Tag Archives: History of Federal Open Market Committee actions

Stephen Lendman ~ The Federal Reserve’s Latest Scam: QE Shell Game

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theintelhub.com | September 24 2012

Now you see it. Now you don’t. QE III is the Fed’s latest scam. A previous article quoted PIMCO’s Bill Gross. He called it money printing “till the cows come home.”

Doing it won’t resolve festering economic problems. They’re getting worse while Bernanke, the ECB, Bank of England, Bank of Japan, Congress, Obama, and like-minded world leaders fiddle.

After crisis conditions erupted in fall 2007, one scam followed another. Occupy Wall Street is right. “Banks got bailed out. We got sold out.” It hasn’t stopped and won’t until either people rebel or the whole house of cards Greenspan/Bernanke built collapses.

Helicopter Ben operates by Abraham Maslow’s maxim that “if the only tool you have is a hammer, every problem looks like a nail.”

Hammering all day won’t help. He’s buying time. Little else. An eventual day of reckoning looms. The longer it’s delayed, the greater the collapse when it comes.

It’s not if, just when. Bad policy assures bad results. It’s not rocket science. It’s simple truth.

If properly used, QE could have worked and still can if redirected to where it’s needed. It’s not and won’t be. For nearly five years, credit went for speculation, big salaries and bonuses. It hasn’t been for the economy to stimulate growth and create jobs.

Financial warfare rages. America and other societies are affected. Ordinary people are hurt most. Hard times keep getting harder.

Since September 2007, the Fed cut interest rates from 5.25 to .25%. Surviving investment banks became commercial ones to get free money unavailable to ordinary folks.

They scammed trillions. How much is kept secret. It’s at least $9 trillion and may be up to two and half times that much.

Hundreds of billions went to Fannie, Freddie, AIG, the automakers and others. At the same time, millions lost jobs, homes and futures. Who cares about them when only money power and helping corporate favorites matter.

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Bob Adelmann ~ Federal Reserve Balance Sheet Set to Explode

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The New American | September 19 2012

When the Federal Reserve announced last week its plan to buy more treasury securities, only a few read the fine print. Instead, the stock market jumped for joy at the news, leaping nearly 300 points on Friday.

What most market observers saw was the headline: “the [Federal Open Market] Committee agreed today to increase policy accommodation by purchasing additional … securities at a pace of $40 billion per month.” The press release added: “These actions … should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”

Those observers envisioned sugar plums dancing in their heads as the Fed’s plan would lead, no doubt, to more economic growth, more jobs, more profits, and more stocks to sell on Wall Street.

Catherine Mann, professor of finance at Brandeis University, expressed her doubts that the new plan would do any such thing:

The Fed continues to want the economy to grow faster and specifically, to grow more jobs, but the ability of QE to do that is extraordinarily limited.

We know that QE reduced interest rates, but we also know that has not led to more construction, more mortgages, more business investment, or more lending. Since it hasn’t done any of that, it probably hasn’t created jobs either.

In fact, unemployment not only hasn’t fallen significantly since the start of the Fed’s rollouts of Quantitative Easings, but it has remained higher longer than any time since the early 1980s. Mark Gertler, an economist at New York University, estimated that if the monthly purchases continued long enough, whereby the Fed would purchase another $500 to $600 billion of securities, it might lower long-term interest rates by one-tenth of one percent — maybe. Stated Gertler, “We’re not talking about a major form of stimulus, but given [that] the job market is still unsettled, it could be useful. Everything else being equal, credit will be cheaper.

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Bob Adelmann ~ Federal Reserve Balance Sheet Set to Explode

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The New American | September 19 2012

When the Federal Reserve announced last week its plan to buy more treasury securities, only a few read the fine print. Instead, the stock market jumped for joy at the news, leaping nearly 300 points on Friday.

What most market observers saw was the headline: “the [Federal Open Market] Committee agreed today to increase policy accommodation by purchasing additional … securities at a pace of $40 billion per month.” The press release added: “These actions … should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”

Those observers envisioned sugar plums dancing in their heads as the Fed’s plan would lead, no doubt, to more economic growth, more jobs, more profits, and more stocks to sell on Wall Street.

Catherine Mann, professor of finance at Brandeis University, expressed her doubts that the new plan would do any such thing:

The Fed continues to want the economy to grow faster and specifically, to grow more jobs, but the ability of QE to do that is extraordinarily limited.

We know that QE reduced interest rates, but we also know that has not led to more construction, more mortgages, more business investment, or more lending. Since it hasn’t done any of that, it probably hasn’t created jobs either.

In fact, unemployment not only hasn’t fallen significantly since the start of the Fed’s rollouts of Quantitative Easings, but it has remained higher longer than any time since the early 1980s. Mark Gertler, an economist at New York University, estimated that if the monthly purchases continued long enough, whereby the Fed would purchase another $500 to $600 billion of securities, it might lower long-term interest rates by one-tenth of one percent — maybe. Stated Gertler, “We’re not talking about a major form of stimulus, but given [that] the job market is still unsettled, it could be useful. Everything else being equal, credit will be cheaper.

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Global Systemic Crisis/October 2012 -The Global Economy Sucked Into A Black Hole And World Geopolitics Heated To White-Hot

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GEAB | September 16 2012 | Thanks, Kevin

As LEAP/E2020 anticipated since the end of 2011, the end of summer 2012 marks the beginning of the revival for Euroland with the emergence of a positive dynamic fed by two lasting phenomena: first, the progressive operational installation of the instruments bitterly discussed and decided upon during the last 18 months and, secondly, the visionary spark brought by the political changes of the last six months which have put Euroland’s medium to long term future back in the middle of the decision-making process. The Euro’s progress these past weeks offers a perfect illustration of the phenomenon (1). That being said, Europe will be in recession for the next six to twelve months. It just goes to show that the only good news that we announced in the June 2012 GEAB issue is far from being miraculous.

In a certain sense, it’s even the contrary, since henceforth it’s no longer possible to hide the global economy’s tragic state behind the pretext of the “Euro or Greek crisis”. The more Euroland advances constructively, the more the “Potemkinien” (2) character of the US, Chinese, Japanese and Brazilian… economies’ « health » will show itself. The tree will no longer hide the forest, namely that all the major global economies are entering recession or slowing growth simultaneously, leading the socio-economic and financial world into a black hole.

At the same time summer 2012 will have marked a major acceleration in world geopolitical dislocation with a Syrian conflict which becomes more dangerous for the Middle East and the world day by day (3), Israeli-Iranian tension which is ready to explode at any time, and widespread testing of declining US power – from the China Sea to Latin America via the whole Muslim world. The strategic-military world is heated white-hot as the massive resumption of arms sales worldwide illustrates for that matter, with the United States supplying 85% of the total (4).

Global arms sales and principal exporters’ share (2010-2011) - Source: New York Times, 08/2012

Global arms sales and principal exporters’ share (2010-2011) – Source: New York Times, 08/2012

For these reasons, LEAP/E2020 maintains its June 2012 Red Alert and estimates that, by the end of October 2012, the global economy will be sucked into a black hole against a backdrop of world geopolitics heated white-hot. Suffice it to say that the coming weeks will, according to our team, carry the planet away in a hurricane of unprecedented crises and conflicts.

So, in this GEAB issue, LEAP/E2020 sets out the list of the seven key factors of this double shock without modern historical equivalent:

In addition, this GEAB issue contains an anticipation of the cumulative impact of the crisis and the Internet on European retail trade, predicting a loss of 2.5 million jobs by 2015.

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Brandon Smith ~ Has The Perfect Moment To Kill The Dollar Arrived?

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Alt_Market | August 7 2012 | Thanks, A.L.

The idea of “collapse”, social and financial, comes with an incredible array of hypothetical consequences ranging from public dissent and martial law, to the complete disintegration of infrastructure and the devolution of mankind into a swarm of mindless arm chewing cannibals.  In an age of television nirvana and cinema overload, I have found that the collective unconscious of our culture has now defined what collapse is based only on the most narrow of extremes.  If they aren’t being hunted down by machete wielding looters or swastika wearing jackboots, then the average American dupe figures that the country is not in much danger.  Hollywood fantasy has blinded us to the tangible crises at our doorstep.

The reality is that collapse is not a singular event, but a process.  It is a symphony of doom, composed of a series of exponentially more powerful crescendos.  If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood.  That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled.

In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar.  At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.

Last month, the Fed announced that it was formulating a plan to “expand its tool kit”.  This includes an openly admitted possibility of a third round of quantitative easing starting as early as September:

http://www.reuters.com/article/2012/07/24/us-usa-fed-tools-idUSBRE86N1G120120724

This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September.  In that month, EU policymakers will return from summer holiday.  German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund.  The Dutch, which are anti-bailout, will vote in elections.  Greece will be attempting to renegotiate its financial lifeline.  And, the ECB will have to assess the impending chaos in Spain and Italy:

http://www.reuters.com/article/2012/07/29/us-eurozone-crisis-idUSBRE86S05J20120729

As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT.  Sorry, but central banks have only two options when attempting to shift the tide of the economy:  They can lower interest rates to zero, and, they can print-print-print.  That is it.  We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years!  These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008.

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Why There Are No Jobs

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M.N. Gordon | theintelhub | May 4 2012

What a week. On Tuesday the DOW finished the day at 13,279, its highest close since December 2007. In terms of the stock market, we’ve crossed the great divide…December 2007, remember, was pre-financial crisis.

In fact, it was nearly a year before Lehman Brothers vanished from the face of the earth and black swans relentlessly descended upon the LIBOR like common ravens upon fresh Southern California road kill. If you recall, when the sky was falling in late 2008, spread movements that were statistically not possible in a million years, somehow, happened every day.

Money market shares of the Reserve Primary Fund did the impossible…they broke the buck – falling to $0.97 cents a share. Still, while the stock market may be back to where it was over four years ago, the world is dramatically different…

For one thing, back in December of 2007 you could buy a 10-year Treasury Note yielding 4.23 percent. Today the 10-year Note Yields less than half that. Of course, December 2007 was before TARP, CPFF, MMIFF, TAF, ZIRP, QE, QE2, Operation Twist, and all sorts of other harebrained schemes were put into practice to “reflate” financial markets.

But while the stock market may be back to pre-recession levels, one thing all the fiscal and monetary gas didn’t do…it didn’t create jobs. Moreover, it likely inhibited them.

Job’s Market Recline

By the time you read this the Labor Department will have released its jobs report for April. Maybe the 125,000 new jobs needed to keep up with population growth will be added…but we don’t expect many more than that. Obviously, the economy is not adding enough new jobs…

According to the Hamilton Project, “As of February, our nation faces a jobs gap of 11.4 million jobs, 5.2 million from jobs lost since 2007, and another 6.1 million jobs that should have been created in the absence of the recession.

“If the economy adds about 208,000 jobs per month, which was the average monthly rate for the best year of job creation in the 2000s, then it will take until February 2020 – 8 years – to close the jobs gap.”

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