The Fed’s real job is to monetize the government’s debt at an acceptably low rate of interest. All this other economic and financial stuff is just window dressing. From Charles Hugh Smith at oftwominds.com:
Despite their hollow bleatings about ‘doing all we can to achieve full employment’, the Fed’s policies has been Kryptonite to employment, labor and the bottom 90%–and most especially to the bottom 50%, the working poor that one might imagine most deserve a leg up.
As wealth and income inequality soar to new heights thanks to the Federal Reserve’s policies of zero interest rates, money-printing and financial stimulus, the Fed says its goal is to create more jobs. Really? OK, let’s look at how the Fed’s doing with that.
I’ve assembled a chart deck to display the consequences of Fed policies on debt, wealth inequality and employment. Recall what Fed policies actually do:
1. Zero interest rate policy (ZIRP) destroyed the low-risk return on savings and money market funds, stripping everyone not in the Fed-privileged rentier-speculator-financier class of safe, real returns on capital.
2. Zero interest rate policy (ZIRP) lowered the cost of speculation by financiers and corporations but left the interest rates paid by the working poor for credit cards, auto loans and student loans at extortionate rates.
There’s something seriously wrong with a monetary system that must rely on continuous obfuscation. From Robert Aro at mises.org:
On Wednesday, Federal Reserve Chair Jerome Powell showed how simple questions do not always get simple answers. When speaking to the media after the latest Federal Open Market Committee (FOMC) meeting, some difficult questions were asked. So much so, Powell had to repeat one question to himself, asking:
When will the economy be able to stand on its own feet?
He immediately followed with:
I’m not sure what the exact nature of that question is.
FOX News correspondent Edward Lawrence elaborated, asking when the Fed would lower the number of treasuries it buys, and when the economy would function “without having that support from the monetary side.”
Powell found ways to avoid answering the idea of a nation which stands without central bank supports, but he did refer to various “tests” the Fed will do in order to make decisions like shrinking the balance sheet, explaining:
we’ve articulated our test for that, as you know, and that is just we’ll continue asset purchases at this pace until we see substantial further progress.
He went on to say that prior to making any decisions, such as buying fewer treasuries, they will give the public a lot of notice beforehand.
… They keep turning up the heat on the pressure cooker, and sooner or later something’s going to blow. From The Zman at theburningplatform.com:
A universal truth of life is that pressure reveals character. This is not only true in individuals, but it is also true in societies. When times are easy, all sorts of undesirable things can be overlooked. The petty corruption in government is not a big deal in a booming economy. Inequality is ignored, maybe even celebrated when times are good, because people think their time will come. It is when things turn down that all of a sudden, those issues rise up and take up people’s attention…
… most buyers in Indiana are now forced to drop contingencies designed to protect them in their purchases. They forgo home inspections, home appraisals, and even tax credits owed to them, just so the seller will consider their offer…
The only thing the still locked-down European economy has going for it is the European Central Bank. From Claudio Grass at mises.org:
Over the last few weeks, we’ve been constantly bombarded by news reports and “expert” analyses celebrating an incredible global economic recovery. They’re not even presented as projections or expectations anymore, but as a fact, as though the return to vibrant growth were already underway. Stock markets certainly seem to agree, going from record high to record high while all the political and institutional leaders congratulate themselves on a job well done.
Although this is largely the consensus in most Western economies, this jubilant, victorious mood feels most bizarre in Europe. Celebrating a recovery during a third round of total lockdowns, closed shops, travel bans, and millions out of work seems like cognitive dissonance at best, or barefaced political hypocrisy at worst. France, Italy, Germany, Austria, they’ve all launched yet another round of business shutdowns and heavily restricted social activities and freedom of movement. And they did that to combat what they labeled a terrible, deadly third wave of infections and hospital overcrowding. In fact, to convince the public of the dire need to go back into lockdown, they painted postapocalyptic visions of a virus-overrun nation and sounded the alarm on the imminent collapse of their public health systems. Under these extreme conditions, these existential threats, closely resembling a state of national emergency, it is really quite challenging to see how the economy might be flourishing.
One could argue that the trillions that were printed by the ECB and helicopter dropped on member states actually achieved their aim and successfully rescued and restarted the economy. However, it is still hard to fathom how injecting any amount of cash into a forcibly frozen economy can restart economic activity and jump-start productivity, given that it’s still largely illegal to be economically active and productive. In other words, you can pump as much fuel as you like into your car, but if the engine is dead, you probably won’t go very far.
Authored by Charles Hugh Smith via OfTwoMinds blog, What’s left are the ‘fatal synergies’ of soaring debt and leverage, diminishing returns on stimulus, the substitution of credit for savings and the coming deflationary tsunami that pops all the speculative bubbles. Imagine a once modest but sturdy home…
…Today, America owes over $7 trillion to foreign nations, in addition to the $14 trillion it owes to domestic investors and the $6 trillion it has looted from its Social Security Trust Fund. America’s predominance is about to disappear as the nation struggles to borrow enough money just to keep up with the interest on its debt…
By Jp Cortez By signing sound money legislation today, Arkansas Gov. Asa Hutchinson has officially ended sales taxation on gold, silver, platinum, and palladium bullion and… Arkansas Ends Sales… Go to Source Author: Activist Post