Today the big hoopla on the financial Bubblevision networks was the release of the Federal Reserve Board of Governors meeting minutes. The behind the scenes video that the public never gets to see looked like this:
That must have been called the Yellen policy back in the day.
In reality today’s minutes were another non-event for a rigged market except for the sheep who are about to see their 401K’s and IRA’s fleeced for a good 50-70%+ thanks to the fraud known as Wall Street. And the Federal Reserve is backing them to the hilt.
What prompts this “optimism” on my part? Let’s take this brief excerpt about Mortgage Backed Securities out of the minutes for review:
With respect to the Federal Reserve’s agency MBS redemptions, participants generally noted that MBS principal prepayments would likely run under the proposed monthly cap in a range of plausible interest rate scenarios but that the cap could guard against outsized reductions in the Federal Reserve’s agency MBS holdings in scenarios with especially high prepayments. Some participants noted that under the proposed approach to running off Treasury and agency securities primarily through adjustments to reinvestments, agency MBS holdings would still make up a sizable share of the Federal Reserve’s asset holdings for many years. Participants generally agreed that after balance sheet runoff was well under way, it will be appropriate to consider sales of agency MBS to enable suitable progress toward a longer-run SOMA portfolio composed primarily of Treasury securities. A Committee decision to implement a program of agency MBS sales would be announced well in advance.
Several participants noted the significant uncertainty around the future level of reserves that would be consistent with the Committee’s ample-reserves operating framework. Against this backdrop, participants generally agreed that it would be appropriate to first slow and then stop the decline in the size of the balance sheet when reserve balances were above the level the Committee judged to be consistent with ample reserves, thereby allowing reserves to decline more gradually as nonreserve liabilities increased over time…
Let’s translate that to the language of reality:
- The Fed knows it needs to sell MBS, but they are not quite ready to yet, so they’ll let a lot of it run off the balance sheet up to $35 billion per month then consider outright sales.
- The Fed can not take a rash action to slow down monetary expansion in housing because it will hurt the member banks in this time of a supply shortage.
- The Fed is making this up as they go along.
The truth?
Everyone with a brain remembers the 2005-2009 fiasco which destroyed the remnants of the classical American capitalist financial system. Thus there is no way they wish to dump the Mortgage Backed Securities (MBS) on the markets until there is a way to force Congress to pass a taxpayer funded instrument to buy and hold this garbage. If the housing market is so “healthy” then why is the Federal Reserve buying the same suspect bankster assembled MBS at this time? The money laundering will continue until it can not or it is pawned off on Main Street in the near future.
And they will succeed in forcing the taxpayers to eat it again.
In the mean time, no matter what their balance sheet says, at the pace they plan to move it will take almost 7 years (AGAIN 7 YEARS!!!) to liquidate just the MBS on their balance sheet which they should not even own anyways.
Also there is scant reference to bringing inflation under control other than the traditional methodology of increasing the Fed Funds rate at a slightly faster pace. The problem with that, using their own metrics, is that they would have to wait until 2025 to even get the Fed Funds rate even close to the real 19.9% inflation rate.
I did not pull that 19.9% number out of my ass, it is right here in black and white from the Atlanta Federal Reserve:
And that’s without March’s update which should put it well north of 20%. Hence the Fed is going to protect its own corrupt system as long as it can then dump the entire mess on the taxpayers before the new system is implemented. Enjoy your $17 8 oz. triple latte raspberry pumpkin espresso you morons and you should thank the Fed for every price increase on that every time you buy one!
Maybe, just maybe, President Andrew Jackson was right about this corrupt cabal of fiends after all.
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