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Federal Reserve Chair Janet Yellen is quite convinced that the United States will not experience another financial crisis for a very long time to come. In fact, she is publicly saying that she does not believe that another one will happen “in our lifetimes”. But there are other central bankers that see things very differently. In fact, a new report that was just released by the Bank for International Settlements is warning that a new financial crisis could soon strike “with a vengeance”. So who is right?
It would be nice if it turned out that Yellen was right. Nobody should want to see a repeat of what happened in 2008, and Yellen seems extremely confident that she will never see another crisis of that magnitude…
One month ago, Donald Trump urged his followers to sell stocks, warning of “very scary scenarios” for investors, and accused the Fed of setting the stage for the next market crash when he said that “interest rates are artificially low” during a phone interview with Fox Business. “The only reason the stock market is where it is is because you get free money.”
Earlier today, speaking to a reporter traveling on his plane who asked Trump about a potential rate hike by the Fed in September, Trump took his vendetta to the next level, saying that the Fed is “keeping the rates artificially low so the economy doesn’t go down so that Obama can say that he did a good job. They’re keeping the rates artificially low so that Obama can go out and play golf in January and say that he did a good job. It’s a very false economy. We have a bad economy, everybody understands that but it’s a false economy. The only reason the rates are low is so that he can leave office and he can say, ‘See I told you.'”
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The closed-door meeting between Obama, Biden and Yellen has concluded, and moments ago the White House released the following statement:
“The President and Chair Yellen met this afternoon in the Oval Office as part of an ongoing dialogue on the state of the economy. They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally. They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers.”
Of course, for the actual transcript of what was said, we will have to rely on some conscientious White House leaker putting it on BitTorrent, but here is our modest attempt at translating what was and what was not said: no market crashes allowed until November.
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Three weeks ago, when the Fed and Janet Yellen shocked markets with their extremely dovish statement in which they admitted the US Federal Reserve no longer is US data dependent, and instead is far more focused on global developments and especially China’s dollar-pegged currency (which makes it impossible for the Fed to be hawkish without causing further FX instability and leading to more Chinese capital flight), CNBC’s Steve Liesman asked Yellen point blank a question which would seem otherwise completely taboo: does the Fed have a credibility problem.
This was her response:
Full article here:
Thanks to the just released February diary of Fed chief Yellen, we now know exactly when she called Bank of England Governor (and former Goldman Sachs employee) Marc Carney and ECB President (and former Goldman Sachs employee) Mario Draghi.
Can you guess when?
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The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.
As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years?
And yes, the Fed is above the law …
Update: DJIA FUTURES AT DAY’S LOW, FALL 361PTS; S&P -38, NASDAQ -91
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For nearly one year, Wisconsin Rep. Sean Duffy has been Janet Yellen’s nemesis over the ongoing probe into Fed leakage of material inside information via Medley Global and any other undisclosed channels, one which has seen subpoeans be lobbed at the Fed which has been doing everything in its power to stall said probe, and which cost Pedro da Costa his job when he dared to ask questions at a Fed presser that were not precleared by his WSJ “Fed mouthpiece” peers.
Today, during Yellen’s appearance before the House Financial Services committee, Duffy finally had enough, and in a heated exchange asked Yellen what on legal authority is the Fed exerting privilege to ignore a Congressional probe into what is clearly a criminal leak, one which has nothing to do with monetary policy and everything to do with the Fed providing material, market moving information to its favorite media and financial outlets.
The exchange highlights are below:
What Janet knows, as The Burning Platform’s Jim Quinn exclaims, is that a 1% increase in interest rates would increase the interest on the National Debt from $400 billion per year to $600 billion per year, a 50% increase.
Interest rates back at NORMAL historical rates that we had as recently as 2007 would increase the interest on the National Debt to $1 trillion per year, a 150% increase.
Plus, the National Debt increases by $1.5 billion per day, so our interest bill goes up by $35 million per day already.
Do you really think Yellen is going to be increasing interest rates?
As the market now diligently calculates the suddenly surging odds of a December rate hike, here’s Yellen with a preview of what will happen once the rate hike cycle is aborted…
- YELLEN SAYS IF OUTLOOK WORSENED FED MIGHT WEIGH NEGATIVE RATES
… just as it was aborted in Japan in August of 2000 when the BOJ also decided to send a signal how much stronger the economy is by hiking 25 bps, only to cut 7 months later and to proceed to monetize not only all net Japanese debt issuance a decade later, but to hold half of all equity ETFs.
The good news:
While the world was focused on the content of Yellen’s Thursday speech in Amherst for clues on whether the Fed Chair would back off her disturbingly dovish outlook on the world, what was the real surprise was the delivery: as we showed previously, there was a very troubling 100 second interval at the very end of the 50 minute, 5,000+ word speech, in which the 69-year old Yellen suddenly seemed unable to read the words on the page, was rereading the same phrase over and over, paused for long stretches at a time, and then had a violent reaction that forced her to end her speech prematurely. Watch it again below.
In the aftermath of the incident, a narrative was quickly cobbled together that Yellen had suffered from dehydration, but based on her actions and behavior, that seems improbable.
“Yellen faltered at end of her speech. Last page was agonizing. I don’t think she felt well but she seemed better when she left the stage.”
“…the federal funds rate and other nominal interest rates cannot go much below zero, since holding cash is always an alternative to investing in securities. … the lowest the FOMC can feasibly push the real federal funds rate is essentially the negative value of the inflation rate. As a result, the Federal Reserve has less room to ease monetary policy when inflation is very low. This limitation is a potentially serious problem because severe downturns such as the Great Recession may require pushing real interest rates far below zero for an extended period to restore full employment at a satisfactory pace.“
Sep 5, 2015
In this special episode of the Keiser Report from New York, Max Keiser and Stacy Herbert discuss the never seen before triple category four hurricanes heading for global financial markets caused by injection of too much hot air from central bankers. In the second half, Max interviews Gerald Celente about Rule 48, volatility and invasions.
– The Fed Confirms It Is Above The Law: Yellen Tells Hensarling “No” On Leak Probe Documents (ZeroHedge, June 22, 2015):
Just a few days after Jeb Hensarling accused The Fed of “willful obstruction” in the Congressional leak probe, demanding “immediate compliance” with the subpoena seeing “no legal basis to withhold records from Congress,” Janet Yellen has responded in a letter: YELLEN REPEATS FED CAN’T PROVIDE DOCUMENTS ON LEAK PROBE. If this does not confirm The Fed is utterly above the law, we are not sure what it will take to convince skeptics of the need for an independent audit. As Hensarling previously noted, this appears to be “vigorous and coordinated obstruction.”
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– “The Fed Has Been Horribly Wrong” Deutsche Bank Admits, Dares To Ask If Yellen Is Planning A Housing Market Crash (ZeroHedge, May 31, 2015):
When the “very serious people” start to admit that the entire house of cards was held together with nothing but bullshit and propaganda, it may be a time to panic…
– Guess Who Predicted The Failure Of QE (ZeroHedge, April 30, 2015):
“As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.
I think my views on this mirror those that you expressed in your opening comments, Mr. Chairman.”
How did that work out?
– Russia’s Central Bank Governor Is Way Smarter Than Ours (The Automatic Earth, April 8, 2015):
It wouldn’t be a first, but it would certainly be a – bigger – shock. That is to say, the Bank of England hijacked the head of Canada’s central bank some time ago, but, while unexpected enough, that would pale in comparison to the US hiring the present Governor of the Russian central bank, Elvira Sakhipzadovna Nabiullina. It would still seem to be a mighty fine idea, though.
Not that I think it will happen, not to worry if you think Yellen is just what it takes at the Fed. But Nabiullina is both razor sharp and fiercely independent. Yellen is obviously neither; she’s a cog in a machine that huffs and puffs and pumps and dumps to make sure her overlords in the blissful world of US finance make ever more profit no matter how bad things get in American society.