.
So long as the #’s are fairly accurate she’ll
eventually do the right thing.
Whatever problems we have, will not come from her
decisions.
If she errors, we will have INFLATION!!

[Brooklyn Attitude]

” Sell The Bonds, Sell The Stocks, Sell The House”

If bonds, stocks and real estate values crash, everyone is poor. The RAT dream of equality becomes a reality.

[Does so]

For now I will hang on to the stocks and hang on to my real estate as both have treated me well in the long run.

Some of us don't have a long run...

[Pontiac]

We are going to have to re-industrialize America at some point.

With what?

We are graduating a bunch of kids that don't know which end of the hammer to hold. That can't write a complete sentence or calculate the length of a hypotenuse.

Public education and video games have lobotomized this country.

[Bluestocking]

The Fed doesn’t determine interest rates, the global bond market does.

One of today’s Wall Street Journal headlines makes this clear: ‘’Fed Hikes But Some Rates Veer Lower.’’

Janet Yellen wants U.S. interest rates to rise, yet the yield on the 10-year bond has FALLEN ever since she ‘’raised’’ rates two days ago.

That’s because, as the WSJ states, ‘’Strong global demand for U.S. Treasurys, which tends to push down yields, is potentially creating a conflict with the central bank’s plans...’’

In other words, unlike good chess players, the Fed can’t see two moves ahead, and so its best laid plans are going awry.

And, therefore, whatever economic benefits the Fed thought it would achieve by ‘’raising’’ rates will actually hurt the economy by causing rates in the real world to fall.

Thank you, Janet and your fellow learned but foolish Keynesian economists, who have no ability to foresee the implications of your actions.