Tag Archives: Janet Yellen

How Natural Law Works

Mention the words natural law and what image does the mind conjure up? Say natural law and the brain might create for you and image of airheads living in communes preaching agape love. As a teacher of natural law, I treat the subject quite differently. Make an observation of a principle that works over and over again over all of history’s long timeline. Then, even with all of the effort in the world, folks can’t come up with a universally accepted, or even a good guess as to why it works. The cause is often unexplainable or elusive and not concrete at best.

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How Low Are You Willing To Go?

Lets say you have $300,000 cash and you don’t want to risk it in the stock market. Today the highest CD rates in the country are about 1.25%. That pays you $312 per month. If you were not being robbed blind by Federal Reserve policy, you would receive about 3.25% on your savings or $813 per month. This is because no bank in the world will pay you what your money is worth if they can get the same from the Federal Reserve for next to nothing. I ask you, are you happy with that? Everybody has to decide for himself how low he is willing to go.

Are you in awe of Janet Yellen and the other Federal Reserve members? I am telling you, these people are no more honest than crack dealers. They have lower morals than crack whores. But, people love and respect them. For what, God only knows. They have no competence whatsoever. You think they do? All they have done is wreak havoc on the economy and rob you blind. If you love them anyway, you are crazy. A group of astrologers would do better by leaps and bounds. Never in the history of the world has a central bank successfully kick started an economy. But, people love and respect them anyway. Would you respect a thief who broke into your house and stole your silver? Perhaps you would, if you are crazy. O.K., so you are satisfied to earn a paltry 1.25 % on your savings? If you are, you are crazy.

What is worse, Federal Reserve policy has wrought so much havoc on the economy the whole system is going to collapse. Chances are good you will lose the savings on which you’re earning no more than 1.25%. And, will you still love the Federal Reserve? Perhaps, but you are crazy if you do. Do you think Federal Reserve members are good economists? Even if they grasp the concepts, they are too dishonest to be good at anything.

The Federal Reserve System was established by Congress in 1914. During all of its years it has impoverished countless human beings and has not had one successful program. Just since 2008 they have stolen unfathomable amounts from honest hard working Americans. Still Americans love and worship these people. An act of Congress can also eliminate this destructive institution in the same way it was created. The Federal Reserve Members belong in handcuffs, but that won’t happen.

Have I been too harsh? Well, this is as harsh as I can possibly be. If I could be even more harsh, believe me, I would.

Will Trump Rig the Stock Market?

In 1987 the Reagan administration began managing the securities markets. Since that time, to varying degrees politicians on both sides of the isle have supported programs to enhance asset prices. Both monetary and fiscal policy have been used since that time for that very purpose. There have been no exceptions. Easy money has had only one purpose and that is to further enrich politically powerful constituents and investors.

Beginning in 2006 efforts changed from simply enhancing stock prices to completely preventing any loss of value. In 2008 asset prices declined in the face of unprecedented preventative efforts.

From 2008 through the present, all government efforts have centered around saving the stock market and elevating asset prices and goosing profit margins. Although they have no idea how or why it has happened, the poor and middle class have been devastated financially by the process.

All increases in corporate profits and GDP are rooted in spending by the super wealthy who are the only group to benefit from the rigging process.

When the stock market declines, the economy will drop into a very serious depression which will make the Great Depression of the 30s look pale. Will Trump rig the stock market?

The stock market is already being rigged. A better question is, will Trump interrupt the process? I would guess not. Trump will do everything possible to continue goosing asset process at least until the second year of his presidency. The Trump tax cut and spending plans are very much a way of passing the rigging baton to congress and taking pressure off the very tired Federal Reserve.

It may not be possible. Reality can impose itself on the world at any time, without warning and without anyone’s permission. Trump’s personal case will be better served by accommodating Wall Street. That is what he will do.

The public is still clueless as to how these things work. In this case, Trump has nothing to do lose by continuing to funnel wealth and income to the upper 1%. People know they have been burned, but are still clueless as to the source of their suffering. Suffering does activate the thinking process but it can take a long time.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute

Changing Faces of Welfare

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The welfare we provide the rich through the Federal Reserve system in just one year is many time greater than all of welfare we have provided the poor in all of our history. To that we have to add the benefits the very rich receive by using congress to guarantee their incomes and rig the markets they operate in.

The notion that the poor are the primary engine for never ending dependence on government has whiskers on it to say the least. Once an idea gains acceptance and catches on it develops a life of its own. When the time comes that it is no longer true, it is treated as fact regardless. Hardly a soul even wonders otherwise.

The poor do get some benefits, but the days when “helping the poor” seriously drove up the cost of government are long behind us. The true angst behind the current change in government is the fear by the rich of being cut off from their government benefits. That fear is probably not well founded. Trump’s tax and spending plans are tailored towards rewarding the politically powerful, just like those of the last two presidents.

Welfare for the rich is far more hazardous than welfare for the poor. The rich have the political power to see to it that their benefits continue growing. Can you visualize a thousand sided figure? No you can’t. It is just as hard to fathom the amount of money the rich have extracted out of the general population over the last forty six years by using the government as a tool. The process is ongoing.

Fantasy Free Economics recommends the following blogs.

Woodpiler Report Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

How the Rich Got Lazy

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No one gets lazy without a lot of help. The poor are often accused of being lazy. It is often said that programs to help the poor rob them of initiative. It is said, the more government gives to the poor, the lazier they get.

What happens to the rich when, they get lots and lots of government benefits including artificially manufactured wealth and all the money they want to borrow for less than the rate of inflation? What happens when Federal Reserve policy is used for nothing other than to drive up stock prices for the benefit of the richest people on the planet while driving corporate profit margins much higher than they would be in a free market?

I think you guessed right. The rich get extremely lazy. They stop innovating. Their entrepreneurial skills get rusty. They keep their hands out so as to get more and more from the tax payers. The government giving to the rich does certain types of damage that does not occur when giving to the poor.

When the rich are on the dole, corporate profits suffer and the poor get laid off or fired. When the poor are lazy, the same effect does not occur. The poor don’t innovate and come up with new business ideas. They just wallow among themselves and the damage doesn’t spread.

When the rich discover that all they have do do is wait for the Federal Reserve to drive up the prices of their assets what follows.? It is a lot easier for a corporation to buy its own stock and create artificially high earnings. Who needs new and better products to sell if government pays for not innovating?

The Federal Reserve is starting to make noises about buying equities outright. They already do so through surrogates. They may be buying equities now, even if they are forbidden by law from doing so. Laws at the top are no longer enforced and no one outside of the Federal Reserve really knows what they are doing. It is a secret integrity free agency.

One way to make absolutely sure the economy never recovers is for central banks to buy stocks. Many foreign central banks, like Japan already do. The Swiss do. These programs guarantee economic failure for all industrialized nations. Do not wait for the global economy to turn around anytime soon. Citizens around the world are mostly clueless as to what is going on and have no idea how much wealth and income is being taken from them. For Americans, the rich are their role models and are beyond criticism in the eyes of citizens.

Stock Market Through October

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Don’t click on these headlines. They are images and just for display. September through Mid-October is the logical time for the market to crash. Will it crash? Everything under the sun is being done to hold it up. Headlines like the ones displayed here are not what they seem. They are designed to draw in short sellers to squeeze so as to help push the market up. The financial news, regardless of where it originates, does not report much genuine news. The financial news is an opinion management service and promotes faith in the financial markets. The only time a lot of bearish articles show up, is when there is a planned boost to equity prices. The more traders who short are expecting a decline, the easier it is for manipulators to drive it higher.

Who is buying stocks? The public is buying only a little and hedge funds are not buying much. Certain central banks are buying heavily. There is no way to tell exactly what the Federal Reserve is doing, but be assured, it is buying through surrogates if not outright. Friends of the Fed are creating artificial demand through the derivatives markets. These are large institutions which get advance information and other benefits from the Federal Reserve for helping make each day green. There are corporate buybacks. This is a type of corporate cannibalism that generates higher earnings and stock prices in the short run but that will eventually break the companies. The Federal Reserve assures the corporations that they have their backs and that their buys will be profitable.

Think of this as a chain that will be broken. We don’t know what link will fail but when one does, the whole system will collapse.

Central Banks + Friends of the Fed + Corporate Buybacks + Short Sellers Getting Squeezed=Higher Stock Prices

The central banks will not fail. You as a citizen can only invest what you can earn and borrow. Central banks have no worry about taking losses. They get all the free trading money imaginable free, with just a click of the mouse.

Friends of the Fed are organized crime. They will participate as long as the Federal Reserve’s guarantees allow them to make a profit. They are the ones who squeeze short sellers. All of their trades are short term, sometimes just seconds apart. Friends of the Fed are the most likely link in the chain to break. When the Federal Reserve can no longer guarantee them risk free trades, they will disappear into oblivion.

Some corporations are already backing off of buyback programs. Many corporations have losing positions in their own stock already. The eventual losses will be devastating. Corporate officers love buybacks because they allow them to get paid the largest amount of money in the shortest period of time. If the stock of their companies tank, corporate officers have little concern. Their cake has already been made and all they have already eaten it. Corporate buybacks could evaporate very quickly.

Short sellers amaze me. So many still trade is if they were in a genuine trading environment. They are shrinking in number because so many have gone broke.

There are two ways the market can crash this fall and they are both long shots. An enormous amount of stock could come on the market from unanticipated sources. A war or an assassination could trigger something like this. Members of the Federal Reserve Open Market Committee could suddenly be overcome by guilt and confess as to what they have been doing and what the outcome will be. Definitely don’t count on that. The other way is for one of the links to come undone. Friends of the Fed are not doing as well as they were. I know nothing of their exact profit and loss situation. They will cut and run sooner or later. I have no way to tell.

Central banks are not going to give up controlling stock prices. My expectation is that they will be successful in keeping the market up through October. It is getting harder to do. My portfolio consists of cash and just a few small positions in bear etfs. I am a good trader but I know my limitations. Like everyone else who trades I would have to trade against the government based on what I expect the government to do. Even expecting the market to move higher through October I won’t go long. The chances of a huge one day washout are simply too great.

Stock Market Now Through January

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Human behavior is highly predictable. Dogs and cats have it down pat. Animals do not define their owners with euphemisms. They respond to them exactly as they are and know exactly what to expect. Human beings define their masters with all sorts of lofty euphemisms so they are completely confounded by what happens. You have no masters? That is because you define them as representatives, regardless of the fact that you serve them.

There are plans for the stock market. There is virtually no chance the averages will close down for the year, even if indicators lead you to expect that it will. Following an up year, you can expect a sell off in the first few days of January 2016 and then a break out to the upside which will be billed as the next up leg of this amazing bull market. Never mind that the breadth may be miserable and international events and circumstances will be miserable.

To accomplish these things, all it takes is all of the money in the world. The central banks have that and even more if they need it. All investors have is what they have earned.

How is such a thing possible? It is easy. All it takes is for the overwhelming majority of world citizens to believe the Federal Reserve is necessary, Open Market Committee members are honest people and that all that is being done is for the public good.

The truth is that Wall Street has hired government to enrich them and that is what is happening. It is as simple as that. The end, of course, is the complete destruction of the economy. That takes a long time so it is still open season on anyone who works for a living.

Americans will figure this out and rebel horribly but the odds of that happening in the next 30 days is real slim. I am forecasting dismal results for anyone trying to short this market. You are right about what you see but having all of the money in the world is an advantage that is hard to overcome. Donald Trump knows these things, so why is he not speaking up? Trump may be a refreshing figure but his bid for the presidency is self serving as all such efforts are. He will speak up only if it is to his benefit to do so.

Here is Curbside Jimmy’s Like The Highway and the Sea

Hedging Against Looking Stupid

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Amidst of world wide central bank efforts to keep stock prices elevated and moving higher, public figures especially current and past Federal Reserve Chairs are starting to comment that stocks are over priced. Remember these people all have genius plus IQs. The world is full of bright people doing stupid things. Why do smart people do stupid things? For one stupidity and intelligence are completely independent of one another. Stupidity is simply maladaptive behavior.

If a brilliant person wants something to be true bad enough, he will see it as true the same as will a moron. Chances are though Federal Reserve members are doing stupid things in keeping with the political agendas they are carrying out. Nothing is too stupid to do if personal gain is great enough. At higher levels economists get paid to lie so stupidity may not enter the picture. The price is right and accepting money is rational.

Still, the wealth effect that has been created never has had a prayer of benefiting the entire country. Do both Ben Bernanke and Janet Yellen really believe QE is a good deal? There is not a chance they do but you will never get an honest answer.

Just watch what happens. More and more statements will be of the kind that point to stocks “possibly being overpriced.” Look for others besides the Fed people to start throwing in their words of caution. Doing stupid things for profit is a whole lot different than doing stupid things because one is an idiot.

Expect more of these kinds of statements. They are hedges against looking stupid. Stupid for personal gain makes sense in a professional sense but no one wants to wear the label.

As for politicians, as the economy denigrates and the financial markets collapse, they will practice the art of not knowing. All will be innocent as in deprived of meaningful information.

Make no mistake. The Federal Reserve folks knew what they were doing.

Gaming The Fed

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Criminals Posing as Economists

I can say with complete authority that there is not one real economist on the Federal Reserve Open Market Committee. How do I know? I am a real economist and I know political hacks when I see them. The Federal Open Market Committee consists of hired guns carrying out the political agendas of others who helped them get appointed and confirmed. Having a degree does not make a person an economist. A degree is no indication of competence. Don’t get me wrong, these folks are not morons. They are some of the finest statisticians, accountants, and mathematicians in the world. They are so good that they can fool just about anybody by talking over their heads and dazzling them with terms only they understand. I am not impressed, partly because I am not bad at math myself but more so because I understand the limitations of mathematics and statistical models.

For an engineer building a bridge math is an indispensable tool. For a social scientist, math is good only for describing what has happened up to the current time frame. Economics, mathematical models have no predictive value. The multitude of suckers who comprise the American population believe every word that comes out of their mouths. When an institution like the Federal Reserve makes a decision, it changes all of the incentives that cause men, women and children to do what they do. The model therefore becomes immediately useless.

The models are useful to open market members because they allow them to cite reasons for what they do. In 2008 economists earned a lot of money convincing fools they could save the world from an economic disaster. What they have done is prevent the economy from ever recovering. Quantitative easing has never been anything other than the carrying out of a wealth transferring political agenda. That goal has been accomplished and now the focus has changed to preserving the wealth and power of the financial elitists who determine their agenda.

The job of the Federal Reserve is to increase the wealth of all who help the members get nominated and hold on to their jobs.

Right now the primary job of the Federal Reserve is to push the stock market higher for the benefit of all who have political authority over them.

The algorithms they use are complex but what the algorithms accomplish are simple. Anyone who has traded for a long time can notice prices being supported, in much the way stock prices have always been supported with respect to new offerings. The firm handling the offering has legal authority to manipulate the offering price steady for a certain time period. The Fed is not limited by the law, so deals can be made to prevent stocks from falling for many days running. Each day a small number of stocks are goosed to serve as confidence builders. Every effort is made to make it appear as if the market is about to fall so as to suck in short sellers who are subsequently squeezed out of their positions. This is all government business. Anyone can notice on days when there is news that would normally cause a shake out, central banks buy with both hands and halt any sell off early on.

The unsuspecting investing public is happy as larks because they are watching their IRAs rocket in value. Only a few will ever get their money out at a profit. Why? Only a handful can sell at the top and a few more will be able to sell at a profit at all. This is where math actually is useful. It is mathematically impossible for everyone to sell an investment at a profit when it is severely is severely overpriced. Folks will be shocked at how fast value comes out of their holdings.

The best thing to do is sell right now. There is now way for the economy to grow at all now, much less at a pace fast enough to justify artificially elevated stock prices.

Rigged Market Economy

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The transition has been made in the U.S. from a free market economy to a rigged market economy.

The following is a decent definition of a free market economy.
“DEFINITION of ‘Free Market’
A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.” http://www.investopedia.com/terms/f/freemarket.asp
In the beginning, the U.S. economy was largely free in nature. In a new land with little structure, a free market system developed naturally. The free market concept worked so well, the founding fathers saw fit to separate from England rather than accept government interference. From day one in the new country anyone who could used government as a means of living off the efforts of others. But, the opportunities to do so were minimal. As the country grew and became more complex this changed. Corporations became very powerful and increasingly pressured congress to rig markets. From the 1980s on government policy killed off the free market system.
Adam Smith, father of free market thought, addressed the problem in his classic, Wealth Of Nations.
“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
? Adam Smith
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
? Adam Smith, The Wealth of Nations
Today, for the most part, government decides what citizens purchase and what they pay. Health care is a good example. It is the largest segment of the economy. Government policy dictates that patients pay an insurance company first. The physician is paid by the insurance company. The insurance company plays a role in determining treatment and what medicine is prescribed.
For the most part citizens are happy with the lower living standards of a rigged market system because they are relieved of the stress of making decisions. They are happy to pay more in return for the illusion of being taken care of. They have no choice so they might as well be happy. Government frequently decides what they buy and they don’t mind.
History’s most famous rigged market system was Germany under Hitler just prior to World War II. One of the seldom mentioned attributes of a free market is peace. As a country moves away from free markets, the chances of war accelerate greatly.
Karl Marx is often noted as history’s most destructive economist. In years to come he will probably be supplanted by the names of Ben Bernanke, Henry Paulsen and Janet Yellen. These are the economists who with the authority given them put the last nails in the coffin of the American free market system.