Well the Fed did it again today... extended quantitative gorging-on-fiat indefinitely. By adding a new component today to their strategy (a new justification) Bernanke, in the most conniving and sneaky fashion, gave himself the green light to justify more debt monetization until hell freezes over. Because that's how long it's going to take for the unemployment rate in the United States of America to drop below 6.5%.
It's simply amazing to watch the charade continue that seems like it's right out of the Twilight Zone. Prior to the addition of today's new qualifier, all the Fed had to do was to simply continue to lie about the rate of inflation in order to justify money printing on an ever-increasing scale. But in light of the fact that to continue to hide the current horrid rate of inflation in the areas that hurt us the most (like soaring food prices) is becoming more and more difficult, nearly impossible, a new metric had to be introduced. By making it official that future decisions by the board of governors will now be tied not only to the rate of inflation but to the rate of unemployment, a major step has been taken in which the Fed has paved the way for justification for future insanity on their part. And of course in the insidious modus operandi typical of psychopaths who patiently work toward their goal of ruling the entire world, gradually over time the peg-to-inflation aspect will quietly drift off to the land of the forgotten. In the months and years ahead the 'inflation' aspect will be spoken about less and less often and will instead be replaced with ever-increasing focus on the employment rate as being the key determinator. In essence today's statement opens the door for the Fed to supply the drugs to a hopelessly addicted government for perhaps the next 20 years. This is probably as good time as any to ask Chairman Bernanza exactly what it is that he's been smokin' because the country and the currency won't last another five years at this pace let alone twenty plus. Surely Bernanke knows this? Let me answer that question for you. Yes, he does.
Today's Fed statement read, "In
particular, the Committee decided to keep the target range for the
federal funds rate at zero to one-quarter % and currently anticipated that
this exceptionally low range for the federal funds rate will be
appropriate at least as long as the unemployment rate remains above 6
and a half percent, inflation between one and two years ahead is
projected to be no more than a half percentage points above the
Committee's 2% longer-run goal, and longer-term inflation expectations
continue to be well anchored. The Committee views these thresholds as
consistent with its earlier date-based guidance. In determining how
long to maintain a highly accommodative stance of monetary policy."
Up until now the target date for the end of the policy of supplying more and more green powder for congress to blow up their noses was "sometime in 2015". With today's statement the Fed has extended that date essentially to eternity because let's face it, as long as the once-monumental manufacturing sector of the formerly-great USA continues to leave America for foreign shores, the unemployment rate is never going to drop below 6.5%. NEVER. It's going to balloon to 20% and higher. Eventually the rate of unemployment, which is already grossly under-reported, will also become nearly impossible to hide any further. I expect that sometime after 2016, with bodies piling up in the streets, the ability to hide the rate of unemployment no longer be manageable and will have to be be replaced with a new and fresher "qualifier" that would justify even more QE. I'm guessing it will be something along the lines of "once the economy has improved to the point where the annual suicide rate drops below 65 per thousand we would feel quite confident that we may be able to sell a few bonds back into the system".
We have to recognize the reality here friends. The global central banking cartel are going to
print forever. Let there be absolutely no misunderstanding about that. Because the only alternative is literally to allow the
greatest bond market crash in human history to occur. That would
destroy not only the entire global economic network but the bankers
themselves. Which more or less makes their long term itinerary a crystal clear no-brainer, does it not?
Until next time...
They can't print forever, there is a limit at which they can keep the game going, until they can get away with a system reset (very viable), or..the angry mob go nuts over rising prices.ReplyDelete
One thing is for sure...it won't be dull, but then...was it ever?
You've got that right my friend. I didn't even mention that aspect since it's an entire topic in itself... "How are the American people going to react as prices begin to really skyrocket higher?". It has become abundantly clear to me that with this move today where the Fed pegged its philosophy about money printing to 'employment' rather than 'inflation', they're subtly announcing that they have no choice but to print forever. Right now they're pretending both 'inflation' and the unemployment rate are taken into consideration. But in truth they've added the 'employment' tag because they can see that they're going to lose control of the 'inflation' aspect. They're laying the ground work ahead of time so that they can "justify" more printing in the future.ReplyDelete
But as you say "they can't print forever" without dire consequences and you're absolutely right about that. I have little doubt the day will come when the angry mobs will start doing the Syntagma Square routine in Washington, on Wall Street and in front of the Eccles Building... maybe all over the USA.
About the potential for a "system reset". Ultimately I think that's where it's headed. But I don't think we're going to get to that point for several years yet. I'm afraid that "system reset" you refer to will involve a new currency and perhaps a "global" one. I'd imagine the US dollar is going to be headed lower now for the entire duration of Obama's term if not longer. Somewhere around 4-5 years from now the deflationary cycle might start to unfold (in US dollar terms at least). I've been writing lately that I'm starting to think the unthinkable... that the central banks are going to succeed at kicking the can down the road until the day arrives when some sort of catalyst invokes the deflationary event in a completely uncontrollable fashion. When it finally triggers I think the whole damned financial system will collapse in a matter of days, not years. Weeks at the most. But now I'm starting to believe that day has probably been deferred for a few years.
And That's Checkmate BernankeReplyDelete
Personally I think he's painted himself in a corner with everyone basically throwing rotten tomatoes at him. It's officially anyone's best guess based on best guess numbers. I think the idea of "guidance" is now history, and that the uncertainty introduced into the financial world as a result will have the very predictable consequences that uncertainty normally brings to markets. That coupled with a complete loss of credibility that many are already commenting on, and we've moved into a world where all Bernanke gets are the rotten tomatoes as everyone completely turns their backs to the Fed.
The silver lining might be that markets get real once again with this latest "reality check".
It might just be me projecting though since I'm about as fed up with Plato's Wall as I could ever get.
Thanks for the links HR but neither one of them work for me. I'm not sure what's going on but when I click on an embedded video I'm getting a lot of messages these days that look like the screenshot below. Do you get these? I've got a hunch it's because I'm not in the USA. Same with the offer from Phoenix to get their special report. They can't process my email address which is in Canada. Can you get that report here?ReplyDelete
AR, couldn't agree moreReplyDelete
The reason why actual structural unemployment will remain elevated is because of the diminishing returns on innovation & technology
You are right about a sudden and massive collapse as the most likely outcome to the Fed's policies. An analogy is often made to ecological management such as forest fires or flood controls. Small fires allowed to clear out dead brush or watersheds allowing rivers to overflow actually make the systems stronger because a robustness is created which spreads out and smooths natural cycles. Conversely, control and stabilization that tries to eliminate setbacks will only serve to eventually increase fragility and cause fewer but more disastrous downturns.
I don't know about the lower dollar though. What they used to do in a summit conference or with a rate cut in the 80's now requires trillions of dollars of trickery more and more often. Surely we are near the point where the patient is too over-medicated.
Holy smokes, this is the caption under the graph you put up: "Fig. 1. Rate of innovation since the end of the Dark Ages. Points are an average over 10 years with the last point covering the period from 1990 to 1999. The smooth curve is a least squares fit of a modified Gaussian distribution to the data."ReplyDelete
It's showing that the number of innovative events per year per billion souls is diminishing toward zero. So it appears that a hundred years from now we ain't gonna be inventing anything new, giving a whole new meaning to the following brief conversation: "So what's new"? "Nothin".
I understand what you're saying about the dollar. I'm just saying that the dollar will continue to tank as a result of their policies until the deflationary bond collapse kicks off which would also begin as the end game to their policies. IOW, the dollar will continue lower until they lose the game.
I'm not certain though whether or not the patient is medicated to the point of death yet or not. So I think we just have to play it by ear over the next few months and just do our trading according to the charts as best we can, without relying on our "instincts" but rather on what we see the charts telling us. Best of luck to you bud :-)
I haven't seen that message. Haven't had problems either. The Santelli clip continues to play fine. TheReplyDelete
Graham Summers piece can also be found here: http://gainspainscapital.com/2012/12/12/and-thats-checkmate-ben-bernanke/
Weird stuff. Computers happen. ;-) Have you tried different browsers? Everything is updated? Happens on different machines?
Bernanke's Erroneous SolaceReplyDelete
FOMC: Bend Over America
the time. Well worth the time.
. . .no one wants to mention that the Fed Chairman has changed the rules ofReplyDelete
the game in the middle of the game but there you are; a backsliding
Federal Reserve Bank whose statements are only crafted for the moment and future
moments may be brief; we just don’t know. Apparently we have
transitioned to a “whatever is convenient” policy at the Fed...
That's the attitude I'm referring to. Getting people to think like that can't be good for business.
QE Ad Infinitum
Thanks for the response HR. You helped me get one of the issues solved. When I discovered that the Santelli clip works on IE but not on Firebox it suddenly dawned on me that I'd recently installed a tiny add-on called Adblock. When I disabled it the Santelli clip worked fine on Firefox too. So one down one to go.ReplyDelete
Thanks again :-)
Glad to be of help. :-))ReplyDelete
BTW as long as I'm here: Heads
up! December 2007 analog in play.
things have actual gotten weirdly worse since that study was published. The number of patents has gone way up, but only because of patent trolls. They now file more than half in the US
And to think I spend most of my day reinventing the wheel and never getting compensated for it!
Even if individuals or enterprises had anything to invent, the troll tax adds a heavy burden on innovation and development. Talk about a tipping point.
As for the market, I'm thinking we may see a divergence between the dollar and stocks similar to what happened in December of last year
Jeez... what a predator nation the US has become. I don't imagine it's much better anywhere else so I'm certainly not being condescending toward the USA Greener. The inefficiencies in the system as it exists today have become so great that it's nearly impossible to win or be productive at all now. An entire re-write of the entire legal system is definitely in order and I suggest you get right on that. I'll help you if you want.ReplyDelete
Did you know that in West Virginia it is actually written into law that it is illegal for a man to screw a sheep... unless it weighs over 40 pounds. Gotta give the poor thing a fighting chance I guess. In Montana there is still a law on the books which says that if you see a group of 6 or more native Americans it is perfectly fine to shoot them all... because according to law in Montana, "any group of Indians greater than 6 is deemed to be a war party". How insane is that?
On your assertion about the dollar and equities diverging... do you mean that they might start moving in tandem again? I don't actually recall what they did last December but it looks like the both went the same direction... up. So I get it now... I see what you're saying. You could be right.
I'm not sure if you've seen my article from last January on that topic. At that time I made the assertion that "inverse" could become permanent. Ever since I wrote that, that is what has happened. But as the article also points out stocks and equities can indeed move in tandem and have done so approximately half the time over the past 5-7 years. So you think they might do that again... both head lower together? Wouldn't that take a lot of folks by surprise? But it shouldn't, because I've shown this chart over and over again to provide evidence that it can happen.
On a side note, for some reason that article was a hit right off the bat and has been a "hot" article for 11 months running. I have absolutely no idea why it's so popular but it continues to get about the same number of reads every month... about 1500 per month. So right now it's heading toward 17000 reads and I can't even see where they're coming from because they're not coming from any one site in particular. The readers are just coming from all over the internet more or less. But it does point out that it's a topic that a lot of astute investors are at least aware of. Good for them!
Anyway... at this very moment it looks like your assertion might be very timely... you could definitely be right. Good eye my Green brother.
Sorry wasn't too clear. Last Dec the dollar and stocks rose together like you said. What I'm seeing is they drop together into the end of the month. Maybe a bounce early next week then more downside. I know this doesn't jibe with seasonal tendencies, so I'm playing it pretty carefully. If I'm wrong than it will be the same old merry Christmas I guess.ReplyDelete
And yes that was a great article. I also remember your earlier studies on the dollar/stock correlations over at the House of Trolls. Good stuff.
Well, its the tail end of the weekend, a few charts to throw at you AR.ReplyDelete
A vague thought on a possible H/S..to develop into summer 2013.
I note it, since my next targets are roughly 1200..then a big bounce to at around 1350/75. Maybe a RS ?
I hardly ever post them, but I kinda like the Keltner channels, they seem to capture the tops better than the bollinger bands.
Finally, a rainbow count chart. A 5 wave would certainly make things a lot easier this coming Jan>March period.
Anyway, I think whats clear is that a break under the November sp1343 low should in theory open the door to the low 1200s.
If I'm wrong, I'm going to be real disappointed, although I think I said that prior to 1345 being hit.
I just have very low confidence still. Too many nasty years, seen too many good traders...disappear, not that I blame them.
Good wishes for what will be the last full trading week of the year. Gods help us all, ;)
Just a quick note friends. For some reason Disqus has apparently taken it upon itself to 'disallow' readers to see who "liked" any particular comment. I did not make that change because I don't think it does any harm for us to see who likes our comments from time to time. It helps to form nice bonds and friendships in my humble opinion. Just so you know... I didn't make that change, Disqus did. I've deleted a few cookies including some from Disqus just in case one got corrupted or 'stuck' or something. That didn't help. But I'll fix it if I can.ReplyDelete
Haha, talk about respect between two bloggers. I certainly appreciate your visits PD.ReplyDelete
I find it very funny, but not odd, that I went to your site this weekend and posted one chart and made reference to others that have me thinking quite bullish these day... and you come to this blog and post your views for the bearish case. And it's respectful between the two of us. I like that. I value it, because it pays off big time to have an open mind and to listen to the arguments by other people who have good technical talents. I'm not just referring to yourself PD, but to others as well who post here. Great minds with some really good perspectives. And when they don't agree with my own opinions I'd be a fool to think I'm absolutely correct. You'd better believe I take a second look, and a third look when this happens. Right now I'm leaning bullish based on what we're seeing in the currency arena. But I'm also seeing what might be "a first" in nearly a year. And that is the fact that it appears that the USD 'might' be in the process of switching teams by relenting on it's insistence on moving inversely with equities. In other words, the USD 'might' be in the process of switching to where it will now move in tandem with equities. They could both drop together. In my opinion that isn't confirmed yet but this week should reveal what's going to happen on that front.
Cudos to Greenface who also spotted that possibility and mentioned it in a comment below.
On the other hand, the Aussie dollar is skyrocketing. The Yen is finally tanking already, but with the election of another prime minister, one who was in that position before and who loves to print, the decline in the Yen is probably going to accelerate in coming months. So of course the Aussie:Yen pair is going to continue to soar almost with certainty. And as all of us know, over the past many years (maybe a decade or longer) when that pair is rising it has flashed the green light for "risk on". Equities should soar if all else is equal.
But my eyes are wide open PD. I'll be watching closely and I'm ready to switch in a heartbeat if I see the signals I would consider as offering a bit of confirmation that we're heading lower. One of those signals might be a 30 handle gap lower one of these days and I sure as hell don't want to see that one.
The central banks have so messed up the relationship, I can't really try to suggest anything about that.
As for a major 30pt gap lower....certainly not this side of Christmas, and possibly not until mid January.
I was just watching Oscar Carboni, and he is seemingly blazingly bullish again. Hmm
oh noes...futures suggesting we'll open sp'1435..a mere 3pts shy of the FOMC peak.ReplyDelete
Its looking like we'll be back in the 1440s tomorrow, in which case...right back where we started. Urghh.
I see a few out there touting 'fake out', but really..if it is, are we going to see a reversal beginning in Christmas week?
Surprisingly, I've not yet been put on suicide watch. Gods help the bears tomorrow!
I don't think it's a fake out PD, certainly for the reason you mentioned as well as the fact that in their latest statement the Fed made it perfectly clear that they intend to print and buy up the bond markets for the next thousand years... or until the unemployment rate in the US drops below 6.5%... whichever comes first. But then again, the official statement literally said "AT LEAST as long as the unemployment rate is above 6.5%". So to think that all of a sudden that much more money somehow isn't going to make its way into the equities markets just makes no sense to me. I think that as time progresses less and less of the weekly offerings of cash will come into the equities markets but it could take months and months before the effectiveness of QE on the stock markets is actually and truly exhausted. I think we'll get signals from the bond markets before that happens. Imagine that... bonds and equities tanking together. I think that's what will eventually happen if and when we ever see a true deflationary phase get rolling.ReplyDelete
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