Anonymous, Extremists against the FRB

There is an extremist technology based terrorist group out there called Anonymous.  This group has launched  various small attacks against the Federal Reserve Bank to give visibility to their agenda.   While I agree that the current global fiat currency system has issues, I do NOT view this as a conspiracy to oppress the world.

In reality, centralized systems weakest link is, they are centralized.   Centralization stifles innovation, in effect evolution.  Centralization magnifies mistakes they make, as the people part of the central authority will over time, align with like-minded approach.  In the current Federal Reserve Bank, there is no question that overall the entire establishment believes in the mantra of Keynesian economics.  When a body of people follow a methodology, a religious like belief system, their decisions become extremely prejudice.  They are responding to a problem with 'What they know'.   That is what we are witnessing.  I am NOT a believer of Conspiracy theories.

Anonymous launched an attack and breached the Federal Reserve System, announcing it on SuperBowl Sunday.  I am of the belief while a black eye on the Fed, I really doubt there is any information they retrieved that has any remote effect on the security of the country banking system.

Anonymous, assuming they believe what they say, are unfortunately, misguided in their approach.  I believe they are likely young, under 30 years old, and view themselves as helping save the future for themselves and others.   What they don't realize is their attacks will have the exact opposite effect.  The Federal Reserve Bank are the established, lawful, and community supporting entities, and Anonymous are the rogue terrorists.

And I actually believe that this view, is a correct one.  Anonymous is the problem.

If their acts moved away from concerning of the current framework, and focused on a better framework, as I describe in my post Ideal form of Money - Power to the People, then they could help provide a solution to a system that will fail to competition of a better system.

If they actually triggered a situation by their acts, a run on the banks, they will create kaos and much death.  I'd like to not see that please.  I'd rather transition  like people did with Music, Video, Software services, tablets, smartphone, and other tech-era revolutions.  Some can stay on old, some will move to new, and eventually the new takes over, replacing the old.  That is a transition I'd rather face.

Same goes for the protest group called  Occupy Wallstreet. Stop protesting, and get on with a solution.

So if you follow these guys, this time, don't root for the under-dog.  Root for the old system, The Federal Reserve Bank, until something better is obvious.
Notice in video below how they combine what I see, Commodity Costs increasing, currency crisis, but their root is the evil conspiracy people while my view is, the world is evolving.  Its nice and simple to view bad guys are holding back paradise.  The reality is people do what they think is net best for them and others (in that order), given the construct they have to work with.  Notice they want to punish selfish people, supporting this is supporting global extinction.  Humans are selfish, its called self-preservation.

Market Cycles

My friend John, a professional securities trader, has recently become bearish enough to put a toe into shorting the market, for near term.  He views the market movements after QE1, QE2, different than current after QE3.  The market movement difference now has encouraged him to take a bearish stance on the market.

If you read the news, there is plenty of bearish news to back up this view.  Fedex shipping is down, which can be compared to GDP forecasting, California sales tax revenue declined 20% YOY in August,  IMF chief warns of US financial issues in short, medium, and long term, Eurozone is seeing steepest contraction since 2009, Japan exports contract 3rd month in a row and China PMI contracts, Toronto home sales decline 64 percent (due to law change).
Pile on the Euro news with Greece, France, and Spain seeing Neo-Nazi fractions rising threatening those countries status quo.

Now lets look at the opposite view, there is plenty to find, but I am quoting the top two from my perspective. The Federal Reserve bank believes QE3 will help the US economy, as QE1 and QE2 did in the marketplace.

My favorite market watcher Gary of Smart Money tracker is calling for a "near term" bottom with market reversal.  Gary isn't the sort to make super long term predictions like the year ahead, he watches cycles to see next move.

So what is next?  A market fall of significance is always in the cards, especially if you look at history now or in the Great Depression.  (currency wars occurred back then too)  I am mixed, while I don't think in the year ahead we will see 30% market gains, it is possible the market finds a dead range of +10% and -10%.  My inner voice tells me the market is very weak and going to implode, but then again, I have heard that voice a few times in the last few years.

A conservative stance is probably in order, and on any strength, I may continue to lighten to be nimble.

Ronald Reagan Director of OM and Budget

David Stockman was Ronald Reagan's Director of Office Management and Budget, and was recently interviewed on effect of the Federal Reserve bank.  I completely agree centralized force trying to alter capitalistic cycles.  The Fed can distort the capital markets, but it cannot fix by meddling with loose monetary standards.

If the fed exists at all, it should intervene ONLY in a 2008 type event.  But the irony is 2008 event wouldn't have happened if the Fed didn't blow that credit bubble in the first place.  Sorta like a pyro who's dayjob is fireman.   Justifying one's job by putting out your own fires.

I don't dislike the fed because of bankers, or top 1%.  I dislike the fed because a small group of people in power cannot contain capitalistic forces.  It's like trying to control evolution, something bigger than human kind.   The central authorities will be broken by technology, as I discussed before in post "Technology, the Ultimate destructor of inefficiencies"

Federal Reserve Announces

I am not impressed, markets may rise day, week, two weeks, but then the slide will resume.
But who knows, I have been wrong a few times :)


Release Date: September 13, 2012 

For immediate release 
Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.

Next Major event

Next Major event is this Wednesday-Thursday, as the Federal Reserve bank announces their next action.
Most of the market pundits expect they announce a new Quantitative Easing program. (loose money).
Some believe the Fed started the QE weeks ago, explaining the market rally.

One thing is for sure, the market expects some meat on this meeting.  If there is ZERO easing, the market may react badly.  I expect there will be some sort of QE indication or program started.

Federal Reserve Bank meeting times

Bernanke says stemming bank runs may be difficult, does anyone care?

When I read Ben Bernanke statement today, I was floored by this statement:

He reiterated a worry that he and other top policymakers have expressed about the continued vulnerability of money market funds.
"The risk of runs ... remains a concern, particularly since some of the tools that policymakers employed to stem the runs during the crisis are no longer available," he said.


Wow, did I just hear a nuclear bomb go off?   Risk of bank runs is still a concern?   But Ben Bernanke is the worlds hero, he saved the world from financial Armageddon.
A hero is someone who changes the world for the better, doesn't do delay tactics and the world still faces the same issues 4 years later!
But the world yawns, and all is good.   What I am unsure of is what does this signal from Bernanke?  Does this mean in the next financial market downturn, his hands are tied?

The argument among bloggers is about The fed's loose monetary policy, can it be kept up forever without consequence?   The thought is the rise of natural resource prices are to blame for loose money games.  And that Ben cannot keep up the same level of monetary loose policies for fear of sparking more civil unrest.

We are seeing in Europe pressure of a classic Deflationary collapse, and in America and China, inflationary forces at work.  The cause is debatable.

What is reality is immaterial.  What matters is what the Federal Reserve believes is reality, and how the behavior may change in the year to come.  If Ben believes that his monetary policies cannot be pursued to the same extent as in 2008, then we will have a change in financial markets, its only a matter of time.

Jim Grant on Federal Reserve latest manipulation

The Federal Reserve announced yet another plan to manipulate the market, and in essence give certain companies money.  There is no such thing as a free bailout.  These cheating actions will eventually have repercussions.

Jim Grant gives a nice interview about his opinion on the market cheating going on.

Jim Grant Speaks about global financial insanity

This Jim Grant Interview is great. I love the internet, I get so much real information about reality vs the fantasy or outright void of information provided on mainstream news. At around 3:40 market in the video, Mr. Grant points out that mark to fantasy accounting is bad, but what is worse is the central banks have zero accountability for their own accounting. The New York Fed is leveraged 100 to 1.   MF Global, the 8th largest bankruptcy ever in the US was leverages 80 to 1 as a comparison.

Assuming thats true, why not leverage 1 googloplex to 1?   Mathematically there isn't much of a risk difference, since you can be insolvent in a heartbeat if accounting was accurately measured.  I just don't agree with Jim at all the insinuation that fiat currency isn't good currency.  I really do hate the gold-bug mantra that shiny rocks is money.  Gold as money is more draconian than the current system by a long shot.

Further, the Federal reserve will NOT take mark to market losses, but instead have a direct "running tab" with the treasury.  What is the difference between US currency and Zimbabwe?  Each month there is less of a difference.  Currency deserves respect and STRICT rules to enforce it in spirit.  Nothing less is acceptable.

Two day Federal Reserve Meeting

Back on September first, with post titled "Know when to hold em, when to walk away", I stated I didn't like the market setup, between then and the Federal Reserve meeting late September. The market is slightly lower since then, and dropped quite a bit lower earlier in the month.

Today marks the second of a two day meeting for the Federal Reserve Bank.  They will of course announce today.

The question is, what can they announce to change anything?  Assuming they don't announce something extreme that immediately tanks the US dollar, there isn't anything they can do to "save" the global economy.  They cannot provide political and global leadership to stimulate economic prosperity.
The function of the Federal Reserve Bank is to set banking and monetary policies.  Although extreme banking and monetary policies helped put us into the global economic imbalance situation, it isn't purely caused by the banking actions.

Overall we have a deflationary situation with western countries not producing enough to cover their expenses, with Asian countries providing the production of goods and increasingly services at much lower cost.  The US does not have a new innovation driver that will pull the economy out of this funk, nor does Europe.   There is a fundamental economic imbalance between countries that must eventually correct.  Having the federal reserve bank lower rates, or do some other trickery does not provide a cure to the western economies, it can only provide pain killers to give short temporary relief.

I'll leave the door open it is possible the Federal Reserve announces something so extreme, that the markets move. Generally speaking the Federal Reserve Bank is near out of any significant options.  I expect in the years ahead their announcements will become increasingly marginalized as the wizard behind the curtain is exposed.

For me, this is very disturbing, back in 2008 and since then I have marginalized the Federal Reserve Banks ability to make any sort of dent in the fundamental economic driver of the USA and western countries.  Here I am now facing that very reality becoming more obvious to the world, and now that it's here, the precipice is presenting itself.   Now I hope that the fed proves me wrong!

What is 17 trillion between friends?

I have posted some video's from Bill Still before. I am in agreement with him that Gold based money is a horrific money system that will enslave the populous. Every transaction will require a miner tax to quantify work owed (IOU = money). You can read my thread of thinking by starting "what is money".

Bill Still made a very good documentary about the history of money, and how that gold makes a horrible money system. Also how the current debt money system is very bad for the people. In my ideal world the government needs a check and balance to create unlimited funds without requiring bonds. In reality, the government currently creates unlimited funds now, but is tied to debt.

I have come to realize with this post that it is possible that the future isn't as grim as I keep fearing. If the current monetary system just made one simple change, to create money government borrows WITHOUT requiring interest, it may unleash for a while a new prosperity. It is the very debt system the government is bound to that is causing much of the issues. For without the government paying an bankers tax on every dollar it creates, the system would be much better off.

I am concerned however with zero constraint by governments to create money, that the currency could hyper-inflate. But if you think about it, deficit spending over 1.5 trillion interest free vs with interest, how does interest to pay to the banking system make the currency more valid?

What Bill Covers in this report is 17 trillion was loaned into existence during the crisis by the Federal Reserve bank, as reported in a US GAO government report recently released. These loans were at no interest (or near zero) to support world wide the entire banking system. Bill's main point is how come the Federal Reserve bank can create 17 trillion dollars with near no interest, lend it out, and get paid back, but the US federal government - aka - the tax payer - cannot.

The source of Bill's information for 17 trillion can be found on pages 205 and 216, on this report by the US Government Accountability Office.

Lets think about this for a minute.

• USA total GDP is about 14 trillion dollars.
• Total US debt load is about 14 trillion dollars.
• Over 17 trillion dollars created by the Federal Reserve Bank - in secret - to prop up the banking system.

Above makes no sense, hence, I don't believe the 17 trillion dollar figure. It is likely to be blown up using the money multiplier quoted with regards to fractional reserve lending. I suspect the original number was the TARP, 700 Billion dollars.

For those who believe the system will collapse, in a classic deflation scenario, with the markets going to all time lows, I ask you, read above.

I agree that there are massive deflationary forces keeping the markets volatile and on the downswing. But the next time it looks like 2008, like it did Monday, I have faith in the banking system to do what it takes to ensure they remain solvent. The banking system is now on the ready to avoid 2008 or worse again, ready to create money out of thin air, to deploy to banks and leverage up 10 to 33 times the money given by the Federal Reserve Bank.

For this game will have a significant shift in the year ahead. The world is looking behind the curtain to see the Wizard of Oz is not as magical as one thought. And it is the aspect of trust and confidence, that will become the issue as the government debt load becomes unsustainable in the year ahead.

Bill Still's video report #24

Bill explains his position on changing debt money system

This market may be in for serious trouble

Text below from article on Bloomberg.

The Federal Reserve said D. Nathan Sheets quit as the central bank’s chief international economic adviser after almost four years in the position and a day before policy makers meet.

The Fed, in a statement today in Washington, didn’t say why Sheets, 46, is leaving the institution.

.....

Sheets is using annual-leave days between now and his official departure date of Sept. 9

.....

The departure means all three of Bernanke’s top staff advisers have left their positions or announced their departures in the last 13 months.

Obviously, I have no inside information. But on the surface, this looks REALLY bad. Sheets wanted out immediately on Monday, August 8th. So much so, he basically walked away.

There are many theories that come to my head, first and foremost actions are being taken that we are not aware of that he wants no part of.

I am adding this to my "Financial Ground Zero" series, as I believe in the year ahead, it will become clear why Bernanke's team are leaving.

The markets may be worse off than I thought....

Federal Reserve Bank Magic

I ran across an old article explaining how the Federal Reserve Bank creates money and some of the games it started playing back in 2008 to combat the deflationary collapse in progress at the time.

The article is written by James. T. Hamilton, an economist who writes for the blog Econbrowser. The article is named "Federal Reserve Balance Sheet", written in December of 2008. A very good read, I highly recommend it.

Federal Reserve Bank Speaks, Dollar tanks

Well, its time for the USD to head into a crisis, and I expect us to now head to break all time lows. The only question is how far down this goes.

If your 100% in cash, you have decided that the crisis will evaporate quickly, and USD will return to highs last year.

If your 100% in gold, you are expecting an all out USD collapse.

I am in the gold camp for the short term, but once break all time lows, it may get interesting. We could have an accelerated USD decline before USD finds strength. But it is possible, although not probable, that the USD headed for all out collapse.

A great blog post that explains why the USD will firm up is available by clicking here.

Click to watch Ben Bernankes speech, its a waste of time to watch. He talks in ridiculous circles and lies. The truth is the market reaction of USD, charts below. And we may finally get 30 year bond rates breaking up, not down, breaking the 25 year downtrend in rates.

I am trying to maintain optimistic USD will bottom and rise, but positioned to protect what savings I have in natural resources if I am wrong.

Hang on, next few weeks will be interesting.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Bretton Woods

Bretton Woods System was an historical event where the IMF and world banking establishment was setup, including the USD as the world reserve currency.

The world is changing, and this cannot stay in place for the next 10 years. A nice, quick, video about Bretton Woods System, and new concerns.

Mohamed El-Erian : QE3 would be a very bad idea

Mohamed El-Erian is CEO and CIO of PIMPCO, one of the largest global bond fund managers.

Great video to watch. Second Video is El-Erian talking about Japan

GREAT Quote "The three major currencies all have issues. It's like picking which dirty shirt to wear, you pick your cleanest dirty shirt".

The second video is long, but WELL WORTH the watch!

Fed releases information....market yawns

I posted how the fed will release information about their secret discount window lending practices. That the market volatility could increase or just yawn.

It was a big yawn from the market as Federal Reserve released data is released on 25,000 pages.

One nice surprise to learn is the Federal Reserve (and by extension US government backed effort) bailed out a Libyan owned back back in 2009.

You can't make this stuff up.

Market Volatility Likely within Days

The US Supreme court earlier this week rejected the Federal Reserve Banks request for secrecy on their "special" lending programs with banks.

The activity since the 2008 financial crisis has been performed without public transparency, under the logic that banks who sought help from the Federal Reserve Bank would be damaged by release of such information.

On the other side is the American People. The US government must operate transparently, as all taxpayer spending, to justify it's expenditures. Since the Federal Reserve Bank, a PRIVATE institution, is operating with the implicit/explicit guarantee the US government will back it's debts, they too must operate transparently.

The ruling is correct, and a little optimism springs forth for me.

However the release of this information is likely to produce volatility as the public absorbs the information. It is also possible it may be "yesterday's news" so who cares, and a registers for 5 minutes in the market as it moves on.

After all the market barely has budged even though Japan is badly damaged, Portugal's government is about to dissolve, and Ireland/Greece may spell the end of the Euro and those countries solvency.

Since none of this matters, it is quite possible the Federal Reserve release won't matter. But I felt it prudent to make readers aware that information is days away from release. My guess is this weekend, after market close, but thats only a guess.

It is likely no matter what is released, its good for gold as those who despise the fiat currency system find justification for buying more precious metals. I am 75% invested right now in precious metal miners. (GDX, GDXJ, GLD, many small miners, SLV, SLW, and rare earth stock AVL)

To read more, click here.

NOTE: I do not despise FIAT currencies, and do not believe gold is money. I do think Fiat system is closer to being a correct system over gold. But there is no question in my mind, current FIAT system is broken.

Federal Reserve Bank circumvents constitution

As previously discussed, only one institution in the US government is allowed to spend taxpayer dollars is congress.

However, as reported by CNBC, the Federal Reserve Bank has sneaked in an important accounting rule change, that puts the taxpayer on the hook for all losses it incurs. In effect, the private (it is not a federal government agency) can no longer go bankrupt, and may spend money, make purchases, and back bank assets without fear.

As for this change being unconstitutional, well, the constitution only matters if the law is enforced. In this case, I doubt this will be challenged and the constitution upheld. For the Federal Reserve Bank is stepping into the marketplace to prop up the US financial situation.

This is a huge blow for those who point to the US dollar as being a world reserve currency, and therefore cannot implode. The keys for the currency valuation have been given to a private banking organization. Therefore, we are in new territory. Once cannot look at the history of American currency since 1913 as a guide.

For more commentary, I highly recommend everyone read other bloggers, more verbose and detailed than myself. I have provided links below.

This event goes into my Financial Ground Zero series, as I highlight events that will eventually likely result in USA financial collapse.

Mish: Timothy Geithner Meets Vladimir Lenin Stage II; Accounting Rule Changes at the Fed will Mask Losses

Market Ticker: The "Independent" Fed Admits The Truth

Zero Hedge: Seven Men, Nine Days, One New Monetary Cartel, Pt. 2

Hussman: Fantastic detailed outline of Federal Reserve Bank monetary pressures "Sixteen Cents: Pushing the Unstable Limits of Monetary Policy"

2011 – THE YEAR OF CATCH-22

I strongly recommend a blog article I found that does a pretty darn good job summarizing the world financial mess the US is in. I am adding a link in my new readers area to this summary. I also added The Burning Platform blog on my list of blogs on the right.

The title is "2011 – THE YEAR OF CATCH-22" by blog The Burning Platform

Below I quoted a couple of highlights. Please click on this link to read it in it entirely.

Quantitative Easing Catch 22

Ben Bernanke’s quantitative easing (dropping dollars from helicopters) is riddled with Catch-22 implications. Bernanke revealed his plan in his 2002 speech about deflation:

“The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.”

The expectations of most when reading Ben’s words were that his helicopters would drop the dollars across America. What he has done is load up his helicopters with trillions of dollars and circled above Wall Street for two years continuously dropping his load. Bernanke’s quantitative easing, which will triple the Fed’s balance sheet by June of 2011, began in earnest in early 2009. The price for a gallon on gasoline was $1.62. Today, it is $3.05, an 88% increase in two years. Gold was $814 an ounce. Today, it is $1,421 an ounce, a 61% increase in two years. In the last year, the prices for copper, silver, cotton, wheat, corn, coffee and other commodities have risen in price by 30% to 90%

Quantitative easing has been sold to the public as a way to avoid the terrible ravages of deflation. The fact is there are less jobs, lower wages, lower home prices, zero returns on bank deposits, higher fuel costs, higher food costs, higher real estate taxes, higher medical insurance premiums and huge jaw dropping bonuses for the bankers on Wall Street. Somehow the government has spun this toxic mix into a CPI which has resulted in fixed income senior citizens getting no increases in their pitiful Social Security payments for two years. You can judge where Ben’s Helicopters have dropped the $2 trillion. Quantitative easing has benefited only Wall Street bankers and the 1% wealthiest Americans. The $1.4 trillion of toxic mortgage backed securities on The Fed’s balance sheet are worth less than $700 billion. How will they unload this toxic waste? The Treasuries they have bought drop in value as interest rates rise. Quantitative easing’s Catch 22 is that it can never be unwound without destroying the Fed and the US economy.

The blog entry does read kinda like a rant, but the situation is complex, and does a good job of trying to touch base on the multiple moving areas.

Gold is NOT the answer to fixing money

I previously covered the Secret of Oz DVD, and I recommend purchasing it.

Updated 8:27 am, thanks to Anton for comment.

I recommend watching the full video available on Youtube.
This compliments how gold produces worse inflation/deflation swings than fiat money, explained by Karl here: (A MUST READ, and video below)

Alternately available by link to watch the video by clicking here. You need about 2 hours.

Adding you tube video to welcome new reader link