That Janet Yellen is quite a GUY! Part 2

“Give me control of a nations money and I care not who makes its laws”
~Mayer Amschel Rothschild

The decision made by the Federal Open Market Committee (FOMC) today is fundamental to the direction of the USD and the US economy. The market responds to the FOMC meetings and anticipation of their decision to raise, extend, or lower the Federal Funds interest rate. The FOMC also makes the decision to increase or decrease money supply. We have seen them increasing money supply since 2008 purchasing long term treasury and mortgage backed securities and quantitative easing (QE) and it has caused interest rates to fall to zero percent, the lowest rate possible. The FED spent eighty-five billion a month buying up those securities. In the last few years the have cut back by ten billion a month. The playbook the FED has been using has been misleading trying to fight economic weakness by using a synthetic form like (QE).
If the FED wants economic growth, they decrease rates. Too much of anything is never good; going to any extreme is very bad. An economy that grows too fast leads to inflation. The increase in rates would slow the economies growth, too slow leads to a recession. Any change in the Federal Fund interest rates will impact us all; even the domestic public will feel the effect with the cost of credit. It will impact the direction of the USD, and how the US economy performs overall. Our economy is barley a float and I am being generous in that statement
Seven years since the crash, Yellen may be forced into a hike; the longer it takes for the inevitability of increased rates the harder the recovery will be. The impact would change everything on a global scale. Could the FED even risk a hike? They will have to raise them eventually, and what better time all the numbers are lined up. The USD is in popular demand. Everyone wants USD this leads to an over stimulated demand. Fact is, finding USD counter parties for swaps is difficult, and a raise could help. If they don’t raise people may abandon the USD, even though the FED would never admit that. To raise or not to raise that is the question. Since the FED is independent what is best for them? The FEDs choice really has nothing to do with the economy and stability of monetary polices. This is about the bubble of government debt that cannot be serviced at a higher rate, even if the US had the tax base to do so. The wages report proved we can’t afford to service the debt, if those numbers are even close to the truth. It is a lose-lose situation.


The anticipation has begun. We already see investors who bought high price stocks pulling out before the FOMC meeting. This time around, bonds are no longer a safe haven; the European Union (EU) and the FED have set the market up for a crisis, a historical bond market collapse. The mass (QE) in Japan and Europe has created a runaway dollar making real US economic recovery impossible. The FED is running out of options. Force the domestic public to buy treasury debt and get low yields bankrupting the people. It could be the reverse bankrupting the FED with high rates in interest and mass retracting of domestic cash availability. The economic activity would be crushed by the Treasury’s detraction of five percent off the GDP. Under a mandate, the FED has to pay any profit that acquires from the interest rate increase back to the Treasury so government pays zero in FED held bonds anyway so the raise would not really benefit the FED or impact the government the way one would think. They keep talking about a small rise. Just a one percent rise in interest on debt would total around one hundred and eighty billion dollars added to the FEDs interest. If US Treasury bill becomes too pricy for the government, they will need to be bailed out by the FED and then the FED buys up those expensive bonds. This buying would be a domino effect of disaster, starting with forcing the USD in to the system by QE4, then hyperinflation, the US dollar would be buried. Everything would collapse however all the debt would be gone. This may be the idea, they know much more information than we can even imagine, this could be the “master plan”, the real reset right around the corner.
Will they monetize debt and risk mass inflation? They would piss off every bondholder in the world causing unpredictable consequences. I personally don’t think they will raise rates, not yet and probably not in June. They could go lower, however negative rates are discouraging to investors. They would issue QE4 before they lower them. The risk of negative rates would rip apart the US defecate, the financing costs would be immense. Negative rates would show just how bad it is and I doubt the United States would pay a premium for foreign investors to have cash in the US. If recovery is possible, true economic recovery will never happen with negative rates, and they know that. The increase would cause a political frenzy, voters who have never even thought the raise could effect them will be looking at all the politicians demanding an explanation looking for someone to blame, the derivatives market implodes and it becomes clear that these trusted politicians have been piling the bank derivative liabilities on the United States taxpayer.
The FED has a limited historical perspective on what a healthy functioning financial system really looks like. Have we seen a healthy economy? Do we have a clue what normal bonds look like? An economy where we put money into a CD or account and get paid to save our money. To better our economy as a whole, a normalized economy. The years of manipulation and bailouts have desensitized people into bad decisions with their investments that didn’t even make sense to begin in the first place. Bonds and stocks have been pushed by the zero percent interest rates at unsupportable levels.
The market is overvalued and if the FEDs decision were based on real data as much as they claim, the rates would have increased a while back. We already see investors who bought high price stocks pulling out before the FOMC meeting. Yellen may push the decision back till June in realizing the massive momentum of equities sell offs. The market has already reacted. With little regard for yields, big money ran out and bought up overvalued bonds, praying the FED will extend the decision till June. This time around, bonds are no longer a safe haven. The European Union (EU) and the FED have set the market up for a crisis, a historical bond market collapse. Manipulation of bond rates from trillion dollar swaps has been the course were on, it would be harder to reverse it now. The raise would cause the bond market meltdown and a market crisis. Bonds have been the life support for banks. If they rise rates an even a quarter point, like they are implying. On a one percent yield, big money would dump all bonds paying at one percent and buy up the one and a quarter. It would cause instability with the bond market, and this bubble is getting bigger and bigger. The end of QE caused an international tsunami into US bonds. They may not have a book that can help this time.
Truth and lies move the market the most; sadly, one isn’t different from the other, the truth, or the lie. It doesn’t matter what’s real or not because human behavior is what you trade on or invest in. Behavioral, social, Industrial, all psychologists and analysts, teams of them all put together with specialists in marketing just to predict what you do, say, how you feel, live, dress, but most of all…what you will spend and spend it on. Let’ say for instance you spend on the market, well they know what you are going to purchase, sell or watch and “they” the big money bet on it. Government runs our media and how and what we believe to be real, news, trends, politics and finance. The decision starts today and with the housing numbers so dismal it looks like an extension and more “patience” is in order, how convenient.

It will be a panic driven recovery