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While Janet Yellen’s timetable for higher interest rates sent markets reeling, investors may have missed an important caveat: it depends on rising inflation.

Treasury yields jumped March 19 after Yellen said in her first press conference as Federal Reserve chair that rates could rise “around six months” after asset purchases end, most likely in the fall. At the same time, she cautioned that a decision on interest rates “depends what conditions are like.”

“Markets are not focusing enough on the conditionality,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore who worked at the Fed’s division of monetary affairs from 2004 until 2008. “If inflation fails to move back up” as the Fed expects, “that’s a reason to expect a later liftoff.”

Yellen’s comments this week followed the release of policy makers’ projections for the benchmark interest rate. The forecasts showed officials predicting the rate, now close to zero, would rise to at least 1 percent at the end of 2015, higher than their December forecast.

Got to fight that deflation.

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With Bernanke gone, the remaining Fed members knowing full well they will be crucified, metaphorically of course (if not literally) when it all inevitably comes crashing down, are finally at liberty with their words... and the truth is bleeding out courtesy of the president of the Dallas Fed, via Bloomberg.


Which incidentally coincides with Bernanke's heartfelt "admission" that "my natural inclinations, even if it weren’t for the legal mandate, would be to try to help the average person." As long as helped to boost the wealth of the non-average billionaire., all is forgiven. "The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help,” Bernanke said. “It’s a hard perception to break." The truth, as again revealed by Fisher, will not help with breaking that perception.

To be honest Fisher is correct it was a massive gift to boost wealth, it was just that it was for the 1% and everyone else could just feck off.

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Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion, roughly 17% of total tax revenue. Just like the Ottoman Empire was at in 1868.

Here’s the thing, though– it’s inappropriate to look at total tax revenue when we’re talking about making interest payments.

The IRS collected $2.49 trillion in taxes last year (net of refunds). But of this amount, $891 billion was from payroll tax.

According to FICA and the Social Security Act of 1935, however, this amount is tied directly to funding Social Security and Medicare. It is not to be used for interest payments.

Based on this data, the amount of tax revenue that the US government had available to pay for its operations was $1.599 trillion in FY2013.

This means they actually spent approximately 26% of their available tax revenue just to pay interest last year… a much higher number than 17%.


Where the marginal buyers of JGBs are foreign investors rather than domestic Japanese investors, interest rates may increase, perhaps significantly. Even at current low interest rates, Japan spends around 25-30% of its tax revenues on interest payments. At borrowing costs of 2.50% to 3.50% per annum, two to three times current rates, Japan’s interest payments will be an unsustainable proportion of tax receipts.

Has the US turned Japanese?

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One of the big problems in America today is that a lot of people simply do not seem to care about what they are doing anymore. The level of sloth, laziness and apathy that we are witnessing in this country is absolutely mind-numbing. Of course this is not true of everyone. There are still many Americans that are extremely hard working. But overall, it really appears that people are not taking as much pride in their work as they once did. Some of the examples that I am about to show you are quite funny. Others are more than just a little bit disturbing. But they all have a common theme. Americans from all walks of life are simply giving up. Whether they are teachers, delivery people or fast food workers, the truth is that there are a whole lot of people out there that seem to have mentally checked out.

For example, take a close look at the midterm exam posted below. Does anything stand out to you?...


If you can't read the writing in the red box, this is what it says...

"In all honesty, I am already bored with this topic. It is far less interesting than I had hoped and I really don't want to finish this essay. I'm fairly sure you don't really read these so I'm just going to put enough words down to make it seem like I wrote a lot while I kill time. Wanna hear some words that rhyme with time?

Crime, dime, mime, (haha mimes are funny), chime, lime. Aw dude you know what has lime in it? Sprite, it like lemon lime. I could really go for one of those about now, but not sierra mist, that just isn't the same. It tries too hard to be sprite but it just cant pull it off. It should just try to be itself and stop trying to measure up to other sodas."


Why give a 5h1t when you are being exploited and ripped off at every opportunity.

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Federal Reserve Chairman Ben S. Bernanke said the Fed will probably hold down its target interest rate long after ending $85 billion in monthly bond buying, and possibly after unemployment falls below 6.5 percent.

"The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after" the jobless rate breaches the Fed's 6.5 percent threshold, Bernanke said yesterday in a speech to economists in Washington. A "preponderance of data" will be needed to begin removing accommodation, he said.

In deciding when to wind down open-ended purchases of bonds, Fed officials are weighing both the "cumulative progress" since they began the program in September 2012 as well as "the prospect for continued gains," Bernanke said. The labor market has shown "meaningful improvement" since the start of the program, although recent job reports have been "somewhat disappointing," he said.

Fed going for a lower unemployment level than Carney. Will he have to revise in response?

Like this...? It's so impressive how Gov can conjure up jobs. QE makes things happen.

1 April 2014

George Osborne commits to 'fight for full employment'

U.S. jobs market dropouts increasingly likely to stay out

By Lucia Mutikani

WASHINGTON Thu Mar 27, 2014

(Reuters) - A growing number of Americans quitting the labor force are likely gone for good, offering a cautionary note to the Federal Reserve as it tries to gauge how tight the jobs market is and how quickly to raise interest rates.

For a long time, data suggested a significant portion of the decrease in labor force participation was because many job seekers had grown frustrated with their search and had given up looking. If the job market tightened enough, the thinking went, these Americans would be lured back to hunt for work again.

But a different picture is now emerging. Data shows participation in the past few years has fallen mainly because Americans have retired or signed up for disability benefits.

"The data suggest that the recent exits from the labor force have been more voluntary in nature than was the case in 2009, when the economy was weak and job prospects were dire," said Omair Sharif, senior economist at RBS in Stamford, Connecticut.

According to economists who have analyzed Labor Department data, 6.6 million people exited the workforce from 2010 and 2013. About 61 percent of these dropouts were retirees, more than double the previous three years' share.

People dropping out because of disability accounted for 28 percent, also up significantly from 2007-2010. Of those remaining, 7 percent were heading to school, while the other 4 percent left for other reasons.

In contrast, between 2007 and 2010, retirees made up a quarter of the six million people who left the labor force, while 18 percent were classified as disabled. About 57 percent were either in school or otherwise on the sidelines.

"This suggests the current drop in the labor force is more structural in nature," said Sharif.

If so, there is less hope of luring people back to hunt for work as the jobs market tightens, as many Fed officials believed would be the case. And the U.S. central bank, which has held benchmark rates near zero since December 2008, will likely need to push them up sooner than they would have otherwise.

in full: http://www.reuters.c...EA2Q09U20140327

Not sure I accept the position that there's going to be wage inflation ahead, because of a diminishing pool of available workers - except for very high skilled workers. And yet... keep throwing money at it.... to create the jobs. Perhaps we'll all be working for older-owners, inheritors, stimulus fuelled property-investors and landlords in the future.

Yellen Says Slack in Job Market Shows Need for Support

Mar 31, 2014

Federal Reserve Chair Janet Yellen, easing investor concern that interest rates may rise earlier than previously forecast, said the world's biggest economy will need Fed stimulus for "some time."

Yellen said today the Fed hasn't done enough to combat unemployment even after holding interest rates near zero for more than five years and pumping up its balance sheet to $4.23 trillion with bond purchases.

"This extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers," Yellen said at a community development conference in Chicago. "The scars from the Great Recession remain, and reaching our goals will take time."

in full: http://www.bloomberg...some-time-.html

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Why give a 5h1t when you are being exploited and ripped off at every opportunity.


There is still opportunity, but in business today, imo you want to be narrowly targeting products and services to the old who've seen massive HPI + got final salary pensions, property-inheritors, the investor/higher banking classes backed by QE, (ect), corporates sitting on money, and the super-rich. That's where the money and wealth is being concentrated at.

You're less likely to make any real money competing with products and services just in general wider market, especially not for younger people starting out, through to their early 40s, including those who've bought and many carrying epic debt already.

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George Osborne commits to 'fight for full employment


If he's referring to REAL full employment in the UK then he'll be looking for something like another 12 to 15 million jobs for UK workers - good luck with that with the UK economy in the state it's currently in.

Of course he's referring to PRETEND full employment in the UK - good luck with that as well as it'll still take some doing and it'll also be interesting to see how they manipulate the statistics even more to try to achieve it and how much more economic devastation and havoc he manages to wreak in doing so.

Edited by billybong
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  • 2 weeks later...


Despite Janet Yellen's meet-and-greet with the unemployed and criminal classes, the absence of Ben Bernanke has seemingly empowered several Fed heads to be just a little too frank and honest about their views. The uncomfortable truthsayer this time is none other than Dallas Fed's Fisher:



We wonder how President Obama, that crusader for fairness, equality and all time Russell 2000 highs, will feel about that? In the meantime, just like the Herp, QE is the gift that keeps on giving.. and giving... and giving... to the 0.001%.

All of this, of course, coincides awkwardly with Bernanke's heartfelt "admission" that "my natural inclinations, even if it weren’t for the legal mandate, would be to try to help the average person." As long as helped to boost the wealth of the non-average billionaire., all is forgiven. "The result was there are still many people after the crisis who still feel that it was unfair that some companies got helped and small banks and small business and average families didn’t get direct help,” Bernanke said. “It’s a hard perception to break." The truth, as again revealed by Fisher, will not help with breaking that perception.

Job done, the rich are richer that's all that matters.

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It worth recalling that when he introduced QE as 'temporary measure' in 2009 then Fed Chairman Ben Bernanke argued that amongst other things it would help put the building industry back on its feet.

Six years on there's been a raging hpi in the more affluent metro areas but with no genuine demand to support the bankster-led speculative mania even this has stalled. Private housing starts are still half what they were a decade ago, barely changed on 2010, and 35% of construction jobs appear to have been lost forever.

This is what recovery looks like? Another epic fail for QE and the Little Professor.


Edited by zugzwang
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This is what recovery looks like? Another epic fail for QE and the Little Professor.

For every action there is....

Weak U.S. prices, not inflation, the threat now: Fed's Yellen

By Jonathan Spicer

NEW YORK Wed Apr 16, 2014


The question for me is whether, after some giddy spending normal-times are back, buy housing at any prices cause it's not earning anything in the bank.... we slip back into consumer retrenchment.

Many Help-To-Buy gleefully having paid big big prices... they have lot spare to spend in the economy. Rents...? One who I know is such a tight-fisted old-bat with all her London homes and raking it in. Other landlords not exactly as proactive in spending on anything but base-level furnishings, and not particularly keen on employing tradesmen to make improvements as a home-owner might prefer to do.

Though he wouldn’t admit it, Bernanke met his match in 2011. The consumer balked at attempts to stimulate aggregate demand via inflationary policy of negative real interest rates, and ever since, has been raising real interest rates by reducing inflation through lower aggregate demand. This is perhaps the most unappreciated yet significant market development since the financial crisis.

Foreign/Asian supposed growing and projected wealth, re real-estate, is one uncertainty though, even if some regions look to have got wealthy on very loose credit themselves.

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  • 2 weeks later...


Everyone knows that the FOMC announcement, due today at 2 pm, will be the culmination of an orderly, traditional 2-day meeting which started yesterday, April 29.

What few know, however, is that in addition to the generic FOMC meeting which started yesterday at 10:30 am, at about the same time, the Fed also held an "expedited" emergency meeting between the four board governors Yellen, Tarullo, Stein, and Powell.

As the WSJ adds, "The four members of the board met to discuss "medium-term monetary policy issues," according to a meeting notice posted on the Fed's website.... A Fed spokesman declined to say if the two meetings were combined, or how long the board meeting lasted." The WSJ also notes that the "last time the Fed board met to discuss "medium-term monetary policy issues" was on April 26, 2011, according to analysts at BNP Paribas."

An emergency meeting. Luckily it's a recovery.

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  • 2 weeks later...
Bernanke Shocker: "No Rate Normalization During My Lifetime"

bernanke-smiling.gi_.top__0.jpgForget all the talk about "dots", "6 months", or any other prognostication from the Fed's new leadership about what will happen in the near and not so near future. For the real answer prepare to shelve out the usual fee of $250,000 for an hour with the Chairsatan, or read Reuters' account of what others who have done so, have learned. The answer is a stunner. "At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime. "Shocking when he said this," the guest scribbled in his notes. "Is that really true?" he scribbled at another point, according to the notes reviewed by Reuters."

When the economy is hooked on cheap money 0.25% becomes the new 4%.

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US Fed weighs rate rise options

The US Federal Reserve began discussing how to raise interest rates, which have been held at 0% since 2008, but caution a rate raise is not imminent, minutes reveal.

Fed Chair: So how are we going to increase rates again?

Everyone else: Ha ha ha.

Fed Chair: Shall we move on?

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Excluding Obamacare, US Economy Contracted By 2% In The First Quarter


As if the official news that the US economy is just one quarter away from an official recession (and with just one month left in the second quarter that inventory restocking better be progressing at an epic pace) but don't worry - supposedly harsh weather somehow managed to wipe out $100 billion in economic growth from the initial forecast for Q1 GDP - here is some even worse news: if one excludes the artificial stimulus to the US economy generated from the Obamacare Q1 taxpayer-subsidized scramble, which resulted in a record surge in Healthcare services spending of $40 billion in the quarter, Q1 GDP would have contracted not by 1% but by 2%!

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  • 2 weeks later...


For all the rigging of the definition of GDP, which over the past year has artificially been boosted by over half a trillion dollars courtesy of various adjustments adding intangibles, goodwill, and underfunded pensions to headline economic output (and soon, courtesy of European financial innocation, the "benefits" of hookers and cocaine too), all GDP really is - in a Keynesian world - is a measure of how financial credit flows through the economy. One can look at it at a consolidated monetary basis (M1, M2, etc), and then apply various (broken) money velocity factors, but the simplest and most accurate means of capturing the US "economy" is simply by looking at the consolidated amount of liabilities within the US traditional banking system.

Visually this means that US GDP and the total amount of traditional bank liabilities should match up. Sure enough, as the chart below shows, they do.


If one were to use this (far more accurate) definition of gross domestic product, one can then do something which is impossible when looking at the conventional mechnistic C+I+G+(X-M) formula: namely calculate to the penny what is the economic "growth" contribution as a result exclusively of the Fed's interventions in the past 6 years.

To do that, one simply has to account for, and exclude, the benefit of the key financial system asset that has been boosted since Lehman courtesy of QE, namely Reserves at the Federal Reserve, which while manifesting themselves in record S&P highs (as we have shown repeatedly over the years), translate into an actual benefit for the economy. Alternatively, if it were not for the Fed, one can calculate how much growth is explicitly artificial, and the result solely of the monetary mandarins of the Marriner Eccles building.

Which brings us to Exhibit A: a chart showing US GDP as well as financial liabilities excluding the benefit of Fed reserve expansion.


Of course, if one takes the track of excluding GDP benefits as a result of Fed intervention, one would have to go back all the way to 1913 and systematically eliminate all those banking product lines which would never have existed had the Fed not blown serial bubbles, with every successive one greater than the previous simply to keep the Ponzi scheme going.

But for simplistic purposes, the chart above will do: the red shaded area shows the direct benefit of the Fed's QE on the consolidated financial system, and by implication, on US GDP.

More at the link.

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Federal Reserve officials, concerned that selling bonds from their $4.3 trillion portfolio could crush the U.S. recovery, are preparing to keep their balance sheet close to record levels for years.

Central bankers are stepping back from a three-year-old strategy for an exit from the unprecedented easing they deployed to battle the worst recession since the Great Depression. Minutes of their last meeting in April made no mention of asset sales.

Officials worry that such sales would spark an abrupt increase in long-term interest rates, making it more expensive for consumers to buy goods on credit and companies to invest, according to James Bullard, president of the Federal Reserve Bank of St. Louis.

What unexpected news, who could have predicted this outcome.....

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IMF cuts US growth forecast for 2014_75566460_75548583.jpg

The International Monetary Fund (IMF) has slashed its US growth forecast, urged policy makers to keep interest rates low and raise the minimum wage to strengthen its recovery.

Will the IMF be making a similar call for the UK? Everyone is hooked on free money.

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