Deep in the darkness of the FED dungeon, one tiny light comes on.

Stay off of small airplanes and get a food taster is the only thing I can say to him.

Quote:

All the BS that's fit to shill.

Love it!

Yeah - they're stupid. For a loooong while I thought they were intelligent but malevolent. Now - I'm starting to understand that they really are just the blind leading the blind.

We're in for some tough times and I think they begin in earnest after the elections.

Whenever I hear of "the Fed setting rates" I wonder what the rates would be like under complete free-market conditions. (Also: no FDIC). This talk just begs the question: Would we have the same shape of yield curve albeit shifted upward? Would it be steeper?

My interpretation of the recent Fed meeting was that the will do more QE in the event of deflation so as to attempt to keep prices from dropping. I am generally bearish.

This took him far too long. I got tired of apologizing for him, being the Dallas Fed and all. I also escaped Dallas, since my views on the city and the metro area are, umm.. generally bearish.

It's sad that politicians who run the country, know so little about how things really work.

The Fed can admit its errors and make restitution by cancelling the treasury debt it holds. We're going to have an artificially inflated money supply anyway, you want that along with a huge debt? And those of you talking about "withdrawing liquidity", be honest, when has that ever happened? Why, since the Fed was launched, has the dollar lost 95% of its value?

They blew the bubble in the wrong place - housing. It's the knock out punch.

The error these clowns make is that you can blow bubbles but you can't control where it happens.

Some one else knows what's going on , watch this - http://www.youtube.com/watch?v=3PvYGG22N....

Thx Cmalbatros, that was awesome.

When a certain prestigious Manhattan law firm engineered the merger of Citicorp and Travelers Group, they weren't bothered by the illegality of breaking Glass-Steagal.

Why?

Because they knew that the (D) & (R) hegemone is owned by the Military Industrial/Banking Complex™, as is the entirety of the USA.

Of course immediately following this illegal Act, the politicos inside the beltway were giddy to repeal Glass-Steagal, which directly is responsible for the unfolding economic horror We the People are living in today...

Not 1 in 10 'MeriKans to this day can understand simple truths as this; They continue to identify as either Republican or Democrat, rather than thinking for themselves as true Americans.

Moreover, some FED Reserve puppet in flyover country, who still is processing information like a retarded mongoloid (given the multitude of data available to him), will not have any impact on the multi-generational looting scheme being perpetrated to this day by the Fraud St./District of Criminals Cabal.

"Moreover, driving down bond yields might force increased pension contributions from corporations and state and local governments, decreasing the deployment of monies toward job maintenance in the public sector."

Might? I'd say it has and it hasn't reached its full impact yet. Just yesterday
the city of Tampa announced its budget. The city had to increase its pension contributions by $29.3 million out of a $787 million budget. 39 employees were
laid off and 100 vacancies left unfilled. It would have been worse but the city
used $12 million from its reserve. Next year that won't be an option. This is happening all across America.

I have to question this portion near the bottom

fisher wrote..

Another issue to be considered before embarking on a program to purchase additional long-term assets is whether such programs violate the basic tenets of the bedrock Bagehot principle, named for the 19th century British leader who “wrote the playbook” for central banking. Walter Bagehot advocated that when responding to a financial crisis, a central bank should lend freely at a penalty rate to anybody and everybody on good collateral. This was the principle we followed in addressing the Panic of 2008, and it was the right thing to do. While none of us are satisfied with the current pace of economic expansion and job creation, presently it is not clear that conditions warrant further crisis-like deployment of the Fed’s arsenal. Besides, it would be difficult to build a case that the main recipient of further credit extensions, namely the U.S. Treasury, or borrowers whose rates are based on historically low spreads over Treasuries, have difficulty accessing the capital markets.

So I confess that, at least in my mind, it is not clear that the benefits of further quantitative easing outweigh the costs, especially if the economic scenario I outlined at the beginning of these comments obtains.

What I envision from the current vantage point is an anemic recovery, but not one that slips into reverse gear. Thus, barring an unforeseen shock, I have concerns about the efficacy of further expanding the Fed’s balance sheet until our political authorities better align fiscal and regulatory initiatives with the needs of job creators. Otherwise, further quantitative easing might be pushing on a string. In the worst case, it could flood the engine of the economy with gas that might later ignite inflation.

Of what good collateral and what high interest rates was he speaking? What I have seen in the covering of junk from Bear Stearn, the purchase of unmarketable mortgage securities and the lending at zero. Is the guy on an LSD trip? To think I have an idiot like this in a high position living 20 miles away. You might note the fact the Fed is doing a switcheroo, trading mortgage principal for treasuries. The reason they are doing this is the banks didn't have any good collateral. All they had was make believe money, based on the creditworthiness of their own debtors and the entire system was cross collateralized with deposits they couldn't support. This means the banks themselves were a pile of liquid crap.

Next, we aren't talking about an ignition of inflation, but the total collapse of the credit. Conventional inflation is created by the private borrowing of credit to expand purchases. What these guys are doing is a game of Russian Roulette, a literal display that no one is really going to pay their debts and we are going to paper over all of it. It appears the only people that are liable are the people that have to file crap with the IRS. They aren't the ones with access to free money.

Fisher does indicate there are going to be some mad people out there when they figure the Fed has ****ed them out of their life savings. It is amazing that people have to choose between buying assets that are at best financial scams or sit in cash and let these crapshooters steal their money. All I can say is hopefully you can get your cash back at zero, while these junk bonds, sold by outfits that are doing insane things like buying their own stock back with the proceeds are going to next to nothing. **** the thrifty, cover up the deeds of thieves. Hell of a combo. There might be some big hooks out there to put up some of these guys asses and troll with them to fish for sharks. Jumbo shrimp any of you sharks?

If the fed withdrew liquidity it would raise the value of the dollar.

Is there a practical limit limit to how far they can go? Is it possible for them to deflate the money supply until the dollar is restored to it's pre-fed value?

The Fed didn't blow a bubble anywhere. They didn't have the power to blow a bubble. The Clinton adminsitration with the aid of Wall Street blew a bubble and we have been stuck with the after effects ever since. When Clinton brought in Rubin, he started the bailouts. We already had impetus of declining long term interest rates (anyone argue the US economy was going to stay intact with 9% treasury rates of 1990, you need to do the finance)and the recapitalization of the S&L's. Mexico imploded and GS came in. GS imploded Mexico, as the money left the country through the wires and the guy who pulled the crap took over and bailout out the hole his outfit created. Then we bailed out LTCM, which had bet big on Russian financials and had played the bollinger band theory to the max, that risk always corrects from a limit. The Fed was accomodative, but the bubble had already been blown.

How many times does a guy have to show up and fart in a place and people wonder what happened. The biggest bomb in this entire matter was Citi. Who set up Citi? Weill and Rubin set it up. Rubin and Summers stomped on Born and stopped the regulation of derivatives, which were the liquidity and risk transfer machine of the next 10 years. The Fed actually had little to do with any of this.

What the Fed does is allow for the discount of good paper for liquidity or cash. It does more, but the idea that long term interest rates follow the dictate of a group that is about as indecisive as a school girl is nonsense. The banks were out of good paper and had been out for decades and were using shell game swapping to keep liquid.

What the Fed is doing now is different. They have set the system up where the banks don't have to borrow any money. But, there are other factors. You might recall the interest rates on short term t-bills went to zero a lot faster than the Fed. T-bills are cash and those that had gotten to cash were in the catbird seat and didn't need any pat on the back. In fact, who was going to move out of cash into a house on fire? And, those with cash of any significance, who was going to put it in Citi? Or BAC? Or FNMA securities? All those were collateralized by their own paper, ala Wachovia.

I know this goes back farther, but then again, we are likely looking at a long term progression of a debt cycle, but maybe the terminal stage. Remember, there were 4 or 5 tricks pulled in the last 100 years, starting with the Fed, then the revaluation by FDR, then Bretton Woods, then Nixon closing the gold window, then Volker. Up to the 1970's, 3% to 4% was a decent return on money. When we got back to 3% in the 1990's, it was totally unsatisfactory. Volker strangled the entire US economy in the 1980's. There is a lot of talk about what happens now if rates go up 3%, but they rammed rates from 7% to 14% and kept them there. That did not break the back of inflation, but instead upset the cost of public finance, destroyed the housing market and created an expectation of double digit returns forever. The 1990's mania was as much tied to Volker as to Greenspan. The US economy would have collapsed in a pile of rubble had that policy gone on much longer.

Little is said about the destruction of the US financial system in the 1950's and 1960's. The US had collapsed by 1971 when the gold window was closed. These policies we bitch about so much today were in full swing back then. The Fed oversubscribed their gold supply and there was nothing done to cut down on overseas speculation and predatory lending that was done with borrowed money and served to debase the currency. We have pretty much been stuck with a compound debt bubble ever since. And, I will give you a clue. Does debt compound faster at 14% or at 1%?

The problem today is one I think most of us know, the debt game has run its course and the Fed and government don't want to recognize that. Instead, they are choosing a bigger shot of dope, more of the same and they are empowering the debt peddlers even more. We have reached the point where debt cant be paid at zero

Newsboy - I think that phrase should be : Military/Medical/Banking Complex. Industry has been steadily whittled down since Eisenhower's day.

Here's why the Fed had better be building a bunker somewhere...look how the guy lays it out in terms that J6P will understand and connect immediately.

http://theeconomiccollapseblog.com/archi....

Rampant Inflation In 2011? The Monetary Base Is Exploding, Commodity Prices Are Skyrocketing And The Fed Wants To Print Lots More Money

Are you ready for rampant inflation? Well, unfortunately it looks like it might be headed our way. The U.S. monetary base has absolutely exploded over the last couple of years, and all that money is starting to filter through into the hands of consumers. Commodity prices are absolutely skyrocketing, and it is inevitable that those price increases will show up in our stores at some point soon. The U.S. dollar has already been slipping substantially, and now there is every indication that the Fed is hungry to start printing even more money. All of these things are going to cause a rise in inflation. Not that we aren't already seeing inflation in many sectors of the economy. Airline fares for the holiday season are up 20 to 30 percent above last year's rates. Double-digit increases in health insurance premiums are being reported from coast to coast. The price of food has been quietly sneaking up even at places like Wal-Mart. Meanwhile the U.S. government insists that the rate of inflation is close to zero. Anyone who actually believes the government inflation numbers is living in a fantasy world. The U.S. government has been openly manipulating official inflation numbers for several decades now. But we really haven't seen anything yet. As increasingly larger amounts of paper money are dumped into the economy, we are eventually going to see the worst inflation in American history. The only real question is how far down the road are we going to get before it happens.

Take a few moments and digest the chart below. It shows just how dramatically the U.S. monetary base has been expanded recently....

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Up to this point this dramatic expansion of the U.S. monetary base has not caused that much inflation because U.S. government borrowing has soaked most of it up and U.S. banks have been hoarding cash and have been building up their reserves.

However, this situation will not last forever. Eventually all this cash will make its way through the food chain and into the hands of U.S. consumers.

But what is even more troubling is the dramatic spike in commodity prices that we have seen in 2010.

Wheat futures have surged 63 percent since the month of June. Wheat has recently been selling well above 7 dollars a bushel on the Chicago Board of Trade.

But wheat is far from alone. In his recent column entitled "An Inflationary Cocktail In The Making", Richard Benson listed many of the other commodities that have seen extraordinary price increases over the past year....

*Agricultural Raw Materials: 24%

*Industrial Inputs Index: 25%

*Metals Price Index: 26%

*Coffee: 45%

*Barley: 32%

*Oranges: 35%

*Beef: 23%

*Pork: 68%

*Salmon: 30%

*Sugar: 24%

*Wool: 20%

*Cotton: 40%

*Palm Oil: 26%

*Hides: 25%

*Rubber: 62%

*Iron Ore: 103%

Now, as those price increases enter the chain of production do you think that there is any chance that they will not cause inflation?

Do you think there is any chance at all that producers and retailers will not pass those costs on to consumers?

It is time to face facts.

Those cost increases are going to filter all the way through the system and your paycheck is soon not going to stretch nearly as far.

Inflation is coming.

Many savvy investors understand what is going on right now. That is one reason why gold and silver are absolutely soaring at the moment.

The price of gold set another record high on Friday for the sixth straight day.

Silver has also experienced extraordinary gains recently, and the U.S. Mint has officially raised their wholesale pricing above spot on American Silver Eagles from $1.50 to $2.00.

Meanwhile, there are even more rumblings that the Fed wants to print lots more money. On Friday, the president of the Federal Reserve Bank of New York, William Dudley, stated that the high unemployment and the low inflation that the United States is experiencing right now are "wholly unacceptable"....

"Further action is likely to be warranted unless the economic outlook evolves in such a way that makes me more confident that we will see better outcomes for both employment and inflation before long."

During his remarks, Dudley even mentioned what the effect of another $500 billion increase in the Fed’s balance sheet would be.

Now keep in mind, this is not just another "Joe" who is making these remarks.

This is the president of the Federal Reserve Bank of New York - the most important of all the regional Fed banks.

In recent weeks it is almost as if you can hear Fed officials salivate as they consider the prospect of flooding the economy with even more money.

Up to this point, very little has worked to stimulate the dying U.S. economy. The Federal Reserve and the Obama administration are getting nervous as the American people become increasingly frustrated about the economic situation.

So will flooding the economy with even more money and causing even more inflation do the trick?

Well, no, but what inflated GDP figures will do is enable Obama and the Fed to say: "Look the economy is growing again!"

But if a flood of paper money causes the value of goods and services produced in the U.S. to go up by 5 percent but the real inflation rate is 10 percent, are we better off or are we worse off?

It doesn't take a genius to figure that one out.

So don't get fooled by "economic growth" numbers. Just because more money is changing hands doesn't mean that the U.S. economy is doing better.

In fact, many American families are going to be financially shredded by the coming inflation tsunami.

Just think about it.

How far will your paycheck go when a half gallon of milk is 10 dollars and a loaf of bread is 5 dollars?

Already, it is incredibly difficult for the average American family of four to get by on $50,000 a year.

So how much money will we need when rampant inflation starts kicking in?

And do you think that your employers will actually give you pay raises to keep up with all of this inflation?

Not in these economic conditions.

In fact, median household incomes are declining from coast to coast all over the United States.

Earlier this year, Ben Bernanke promised Congress that the Federal Reserve would not "print money" to help the U.S. Congress finance the exploding U.S. national debt.

Did any of you believe him at the time?

Did any of you actually believe that the Federal Reserve would act responsibly and would attempt to keep the money supply and inflation under control?

The reality is that the entire Federal Reserve system is predicated on perpetual inflation and a perpetually expanding national debt.

Whatever wealth you and your family have been able to scrape together is going to continue to be whittled away month after month after month by the hidden tax of inflation.

And unfortunately, as discussed above, inflation is about to get a whole lot worse.

So is there any room for optimism? Is there any hope that we will not see horrible inflation in the years ahead? Please feel free to leave a comment with your opinion below....

Yep, this would be the deflationary scenario where the US$ is weak, not strong.

Smart = taking your lumps ASAP so as to protect your future.

DUMB = injecting credit-based system to FORCE inflation upon people whose wages are flat to down thereby increasing your default rates and exacerbating the problem!

Anti, the Warfare Industry is alive and doing quite well, long live the empire!

Getting pretty busy. They might have to buy a second truck.

Maybe a second plane too!

Poor ol' Ben Bernanke ... he's been trying to get some inflation going via economic growth and all he's accomplished is to unleash the speculators (was the housing speculators then the oil speculators then the equity speculators and now it's the agricultural commodity speculators) ... one bubble after another. If I were him, I'd be tearing my hair out!

By the way, I wonder if Bernanke in his oversight of the national banking system was aware of fraudulent foreclosures perpetrated by his banksters? Or will it come as a big surprise [a/k/a, plausible deniability) like the housing bubble?

Now, if we could only get Bernanke to convince his bankster friends that there's big money to be made by breaking up their too-big-to-fail institutions into smaller pieces.

Which is why 0% is ridiculous. 1% is CHEAP - even at the institutional level. 0% is just asking, no BEGGING for trouble.