The US Fed is losing both its power and its relevance to the coming collapse
Australian leaders labouring under the invisible brain of Tony ‘Trappist’ Abbott have at last woken up to the alarming reality of Sydney property prices, a fantasy I earmarked six years ago as the most inflated house-price City on the planet.
The markets are also getting wise to Australia’s one-trick-pony mining economy, and its dependence upon a dramatically slowing China…so that the Aussies are leading the field when it comes to inflation, while the Aussie is losing its value. Deutsche Bank now rates the country one of the most overpriced and risky debt bond destinations in the world.
On DB’s home continent, the euro too is sliding in the light of last chance Greek talks having failed. This followed the failure of the time running out talks, preceded in turn by the IMF pre-walkout talks, Greece isn’t being serious talks, the there’s no talking going on talks, and the we must have real reform talks. Given the Troika’s starting point was we press hard and then say no, the failure of the talks that everyone knew were a sham before they started talks is hardly surprising.
Anyway, having masterfully painted both sides into a corner, the Dieselboomers now find themselves wearing the dunce cap. If nothing else, it hides Dijesslbleom’s ridiculous hair.
Who’s worried now, eh? The FTSE fell last week, as did Wall St. Some observers are reporting that Janet Yellen’s planned quarter percent rise is now off the table for June. And she herself has commanded that rates will not get back to “a more normal” 3-5% range for may years” because if they do the US is broke, the Fed chair didn’t add.
I have an eccentric and often derided view about yields, interest rates, maxed credit cards and secured loans: they all merely different faces on the same paste diamond called unaffordable debt. Without debt, neoliberal economics can’t function, because the falling or static real salaries of consumers can’t afford the repeat purchase cycles demanded by the inflated stock markets created by QE in the first place.
Taper off QE, and everyone gets nervous. Raise interest rates and the nerves become acute anxiety, accompanied by South America going bang, the Sydney property market correcting by 30+%, and consumer spending levels dipping. Run Greece round the humiliation track a few times until it falls over, and ClubMed bond prices spike. Add a few BSDs suggesting that near-zero and negative yields are insane, and bond prices everywhere rise.
Now some of this has taken place….and other bits are getting closer. But the Fed has ‘done’, as it were, nothing. There are two points I’m trying to extract here:
1. The Fed has done nothing partly because the tool box is empty – not just because it is adopting a wait and see, kindly old Yellen Owl approach to the mess out there. That’s a little concerning.
2. I doubt very much if the Fed doing something now is going to make any substantive change to the situation, other than worsening it. And that’s very concerning indeed.
I realise that this is a simplification of the situation the world is in, but I don’t think it simplistic; Ms Yellen has options, but most have failed to date – and all have massive downsides to them. We have become addicted to the US Fed doing something. But the globalists have created an economic planet upon which, by definition, any and every infection is contagious… and has a capacity for pandemic.
Resistance to odious debt and bullying technocrats produces defiance contagion. It also exacerbates bond rise contagion with regional spikes. These destroy the consuming and importing value of currencies, which in turn send net exporters to those regions into reverse. Overdependent economies supplying raw materials to the exporters slump into meltdown. Borrowing costs rise further, and hyperinflation beckons as the ‘stimulation’ required becomes akin to mediaeval tulip madness.
And in the entirety of this process, the Fed has done nothing other than wait. What else can it do? As the AIIB and other as yet half-baked alternatives to Dollar hegemony take shape, gather speed and mix every metaphor imaginable, the US needs to face an unpleasant fact: what the Fed says is important, but it’s becoming irrelevant to the bigger picture.
Filed under: BUT YOU CAN’T HIDE THE REALITY, The US Fed is losing both its power and its relevance to the coming collapse, YOU CAN RUN THE NEWS Tagged: Australia in trouble*, Deutsche in trouble*, Does the US Fed matter today*, Euro in decline*, Janet Yellen, Rising bond yields*, Stock markets flat*
Source: https://hat4uk.wordpress.com/2015/06/15/the-us-fed-is-losing-both-its-power-and-its-relevance-to-the-coming-collapse/
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Whistler Blowers, Insiders
Excellent Post, The Slog.
I would agree that the Fed grows more and more irrelevant on the World currency stage every day that goes by.
Evidence as to the next steps taken by states here, in the USA, can be seen in Texas demanding approximately one billion dollars in gold bullion moved from a Fed Locale back to the State of Texas (as reported here on BIN).
The States will start to issue their own currencies, as the Fed dollar fails.
North Dakota’s fed Free Bank already issues it’s own currency.
Texas is just following suit.
You seem to be talking about 2 different Fed’s. The Federal Reserve System- which is not part of the government in reality does not own any gold and has not since 1933. The US ‘Federal government has not allowed anyone to see or audit their supposed gold supply which would actually belong to the Treasury Dept. in Fort Knox, Ky. The last time the media was allowed in to see it was in 1974 by pressure applied by 12 congressmen. But the government has absolutely refused any audit of fort knox and the us supposed gold supply. Most contend there is no gold and what was shown in 1974 was someone else’s perhaps the rothschilds gold shipped in and then shipped back out. In 1933 FDR outlawed ownership of gold and gold certificate and it was ordered handed over to the government. He then turned around raised the price by himself to $35 an ounce and then shipped over to England for it all to be sold. All of these are facts which anyone can easily research. Texas won’t get any gold because there isn’t any.
Here is the 1974 video inside ft knox.
https://www.youtube.com/watch?v=JRZc7YEV8rU
Do you think Texas will retaliate against the USA if the Gold bullion is not returned to their possession?