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Tuesday, July 15, 2014

Understanding the Fed, Where Things Stand & Being Lobsters

Today's topic is the Federal Reserve..

We here at A&G are constantly striving to explain the corruptive complexity which is the Fed in as simple clear and concise a manner as possible..

Because our readership keeps growing leaps n' bounds and we have no way to know or assume what our followers know prior to visiting, we make another attempt to explain where we are where the Fed is concerned..

And to those who already may know the truth of things, stick with today's post.. There may be a nugget or two of new info for you..  who knows..
So let's begin..

To really understand the Fed, you must accept two realities:

1)  The Fed is a money-printing machine that wants stocks to go higher.

2)  The Fed illustrates - orchestrates - telestrates all its movements to Professional "capital 'I' investors while keeping 'mom & pop' small lower-case 'i' investor completely in the dark...

And that’s pretty much it..
Every other statement one utters regarding the Fed is only accurate for a brief period of time as the Fed continually changes its goals, thresholds, and responsibilities almost every other month.

Since March, 2009 only two things thing have been constant:

1)   The Fed has continued to print money expanding its balance sheet.

2)   Stocks have moved higher.

The Fed does Not have any forecasting ability.
It did not predict the Tech bubble, post 9/11 recession, Housing Bubble, 2008 Crisis, so-called 'Arab Spring', EU Crisis or Housing Bubble 2.0.

In addition via their parrots and talking mouthpieces at Wall Street Journal and on CNBC, we have been hearing that “growth would pick up in the second half of the year” for Five years now.

 It has never shown up.

Neither has income, full-time employment, the labor participation rate, or anything else that would indicate a strong economy much less the beginnings of a recovery or 'green shoots' or other cutesy terms.
 In addition, the Fed has proven that it is only too happy to ignore reality in the form of any data that contradicts its theories and ignore any “threshold” that the Fed itself might establish as a target for stopping the printing presses or raising interest rates.

For instance, the Fed suggested it would stop QE and raise interest rates when unemployment hit the fake figure of 6.5%. The Fed predicted this would happen in 2015. Unemployment hit 6.5% back in the first quarter of 2014.

So what did the Fed do?  Did it raise rates?

Nope..  the Fed dropped its unemployment threshold because said threshold was “no longer meaningful.”
Then there’s the Fed’s 2% inflation threshold, which we hit last month.

The Fed again ignored this, claiming that the inflation numbers were “noise.”

Before the Fed Chair and board were feverishly working behind the scenes to get inflation to grow above 2% even though deflation is far better for everyday people because it allows their money to have more purchasing power..

Now Fed Presidents are claiming that inflation might remain below 2% for several years or that inflation might go above 2% and it would not be a “catastrophe.”
At this point, it is pretty clear that the Fed has absolutely no idea what it’s doing and is simply making things up as it goes.   But the big boys keep listening because they can make great short-term profits

Moreover, there’s little hope of reining in the Fed because even if Congress implementing a “balance sheet size threshold” or controls for the Fed, they'd simply ignore them.

As a result of their meddling, everything from food prices to gas to rentals have gone up, up, up..
And in time they're not going to be able to control the percentages..  2% inflation will become 3% then 4%, etc.. and since most basic survival staples aren't counted in determining the annual increase in Social Security, expect the poor, elderly and disabled to fall further into the cracks..

And ultimately that's where we are..  A super powerful entity that few understand and fewer in positions in power want to take on, is making decisions to solely benefit a select few

And no midterm or 2016 election is going to change a thing.
Those in the know.. well they know and they profit and celebrate themselves on the covers of Forbes and Fortune

And everyone else..  We feel the 'heat' rise along with the prices of everything but we're still content to rest in the pot and daydream time away..

Like the lobsters..