Posted on 09/20/2015 4:30:14 AM PDT by dontreadthis
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.
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 lose.
You all a-holes wouldn’t maybe think of cutting big worthless gub mint now would ya?
Nahhh,that might just work.
The author assumes she cares that it is this bad; she is a 0bama clone commie; as long as she lives in her academic, Marxist bubble, who cares? Afterall, they are the smart people and know what is best, so they in their hypocritical, twisted minds, keep their money and not share it in this marxist scheme. Negative interest rates are coming.
Pet President. I like it. It fits.
I’ve been of the opinion for years that the Fed will not raise rates. Not just for years, maybe for decades.
Why? Because to do so would make the Government’s debt unaffordable and would endanger the sustainability of the Entitlement state.
In fact, since entitlements and the debt are only growing, it’s a good bet that interest rates will have to go lower, even negative. At zero interest (ZIRP), the Government could borrow an unlimited amount of $$ without penalty. At negative (or NIRP) rates, the Government would actually make $$ off its debt.
Why would anyone pay to hold Government debt? In periods of extreme uncertainty or volatility, it might be better to sacrifice 1% of your wealth per year for relative stability vs. risk losing a lot more in the markets. In short, to minimize expected losses.
Of course, NIRP and even ZIRP is effectively a wealth tax. And the best part (for the bureaucrats) is that it does not require any legislation to implement.
See my post #24.
I also think the reasons we are importing millions of low (or no) skill people into this country include:
1. They are expected to create a permanent Democratic (leftist) majority.
2. They will become clients of the Entitlement state. So the Government will just GIVE them $$ to buy stuff they don’t have. Thus stimulating the Economy. That will surely not help the US taxpayer, but it will help the Corporations (like Walmart, GM, Proctor & Gamble, etc).
I hate to sound like a Commie, but it does seem to me that the Corporations have switched sides. At one time (maybe as late as the 1970s), it was in their best interest to have a stable, productive population. Now, they just want people to buy stuff, without regard to who those people are or how they get their $$.
Rats put in place thier own patties with bullseyes on thier back and when the shtf they are told plead the 5th or else
“Puppet”
Another incentive for corruption not just in cronyism but in government cheerleading for itself, which we have in spades.
I have to laugh - grimly - every time government issues so-called statistics ON ITS OWN PERFORMANCE. It's madness. It's also madness when the press a) don't do their own math and b) treat the government's word as absolute fact.
'Hey junior, what were your grades this term?'
'Straight A's, Mom!'
'Great! Check back with you next quarter!'
Greenspan didn’t print money, i.e. monetize debt. This step in our evolution toward a banana republic was left to Ben Bernanke and Janet Yellen.
It was his idea to print more to pay the debt payments.
You can look it up. The idiot said it a few years ago.
End the Fed and the problems go away...
>>I hate to sound like a Commie, but it does seem to me that the Corporations have switched sides.
Think about how the major corporations, including the press (Robert McCormick, William R. Hearst) opposed FDR’s New Deal. Consider how Truman was similarly hated. Neither President won the big prize they were seeking, which was national health care.
JFK, LBJ, and Nixon correctly saw that the “commanding heights” of the economy could be advocates for the expansion of the state, but they needed the proper incentives.
Corporatism is, for a large corporation, a more stable economic system than free enterprise (I do not use the term “capitalism” since is is a Marxist term). Under unsubsidized free enterprise, a corporation may find its product supplanted at a moment’s notice by a superior product. And so industry groups get by far the strongest voice in the “common sense” regulatory framework that the federal government enacts and executes.
The only thing missing from this unfolding corporatist (i.e. neofeudalist) economy is serfs. Sure, we are making formerly middle class families into serfs by limiting economic opportunity, promoting indebtedness, driving up the cost of college, and valorizing intellectual over physical accomplishment. But this won’t produce enough serfs.
Maybe we could import some...
He certainly wasn’t the first to express the idea. The point is, it didn’t happen during the Greenspan era. The fortunate emergency hadn’t occurred yet.
The point is he would do it if he could.
Now he admits there’s a problem.
He’s an idiot.
Especially since he was at one time (when he was in Ayn Rand’s intellectual circle) an advocate of gold-backed currency.
Must have been long, long ago. And way before Andrea Mitchell, lol.
Keynesian economics completely failed. And once you comitt to that road, wwhen it fails, you are screwed. You can’t put the keynesian policies back in the tube.
They borrowed and spent, rinse and repeat, because Keynesian economic theory said there is a multiplier >1 effect on the economy. And because it felt good to spend, spend, spend. Mainly the latter. The former gave them an excuse.
Problem is, the multiplier is actually <1 (as Friedman and Austrian schools proved). Drove up the debt, while actually harming the economy, permanently. There is no way out. Divide by zero. Tilt.
We need a database stored on a server offshore, with liberal politicians, advisors, and media helpers and hollywood cheerleaders names, pictures, titles, agency, car model, year, color, plates, and especially home addresses. Easily accessable read only through tor. Because we need to prepare now to hold them accountable. Suddenly and soon.
[There is no way out. Divide by zero. Tilt.]
That’s what I’m afraid of and how quickly it’s gonna pop up.
The marxist wench will be up to her jowls in kobe beef and caviar regardless of whatever happens to the “little people.”
As for the economy, I dare say its probably doing better than the economic indicators are showing because so much of the economy has moved over to the black market under dear leaders reign.
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