CNBC fact-checks Joe Biden, now that it doesn't matter

 But the article name-checks Donald Trump five times because he's an opponent of Fed decisions.

There's a whole movement out there that wants to End the Fed, composed of Republicans, Democrats, and libertarians, which CNBC is loathe to mention.

Many of them argue that the US 2-year Treasury Note should be the benchmark for the Federal Funds Effective Rate, not the whim of the Fed Chair and the Federal Open Market Committee, who are un-elected, well-connected, and VERY WELL PAID elites who watch out primarily for the interests of the banksters.

For example, despite the disastrous Zero Interest Rate Policy post-Great Recession, DGS2 resisted it and outran DFF throughout the period under Obama and Trump, and anticipated the recent inflationary outburst by starting to rise in the spring of 2021, a full year before the Fed moved to "combat inflation" by raising the funds rate in the spring of 2022. 

Similarly DGS2 also started to fall in November of 2023 despite no change to Fed policy, anticipating the recent decline of inflation rates by almost a year.

The role of the US Treasury Secretary, AS MUCH A CREATURE of the Executive as the Fed Chair, is also huge for interest rates because the Secretary decides how to divvy up the debt securities for auction by duration.

Biden's Treasury Secretary Janet Yellen has been in the news for driving up the issuance in T-bills to 22% when 15% has been customary, which has contributed to longer rates falling and stocks rising, just in time for the election.

But the costs of this have been dramatic, financing deficit spending at the highest rates and driving interest payments on the debt to the third spot in the budget, behind only Social Security and Medicare.

From Hillary's paid speeches to the banksters post-2012: You need both a public and a private position

 Here.

 

 

Jay Powell is only appearing to be serious about battling inflation

 The only thing Jay is doing about inflation is making sure everyone thinks he's doing something about it, while making sure there remains plenty of spread for his pals to trade off it.

Currently the spread is 5.12: Inflation at 8.2 minus an effective funds rate of 3.08. This is a golden opportunity for the banksters and everyone down the food chain until it reaches you. The banks are getting rich off it. Wall Street is getting rich off it. Corporations are getting rich off it. And, of course, the stock market investor parasites are getting rich off it.

You get left holding the bag of all the price increases jacked up under the guise of the general condition.

 

 

 

Three years ago there was no spread: -0.03. Nothing there to exploit.

The banksters LOVE LOVE LOVE this inflation:

Bank of America said Monday that quarterly profit . . . topped expectations on better-than-expected fixed income trading and gains in interest income . . . third-quarter profit fell 8% to $7.1 billion.

The bond market is not happy.

In Rama a voice is heard, lamentation, weeping, and great mourning . . ..

Inflation trader squeals like a stuck pig, fears QT will soon lead to the sort of stock event you tell the grandchildren about

 Well, we've heard that before, but this story about one of them perfectly describes how Fed money creation has ballooned, by design, to facilitate gains for those first in line for the money, the banksters, while the rest of us just get the inflation:

The Fed creates reserves as a special form of dollars that can only be held by banks and some similar firms, that they use to settle debts to each other. (The rest of us mostly use bank-created electronic money, plus physical dollars.) Since QE began, reserves have ballooned as the Fed created reserves to buy bonds from banks. 

Unlike in 2017, large quantities of reserves have been returned to the central bank via money-market funds. These funds, which savers use as a liquid alternative to savings accounts, are allowed to deposit money at the Fed overnight using reverse repurchase agreements (RRPs), and have already sucked $2.2 trillion of reserves out of the system, up from zero at the start of last year.

For now, the loss of reserves isn’t a problem. Banks had too many deposits and reserves anyway, and they still have $3.3 trillion of reserves, more than they had ever held until last year.

More.

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

 

This is as good a day as any to remember that Ben Bernanke's Fed under Obama bailed out the banksters and hung 6.5 million homeowners out to dry

 Bloomberg, August 21, 2011, here:

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley, got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress. ...

Homeowners are more than 30 days past due on their mortgage payments on 4.38 million properties in the U.S., and 2.16 million more properties are in foreclosure, representing a combined $1.27 trillion of unpaid principal, estimates Jacksonville, Florida-based Lender Processing Services Inc. ...

Congress required the disclosure after the Fed rejected requests in 2008 from the late Bloomberg News reporter Mark Pittman and other media companies that sought details of its loans under the Freedom of Information Act. After fighting to keep the data secret, the central bank released unprecedented information about its discount window and other programs under court order in March 2011.

 

The Fed has hardly begun to impose high interest rates and already the banksters are squealing like stuck pigs

 

Laugh of the Day: Stupid liberal shackle dragger actually believed in her messiah, Barack, until he took the banksters' money

Here, in The Sydney Morning Herald:

This one seemingly greedy act has put all that in jeopardy. He's no different from all the others. Just another money-grubbing politician. I can scarcely believe it. I certainly don't want to. It's just weeks since he said, just before he left office: "I won't stop; in fact, I will be right there with you, as a citizen, for all my days that remain."

"And lo, I am with you always, to the close of the age", or the banks open at 0900.

Hillary gets the best she can from Janet Yellen: Economy still too weak for the Fed to further normalize interest rates

Actually, the Fed is too weak morally to normalize interest rates, and won't move until after the election. A December hike if Trump is elected may well send the markets tumbling down, which you know will be blamed on his election, not on the Fed.

Meanwhile banks continue to get rich while impoverishing savers $100 billion quarterly since the end of 2008. That's $3.2 trillion they'll have robbed from the American people by the end of 2016.

Government of the banks, by the banks, and for the banks.

Politico reports here:

The Fed’s target rate is now just 0.25 percent to 0.50 percent, a remarkably low figure this late in an economic recovery that gives the central bank little room to maneuver should a new crisis or recession arise. So the Fed’s move avoids a market meltdown but offers fresh rhetorical evidence for Trump and other Republicans who argue that the economy is extraordinarily weak. ... Trump has also said that as president he would replace Yellen, whose term runs until February 2018. And he has ripped the Fed for creating what he has called a “false economy” with high stock prices but only modest wage gains and a very low labor-force participation rate.

Banks probably will need ZIRP until March 2015 to be fully recapitalized from the crisis

In March 2013 Warren Sulmasy estimated that banks had lost $1 trillion in the crisis, and had recapitalized as little as $300 billion of that by that time.

Chris Whalen has estimated that ZIRP yields banks profits of $100 billion quarterly at the expense of savers who are not fairly recompensed for their deposits under the Federal Reserve policy known as zero interest rate policy.

So theoretically by March 2014, one year on from Sulmasy's estimate, banks had recouped an additional $400 billion, with $300 billion yet to go, which should take us to the spring of 2015 before we can say that banks should have been made completely whole from the crisis.

ZIRP should most definitely end by then, or things are worse than we imagine.

Business as usual: a government of the banks, by the banks and for the banks.

Uninsured Deposits: Cyprus, Maybe 17 Billion Euros, America, $4.75 Trillion

All you high rollers had better hope the big banks don't go bust, but that's what the last five years have been all about now, haven't they?

Government of the banks, by the banks, and for the banks. Big banks. Big mutha banks.

The Banks Rule America And Blaspheme Against Capitalism

In "Bankistan Vanquishes America" here Barry Ritholtz rages against the criminal enterprise under which we live, with a rash of supporting links. Under Clinton, Bush and Obama, its grip has only gotten tighter.

From the conclusion:

On the other side lay the bank apologists, corrupted politicians, and crony capitalists. They advocate the Big Lie of the financial crisis. They choose to ignore the facts and data that disprove their narrative. They continue to push the lies that the bailouts were a good investment. (They weren’t). They work against the Bipartisan consensus that the giant banks should be broken up. They ignore the many former bank CEOs who call for the break up of “Too Big to Fail” banks. They mandated that GSEs were banned from Lobbying, but they made sure that the big banks retained their influence peddling and hold on Washington DC.

They no longer represent the voters of their districts, but instead are the elected representatives of Bankistan.

And unless we do something — and soon — they will vanquish America.

Things haven't changed much since 1819 when the revolutionary paper of fictitious capital resulted in fraudulent bankruptcies on the backs of real capital, real property and commerce (think of today's zero interest rates returning nothing to retirees, collapse in the value of housing long purchased honestly, and moribund GDP and zero velocity money punishing millions with unemployment):

The enormous abuses of the banking system are not only prostrating our commerce, but producing revolution of property, which without more wisdom than we possess, will be much greater than were produced by the revolutionary paper. That too had the merit of purchasing our liberties, while the present trash has only furnished aliment to usurers and swindlers. The banks themselves were doing business on capitals, three fourths of which were fictitious: and, to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labours of the plough, chose rather to call himself a merchant to set up a house of 5000. D. a year expence, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital probably of 100. millions of Dollars, is now to be lost, & to fall on some body; it must take on those who have property to meet it, & probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless & ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knolege of Political economy than we possess. I believe it might be done, but I despair of it’s being done. The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic.

-- Thomas Jefferson

Rush Limbaugh Nonplussed By Caller, Expunged From Record

Rush Limbaugh received a call today from an impertinent listener who suggested that the sequester hubbub about cutting spending by $85 billion a YEAR was completely meaningless since the Federal Reserve has been buying securities in similar amounts every MONTH in the various quantitative easing iterations. We could cut the spending, the caller suggested, and just turn around and recreate the money since the Fed is doing it all the time anyway and no one would ever be the wiser.

The caller was correct, but Rush was completely nonplussed and nervously dismissed the call and cut to commercial (which is why all calls are taken just before commercial breaks, in case they go Egypt). Since I can't find a record of it in the transcripts tonight, I'm guessing it really did disturb Rush enough to make sure the memory of it went straight into the circular file.

But think about it. The Democrats, especially Obama, are screaming the spending cuts are draconian and will hurt necessary jobs and the economy's growth. The Republicans are screaming that unless we cut spending, the world as we know it may come to an abrupt end because of the way a huge mountain of debt threatens to crush growth. Meanwhile the Federal Reserve has expanded its balance sheet from about $500 billion before the crisis to $3 trillion today by purchasing all manner of MBS and Treasury securities and what have you. Over four years that comes to a rate of about $52 billion a MONTH of funny money fed intravenously into the banking sector because it is still as good as dead in its bed.

That threatens everything Rush believes and says about the banks, how they were forced to take TARP, didn't really need it, paid it all back, are now healthy, blah blah blah. When the real story is that the losses they have taken on housing are gargantuan and have left huge holes in their balance sheets (you know, the off-balance-sheet-balance-sheets). The virtually free money from the Fed is designed to help them profit to get back on their feet. For public consumption the Fed says it is doing this to make mortgages cheaper so that housing revives, so that employment revives, neither of which is the real reason. The real reason is to throw banks a life line to allow their private trading desks to make money speculating in the stock markets et alia and restore their capital base.

It's government of the banks, by the banks and for the banks. The rest is just a sideshow.

The Answer: For The Same Reason Government Isn't in Jail

The Question: "Why isn't Wall Street in Jail?", asked here by Matt Taibbi, one more time.

It's hard to make Americans hate DC, lower Manhattan and the banksters as much as the terrorists do, but he keeps trying.

QE (Quantitative Easing): How to Bailout Banks by By-Passing Congress

TPC at Pragmatic Capitalism makes a persuasive case that we have government of the banks, by the banks, and for the banks:

[I]f you’re a bad bank with a few trillion dollars in bad mortgage paper you’re delighted if a AAA rated entity [The Federal Reserve] comes in and swaps those assets out with their highly rated paper. This is exactly what the Fed did in 2009 and make no mistake – it was hugely successful in clearing the credit markets and altering the composition of bank balance sheets. This was Mr. Bernanke’s goal after all. He was simply trying to clear the credit markets and improve the banking system and he believed that would ultimately fix the problems in the US economy. Unfortunately, he misdiagnosed a household balance sheet recession as a banking crisis. QE1 provided liquidity in the credit markets and it gave the banks some much needed breathing room. Unfortunately, the impact on the real economy was far more muted.

The author points out that QE II is now necessary because the banks are going to be in trouble again very soon as the next leg down in housing ensues.

Don't miss the rest here.

Some Banksters May Yet Go To Jail for Fraud

According to a story today from CNBC.com:

In a number of cases in the past year — sources put it between five and ten — auditors have found enough evidence of fraud by bankers that they referred the cases to criminal investigators within the Treasury Inspector General’s office for a more detailed analysis.

The rest is here.

Federal Reserve Appeal Denied, Continues to Stymie to Protect Banksters

Bob Ivry for Bloomberg News is reporting that the Federal Reserve's appeal in May of a March ruling requiring the Fed to disclose information under the Freedom of Information Act has been denied as of August 20:

The full U.S. Court of Appeals in New York, in a docket entry dated Aug. 20, denied a May 4 request by the Fed to review a three-judge panel’s unanimous March 19 decision requiring the agency to release records of the unprecedented $2 trillion U.S. loan program begun primarily after the 2008 collapse of Bear Stearns Cos.

Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case. ...

The amount the Fed and the U.S. government lent, spent and guaranteed to stem the recession and rescue the banking system peaked in March 2009 at $12.8 trillion, most of it following the September 2008 bankruptcy of Lehman Brothers Holdings Inc.

Go here for complete coverage by Bloomberg.

Asset Value Lies Are S.O.P. In Banking

Karl Denninger has a new post here reflecting on a recent entry at Institutional Risk Analytics on "Events of Default" which shines the light on approximately $500 billion in private collateralized debt obligations which continue to be carried by the banks at par value but which are in fact nearly worthless:

It's called legalized accounting fraud, and I've been hollering about it for three years. As the loss severities have continued to climb and the impact accelerate[s] into other areas of securitized debt, the so-called "regulators" have scrambled to find new corners of the carpet to allow the banksters to hide the truth under.

A culture built on lies cannot endure.