Federal Reserve Blows More Bubbles

The Fed blowing bubbles … FDR already tried this disastrous crap, and all it did was result in huge debt and no economic situation at all. Why are we repeating FDR’s failures? Printing money does what, isn’t that the stuff of turd world country dictators? It sure isn’t what free people do by any means.

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.

It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations. Allow interest rates to rise to equal the risks in the economy. Allow bad debts to be liquidated so we can build on a firm foundation. Stop printing money to benefit the government and big banks. Restore sound money to the economy and the American people. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.

More here …

But that’s not Obama, who is our control freak pretty boy hollyweird pressy… Round and round we go, adrift on a endless sea of fake government numbers and nowhere to go ….

Pump, Pump, Pump: Fed Keeps Interest Rates Low, Continues Bond Buying Program

There will come a time when interest rates must go up. And then we will have to pay, pay, pay, for all of Obama’s reckless spend, spend, spend. It’s just not sustainable. If you raise taxes it kills the economy. The only choice is cut, cut cut!

Someone tell the Fed, you cannot print your way out of debt.

The Federal Reserve held fast to its ultra-accommodative monetary policy Wednesday, solidified by what board members described as an economy weakened by fiscal policy.

With the Fed now openly warning that there may actually come a time when the ‘flow’ stops; the most recent Treasury Borrowing Advisory Committee (TBAC) report has some concerning statistics for those change-ridden hopers who see a smooth Fed exit, deficit-reduction, and blue skies ahead.  While they are careful not shout ‘sell’ in a crowded bond market; hidden deep in the 126 page presentation are two charts that bear significant attention. The first shows what TBAC expects (given the market’s expectations) to happen to interest rates in the US as the Fed ‘exits’ its QE program (taper, unwind, hold) – the result, the weighted-average cost of financing for the US government will almost triple from around 1.6% to around 4.3% over the next ten years. But more problematic is that even with CBO’s rather conservative estimates of the growth in US debt over the next decade the USD cost of financing will explode from around $205bn (based on TBAC data) to over $855bn. Still convinced the Fed can exit smoothly?

But with the sheer size of debt now (and growing), that will balloon the absolute cost of servicing US debt to over $850bn per year …

And just what happens to all those retirees – who need yield – who are being herded into stocks when Treasuries pay over 4.5%? Would seem bullish for bond flows … think Japan… It worked for them, right.

This is technically called bankrupt country.

Fed Projects High Unemployment Into 2015

OK so today the Fed says they are going to keep on printing. Until the economy improves.

The latest on the recovery.

WASHINGTON– The Federal Reserve said Wednesday that the U.S. economy has strengthened after pausing late last year but still needs the Fed’s extraordinary support to help lower high unemployment.

In a statement after a two-day meeting, the Fed stood by its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent, as long as the inflation outlook remains mild. And it says it will continue buying $85 billion a month in bonds indefinitely to keep long-term borrowing costs down.

Read more at manufacturing.net …

But apparently they didn’t tell the same story to those who know better. You see how it works? Differing stories for different audiences.

First Record Dow High, Then Record Gas And Grocery Prices

First Record Dow High, Then Record Gas And Grocery Prices

Gary Gibson writes:

Ben Bernanke must have been smirking and nodding smugly all day yesterday. The Dow hit an all-time high at 14,286 and closed at 14,253.77. What’s even more impressive is that this is double where the Dow stood just four years ago. And it only took five and a half years and previously unmatched amounts of new money creation to do it.

The mainstream media would like you to believe the rising Dow is somehow tied to an improving economy. ”Look,” they say, “Housing and auto sales are rising…home prices are recovering…companies are hiring more…Even you skeptical radicals with your free market obsession have to admit that the central bank is doing the good it’s supposed to do!”

In the same breath, however, the mainstream media is suprisingly candid about the real reason the stock market is at record highs. From the Associated Press:

“Stocks are also benefiting from the economic stimulus from the Federal Reserve and other global central banks.

“Under a program called ‘quantitative easing,’ the Fed has bought trillions of dollars of bonds, pushing up their prices and sending their yields lower. That makes stocks more attractive to investors than bonds and keeps interest rates low throughout the economy, encouraging investment and spending.

“The U.S. central bank began buying bonds in January 2009 and is still purchasing $85 billion each month in Treasury bonds and mortgage-backed securities.”

Guess Who is Sticking With Treasury?

What are the primary dealers doing…

Zero Hedge writes:

If one reads sellside research (especially that of Bank of America or Goldman), if one listens to comedy-finance fusion TV channels, if one reads newspapers, one can’t help but be left with the impression that everyone and their grandmother is now dumping Treasurys and buying stocks. Why – because this is a key part of Bernanke’s latest masterplan (which is the same as all his previous “masterplans”, which have failed so far about 4 times previously) to force what little retail investing capital is left out there out of the safety of bonds (return of capital), and into stocks (return on capital). The catalyst? This time, for real, central planners will generate enough (controlled) inflation to create losses for anyone holding long duration paper (such as the Fed of course, whose DV01 is the biggest in the history of the world at over $2 billion, but we digress). So just to test whether or not this was indeed the case, we decided to go to the source data for what the smartest money of all is doing: the 20 or so (RIP 21st PD MF Global) primary dealers. After all, if everyone is dumping Treasury’s over fears of an imminent surge in yields, and rotating into stocks, it would be them right? Well, the result is charted below: we present it without commentary.

When Infinite Inflation Isn’t Enough

Peter Schiff Gives us a refresher:

If no one seems to care that the Titanic is filling with water, why not drill another hole in it? That seems to be the M.O. of the Bernanke Federal Reserve. After the announcement of QE3 (also dubbed “QE Infinity”) created yet another round of media chatter about a recovery, the Fed’s Open Market Committee has decided to push infinity a little bit further. The latest move involves the rolling over of long-term Treasuries purchased as part of Operation Twist, thereby more than doubling QE3 to a monthly influx of $85 billion in phony money starting in December. I call it “QE3 Plus” – now with more inflation!

Inflation By Any Other Name

In case you’ve lost track of all the different ways the Fed has connived to distort the economy, here’s a refresher on Operation Twist: the Fed sells Treasury notes with maturity dates of three years or less, and uses the cash to buy long-term Treasury bonds. This “twisting” of its portfolio is supposed to bring down long-term interest rates to make the US economy appear stronger and inflation appear lower than is actually the case.

The Fed claims operation twist is inflation-neutral as the size of its balance sheet remains constant. However, the process continues to send false signals to market participants, who can now borrow more cheaply to fund long-term projects for which there is no legitimate support. I said it last year when Operation Twist was announced, and I’ll continue to say it: low interests rates are part of the problem, not the solution.

Interventions Are Never Neutral

Just as the Fed used its interest-rate-fixing power to make dot-coms and then housing appear to be viable long-term investments, they are now using QE3 Plus to conceal the fiscal cliff facing the US government in the near future.

As the Fed extends the average maturity of its portfolio, it is locking in the inflation created in the wake of the ’08 credit crisis. Back then, we were promised that the Fed would unwind this new cash infusion when the time was right. Longer maturities lower the quality and liquidity of the Fed’s balance sheet, making the promised “soft landing” that much harder to achieve.

Read the rest…

The National Debt: $16 Trillion Dollars Of Moral, Cultural And Political Decay

Forbes writes:

Wow! We’ll soon cross Sixteen Trillion Dollars in Federal Debt!

S-i-x-t-e-e-n T-r-i-l-l-i-o-n D-o-l-l-a-r-s. That’s a lot of vote buying even for Washington. Is this ruin? Have we indentured our children into servitude? Solomon warned borrowers will be slaves to their lenders. Add $120 plus trillion in unfunded forthcoming liabilities and, well, we’re doomed.

Yet, as significant as this looks, and sixteen trillion of anything cannot be insignificant, the economic repercussions are the least of America’s worries. We still finance this cheaply. Rates on Treasuries remain low. Moreover, America endures as the world’s preeminent economic engine.

At least before Obama and his anti-Colonialist policies, and making of dreams from his father … you went and watched the watched the movie, didn’t you? If so, now you know …

Obviously, debt weighs heavily on markets, especially the spending which spurred annual deficits exceeding $1 trillion. Government intervention smothers more gainful private pursuits. As Washington nonchalantly politicizes capital the economy suffers. Private actors would invest far better than politicians bribing the electorate.

As resources filter through the state’s machinations, liberty and prosperity are sacrificed to political ends. Massive debt is economically bad, really bad, and perhaps even hopeless; but much, much worse is what this reveals about America’s moral, cultural and political decay.

The day the DNC Convention opens … sky high debt.

Fed Meeting: Look, if Things Don’t Improve, We’re Going to Need More Stimulus: Print Like Their Is No Tommorrow

Do you get the impression the Fed has done went and run out of Ammo? There are limited things interest rayes can do/ Do they know?

What’s the current rate for borrowing, 0%. Why borrow or expand your business, all it will do is drive up your taxes.

Does the Fed understand the Laffer curve? The what?

Yesterday, Federal Reserve officials spoke with increased urgency at their last meeting about the need to provide another round of monetary easing to “boost” the U.S. economy.

Many members felt further support would be needed “fairly soon” unless the economy improved significantly, the minutes of the July 31-Aug. 1 meeting show. The minutes didn’t say what steps might be taken. The boldest move would be to launch a new program of bond buying to try to lower long-term interest rates to encourage more borrowing and spending.

“[A]dditional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” the Fed said in minutes to its July 31-August 1 meeting.

Print!!! What you don’t have just borrow. Can’t wait for the audit, and then we will see what the robber barons have done to us.

The minutes show many officials favored pushing the timetable for any increase in record-low short-term rates beyond the Fed’s current plan of at least late 2014. Many economists think the target will be extended to mid-2015. This language might be altered at the September meeting, the minutes indicate.

Early reaction in the stock market was positive but muted. The Dow Jones industrial average rose modestly. It was down about 70 points at 2 p.m. Eastern time, when the Fed minutes were released, and down 30 points several minutes later. The yield on the benchmark 10-year U.S. Treasury note dipped slightly, to 1.74 percent from 1.75 percent earlier.

Maybe you can try gun barrel lending. I don’t think anybody has tried that. Maybe borrow or we use the bayonet?

This is pretty dramatic …

Euro tanks as dollar rises, after fed speaks …

We find there are limits of what monetary polity can do.

Don’t just do something! Sit there!

That’s the approach the Federal Reserve seems to be taking. Faced with a flow of data that indicates a slowdown in the rate of growth, the Federal Open Market Committee announced Wednesday that it was essentially standing pat. And in his press conference yesterday afternoon, Federal Reserve Chairman Ben Bernanke didn’t signal that bold new initiatives would be forthcoming anytime soon.

And that makes sense, says Bob Brusca, chief economist at FAO Economics in New York. “They’re not doing much,” he says in the accompanying interview. “But the Fed doesn’t have much arrows left in the quiver.” (Check out his blog here.)

The central bank did announce that it would continue “operation twist” — i.e. selling short-term bonds that it owns and using the proceeds to buy longer-dated bonds in the hopes of bringing long-term interest rates down. The Fed said it would also plow the proceeds of retired mortgage-backed securities into purchasing new ones. But it isn’t conjuring up any new money to inject into the system.

Fed Reserve Commits an Additional $267B to ‘Operation Twist’

QE3 is on … Wasn’t there someone who once said the U.S. Treasury will never monetize the debt. OK so why is the Fed now buying up Obama’s debt.

WASHINGTON (The Blaze/AP) — The Federal Reserve announced Wednesday that it would commit an addition $267 billion to “Operation Twist,” a program intended to drive down long-term interest rates. The Fed cited weak hiring and lousy consumer spending as reasons for committing this additional “support” to the economy.

But what is “Operation Twist”? As reported earlier on The Blaze:

The plan … resembles a program the Fed used in the early 1960s to “twist” long-term rates lower relative to short-term rates.

[…]

Under its plan, the Fed will extend the average maturity of its holdings from six to eight years. The Fed has directed the New York Fed to buy Treasurys with remaining maturities of six to 30 years, and to sell an equal amount of securities with maturities of three years or less.

The Fed announced that it will continue the program through the end of the year, adding that it might help spur more borrowing, spending, and growth.

The Fed is manipulating interest rates, so Obama can continue to try and finance U.S. debt with low interest rates. Can you imagine what will happen if interest rates go up now?