ZeroHedge full of Jew Rants on Jew Experts these days

[CrackSmokeRepublican]

Seems like all of the Jew run economic websites these days are in high gear criticizing and mocking their fellow J-Tribers in the economics profession.

A whole army of Jews now are overly critical of the "expert Jews" like the "Fed" and "Fed Policies".  People notice the Jew Primary Dealers are merely for joking about as is the SEC and other Jew run "institutions" on Wall Street. The corruption and bankruptcy is a snide insider joke with a big Kosher cackle.  And, then, they call Americans stupid and bankrupt.  But that's the "J" for you.  

While this is occurring, there is another subtle change afoot as well. It seems a lot of "Goyim" who are in the stock market are seeing much of the "Fed", "US Govt.", and "Wallstreet Investments houses" as more and more sinister -- as if a collective Jew "nose" on these institutions is getting recognized as all "Kosher" all the time -- the goal of which is to strip every hard earned asset in the USA from the Goyim before it all "blows".  I've noticed the change in tone among a few pundits. They are realizing it is not a joke anymore and the Jew Rip-off of Goyim America has been engineered for a very long time by the collective J-Team. All the jews are trying to pack in the last "scams" before nothing is left anymore in the US.    

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If You Prop Up an Artificial Economy Long Enough, Does It Become Real?

October 2, 2012


Does carefully nurturing a facade of health actually lead to health? No; all it does is perpetuate a destructive illusion.

The policy of the Status Quo since 2008 boils down to this assumption: if we prop up an artificial economy long enough, it will magically become real. This is an extraordinary assumption: that the process of artifice will result in artifice becoming real.

This is the equivalent of a dysfunctional family presenting an artificial facade of happiness to the external world and expecting that fraud to conjure up real happiness. We all know it doesn't work that way; rather, the dysfunctional family that expends its resources supporting a phony facade is living a lie that only increases its instability.

The U.S. economy is artificial in three important ways:

1. The Federal Reserve has distorted the market for borrowing capital by reducing interest rates to zero. Those holding capital (savings) receive essentially zero interest income while favored borrowers (banks and large corporations) can pursue marginal-return speculations for free (when measured in real terms), creating systemic moral hazard of the most pernicious sort.

2. The Federal Reserve's monetizing of Federal borrowing via the purchase of Treasury bonds has given the government a "free" hand to spend $1.3 trillion more than it collects in tax revenues, feeding inflation (The Source of High Inflation: Government Spending) and the moral hazard created by having essentially free money to dispense to cronies and to buy voter complicity.

In a real market economy, the cost of Federal borrowing would rise as bondholders would demand a premium for taking on the risk that interest rates would eventually rise under the relentless accumulation of stupendous debt. That mechanism has been frozen by the Fed's monetiziation of Federal borrowing.

3. The housing market has essentially been socialized, with the taxpayers now funding the entire mortgage market (98% of mortgages are backed by Federal agencies) and endless subsidies of marginal buyers (3% down payment loans, etc.) The Federal Reserve has committed itself to taking trillions of dollars of impaired or dodgy mortgages off the balance sheets of banks and burying them in its own opaque balance sheet, while also maintaining near-zero interest rates (when adjusted for inflation) to incentivize refinancing and home buying--both of which generate billions of dollars in fat fees for banks.

All this artifice has created an artificial economy on multiple levels. The entire bond market is artificial, the entire stock market is artificial, and the entire housing market is artificial.

One of the more striking quotes I've read recently was buried in a report chronicling the effects of the housing bust on Nevada. The quote was by a woman who had stopped paying her mortgage three years ago and had been living rent/mortgage-free in the house courtesy of the bank, which had declined to even begin the foreclosure process.

Harris, 38, stopped paying her mortgage three years ago after her accounting business lost its biggest client and her home's value plummeted 52 percent. Some neighbors are also delinquent on their mortgages. "There are so many people like me who aren't paying their mortgage so they can buy groceries and gas," said Harris, who was rejected for loan modification programs. "It's creating this whole false economy."

This is an astonishing statement on several levels. That people can only afford to keep afloat if their housing is free reflects an extreme of financial fragility. That the banks are willing to pay property taxes and receive zero income for 3+ years reflects the banks' dedication to restricting the inventory of unsold homes so prices will be forced higher as supply drops below demand.

This strategy, no doubt orchestrated with quasi-official approval, has already paid handsome dividends, as beaten-down markets such as Phoenix have seen sharp increases in home values this year as the number of foreclosed homes entering the market has dwindled. This artificial restriction of inventory by lenders has been well-documented; not only are there millions of homes in the foreclosure pipeline that are not being moved onto the marketplace, there are at least (by some estimates) another 4 million in-default homes that are being held out of the pipeline entirely; this is the "shadow inventory," the inventory that is not even recognized as being in default despite 3+ years of non-payment.

This is a risky game the banks are playing, as this visibly artificial restriction of inventory undermines the belief that this recent surge in home valuations is legitimate, i.e. a balancing of actual supply and demand. Sqeezing inventory does not magically enlarge the pool of qualified home buyers; it "games the system" so those buyers are paying more for the homes that they would otherwise be worth if the market weren't being manipulated. This helps banks by raising the prices they're getting for the few foreclosed properties that reach the market, but it certainly doesn't help buyers.

This strategy is betting that the gains reaped by selling REOs ("real estate owned," i.e. houses the banks own) at higher prices more than offset the losses generated by paying the costs of non-performing loans--property taxes, for example--and the decline in income as homeowners stop making mortage payments.

The real estate industry and the banks are hoping that the increase in housing prices caused by the restriction of inventory will spark a new rush into real estate as people start believing "the bottom is in." But this is based on the expectation that there is pool of potential buyers who are only waiting for the bottom to be identified to jump in and buy a house.

The irony is that restricting inventory keeps prices high, limiting the number of people who qualify for large mortages. Given that incomes of the lower 95% of households have been declining for four years, the foundation of borrowing is crumbling. The Fed has attempted to increase leverage by lowering mortgage rates to 3.5%, barely above official inflation, while relieving banks of impaired mortgages by buying $1 trillion of mortgage-backed securities in 2009-10 and now another $500 billion over the next year.

The idea here is that maintaining an artificial market and reality will somehow magically transform a broken system into a self-healing one. Stated in this transparent fashion, the absurdity of the Status Quo's primary policy is clearly revealed.

Dysfunctional families, enterprises, markets and governing Elites all share this same dilemma: you cannot fix an unhealthy, dysfunctional system by hiding reality behind an artificial reality facade. All you're doing is increasing the instability of the system, which is not allowed to self-correct.

The U.S. economy is riddled with artifice: millions of people who recently generated income from their labor have gamed the system and are now "disabled for life." Millions more are living in a bank-enabled fantasy of free housing. Millions more are living off borrowed money: student loans, money the government has borrowed and dispensed as transfer payments, etc. Assets are artificially propped up lest a banking sector with insufficient collateral be revealed as structurally insolvent.

One definition of dysfunction is an internal conflict that cannot be resolved. That is our Status Quo: its strategy to fix its dysfunction and instability is to create an artificial economy based on smoke-and-mirrors data, ginned up balance sheets and a facade of "normalcy" that is anything but normal or healthy. How can such an artificial economy become healthy when its self-correcting features and transparency have both been overriden by artifice?

It's not difficult to predict an eventual spike of instability in such a system; the only difficulty is predicting the date of the instability. Hiding a broken, dysfunctional economy behind a facade of artifice and illusion can't fix what's broken, it only adds to the system's systemic instability as resources that could have gone to actually fix things are squandered on propping up phony facades of "growth" and "health."

http://www.oftwominds.com/blogoct12/art ... 10-12.html

Bernanke, You (Lying) Ignorant Slut
 

This afternoon Bernanke strode to the lectern and delivered a speech including this ditty:

    But today I want to focus on a role that is particularly identified with the Federal Reserve--the making of monetary policy. The goals of monetary policy--maximum employment and price stability--are given to us by the Congress.

Notice those bolded words -- price stability.

    These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable.

There is the lie; you just witnessed Ben Bernanke take words from a Statute -- an actual law -- and lie through his teeth about what they say.

This is the actual language in The Federal Reserve Act:

    The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

STABLE means unchanging.  It does not mean "the rate of increase in consumer prices (is) low and stable" -- it means the target rate of change in consumer prices is zero.

This is the "Grand Lie" told by Bernanke, by Greenspan and by those who came before them.  It is an active and intentional act of law-breaking by every single member of the FOMC and has been serially since 1913!

Congress could change the law.  It could specify that inflation should be "low and stable."  But Congress said no such thing.  Congress mandated stable prices, not "slowly-increasing" prices.

And let's not kid ourselves as to the actual impact of such a policy.  The so-called "2%" inflation rate that is allegedly "low and stable" sounds like it's a pretty harmless thing.  After all, how can 2% hurt you?

Well, over 100 years, what does 2% inflation turn a $100 item into?  If you said $100 + ($2 (2% of $100) * 100), or $300, you're wrong.  Because an inflation rate is an exponential function that item will cost $710.26 100 years down the road.

In point of fact, however, the actual inflation rate has been approximately 3%, not 2%.  That doesn't sound like such a bad "miss", does it?

Well that same $100 item under a 3% inflation rate costs $1,865.89 100 years hence.

Do you still think this theft of saved funds is "no big deal" when in fact all you're left with of that $100 100 years hence in terms of purchasing power is about $5.36?

I believe that the original Coinage Act's provisions (passed in 1792), which proscribed death for intentional debasement of the currency, is the correct sanction for such treachery.

But despite the fact that there is currently no penalty clause of any sort in The Federal Reserve Act does not change the essential character of what Ben Bernanke and the FOMC are doing.

They are intentionally violating the law.

Now let's talk about the other essential claim that Bernanke made today:

    In normal circumstances, the Federal Reserve implements monetary policy through its influence on short-term interest rates, which in turn affect other interest rates and asset prices.1 Generally, if economic weakness is the primary concern, the Fed acts to reduce interest rates, which supports the economy by inducing businesses to invest more in new capital goods and by leading households to spend more on houses, autos, and other goods and services. Likewise, if the economy is overheating, the Fed can raise interest rates to help cool total demand and constrain inflationary pressures.

How does lowering interest rates "lead households to spend more on houses, autos and other goods and services"?

Lowering interest rates doesn't make your wages go up, so you can't spend more from your earned income.

No, it leads you to spend more by borrowing more money.

But borrowing to consume is in general foolish.

To begin with the more money you have chasing goods and services the more they cost!  This is economics 101, and applies to everything.  Take a look at college costs over the last 30 years if you don't believe me and explain how Calculus has changed in that 30 years, and why it should cost five times (in inflation-adjusted dollars) as much to learn it today in college as it did in 1982.  There is only one reason this happened -- too many dollars chasing too few goods and services.

As a result borrowing to consume is self-defeating as you wind up driving the price higher, which then leaves you in a position where you have to borrow even more!

That would be bad enough if it was the only thing that screws you when you engage in this behavior.

But it's not.

In fact, there are two other problems which are at least as serious and combined are much more-so.

The first is that when you buy a good or service today instead of tomorrow you inherently overpay for it compared to tomorrow's price.  This is due to the fact that human ingenuity continually improves productivity.  Consider the lowly handheld calculator.  If you want one today they're $3 at WalMart.  How much did they cost 30 or 40 years ago?

This is admittedly an extreme example, but far-less extreme examples abound.  A DVD player was $500 just a few years ago.  A couple of years later they were $100.  Now they can be had if you shop carefully for under $50.  Your desire to have it "right now" meant you paid more and got less.  This is perfectly fine provided you can afford to pay for the item with your current economic surplus (savings or current wages) but if you borrowed to own it then you overpaid twice -- once because you drove up the price by chasing the goods and then again because you failed to take advantage of waiting for productivity improvements to lower the cost -- and thus price.

Most people do understand this cost and accept it in the name of vanity, keeping up with the Joneses or whatever.  But it is the other cost -- that is, interest -- that is truly insidious.

See, when a loan is made even if the law is followed (and it is not) and actual capital is lent out that was previously acquired (and it is not) the interest that you are going to have to pay in the future does not exist in the economy.

Get this straight folks -- it doesn't exist.

Now you can look at this situation in isolation -- as "just you" -- and shrug.

And you might get away with that.

For a while.

But 2008 showed us what happens when too many people shrug for too long.  When too many people borrow to spend now rather than spend what they can afford with current production and save some percentage of their income back to form capital eventually you hit the wall because the interest that was never created to pay the debts doesn't exist, and eventually someone raises their hand and says "this is a Ponzi scheme -- credit must expand exponentially for everyone to be able to pay, which means it won't -- and can't -- go on forever.  I quit -- give me my money NOW!"

The music stops and there are not enough chairs.

What government and The Fed have done since is not a solution.  It was and is a scam. It is an attempt to sell you on the premise that the bad debts that were taken on and left people without chairs can continue to exist and be serviced by the government running huge budget deficits.

This is a lie and it is trivially provable that it is a lie.

If the economy has 10,000 units of production and 10,000 units of credit and currency in it, and the government emits another 1,000 units of credit and currency nothing has changed other than the fact that each unit of production now requires more credit or currency to buy than it did before!

This is exactly identical mathematically to the government increasing taxes by the precise same amount without telling you it has done so!

In fact, the government can and has lied to you and told you it has and is cutting taxes while in fact it has raised them!

But what happens when you raise taxes in this fashion?  The cost of employing people goes up and the number of employed people goes down.

And what has happened?

Exactly that.

Now how do you increase government funding and thus maintain the deficit spending if you can't put people back to work?

You can't.

The premise that Bernanke, Bush and Obama all operated on is that by spending in deficit they could con you into restarting the exponential borrowing charade.  Four years on we now know this strategy has failed; there are simply not enough qualified and willing borrowers in the economy to take on yet another exponential load of debt ($54 trillion, approximately, this time around) to run another "cycle" of this Ponzi scheme.

But if we keep this charade up for too long, since we have now centered the gross increase in borrowings in the Federal Government, and hit that wall, the government collapses.

That is what we now face, and the only question is how far we are away from disintegration of our society, government, economy and mass unemployment.

Bernanke said much else in his speech today, but these are the only two items that matter.  The rest was nothing more than arm-waving, and I'm quite sure he hopes you didn't catch his dissembling right up front -- if anyone did, it certainly wasn't evident in the questions that were asked.

Wake up America.

http://market-ticker.org/akcs-www?post=212224

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The highlights from Bill Gross' latest monthly piece:  

    Armageddon is not around the corner. I don't believe in the imminent demise of the U.S. economy and its financial markets. But I'm afraid for them.
    Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the "Ring of Fire."
    If the fiscal gap isn't closed even ever so gradually over the next few years, then rating services, dollar reserve holding nations and bond managers embarrassed into being reborn as vigilantes may together force a resolution that ends in tears. The damage would likely be beyond repair.  
   The U.S. and its fellow serial abusers have been inhaling debt's methamphetamine crystals for some time now, and kicking the habit looks incredibly difficult.  

Someday they won't be calling Americans "Meth addicts" but "Nazis" for kicking their scamming asses out of here.  Bill Gross like Bernanke and Bibi Netanyahoo is just another God-Damned Jew. --CSR

[Ognir]

I don't buy it that ZH has been sold-out, but that is certainly possible wild posts of recent, unnamed sources, war on Iran, israel douple speak http://www.zerohedge.com/news/2012-10-1 ... rsian-gulf

The Ogster ‏@Ognir2

Der Spiegel, citing unnamed "Western intelligence officials" privy to "top secret" information #sad