The Fed’s Hobson’s Choice: End QE and Zero-Interest Rates or Destabilize the Dollar and the Treasury Market Posted on June 24, 2014 Though the Fed is doing its best to mask its abject failure and lack of choices with public relations, the reality is it has no choice but to taper and eventually end its endless spew of credit and its unprecedented and destabilizing purchases of assets.
- Fascist Corporations On Trial In Geneva: World Anti-Trust Trial.
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- ROLLING STONE: “Conspiracy Theorists Of The World, Believers In The Hidden Hands Of The Rothschilds, We Skeptics Owe You An Apology.”
Many smart observers assume the Federal Reserve (and other central banks) can print money and buy assets like bonds, mortgages and stocks unconstrained by any limit. Indeed, at first glance, it seems like a closed circle: print the money and use it to buy bonds, mortgages and equities, which are booked as assets.
The more the Fed buys (or enables proxies and financiers to buy), the greater the assets value, as buying pushes prices higher. After all, look what quantitative easing (i.e. buying assets like Treasury bonds and home mortgages) and zero-interest rates have done for the stock market: to the moon, baby! SILVER And to housing: thanks to the printing press and buying mortgages, the Fed inflated an echo-bubble to soften the inevitable crash of the previous bubble:
NWO Cartel have over invested in the greedy derivatives game and those bets are going to go down next year 2015 in a HOUSE OF FLAMES.
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On the surface, there are no intrinsic limits to QE and central bank money-printing:in other words, there appears to be nothing stopping the Fed from printing essentially limitless money and buying up the majority of Treasury bonds, mortgages and stocks.
But we must be mindful that the economy is not linear. Pushing asset prices higher via unlimited credit at zero-interest rates has not trickled down to wages or consumer spending.
That is, the wealth effect is missing in action despite a $20 trillion increase in household net worth. (Most of this increase flowed to the top 10%, and within that, most flowed to the top 1/10 of 1%.
Meanwhile, risky credit bets are soaring: subprime auto loans are now common, margin debt has skyrocketed and purchases of junk bonds have gone through the roof. The Fed’s printing and asset purchases do not occur in a vacuum.
Fed printing and asset purchases affect the reserve currency, the U.S. dollar, and the Treasury market, which the Fed now dominates via its purchases.
Keeping interest rates near zero has removed any financial incentive to buying Treasury bonds other than flight to safety.
As Stephanie Pomboy observed in her excellent Wine Country Conference 2014 presentation, (and I paraphrase here):
“every day they continued QE, they chased away more and more of our foreign creditors.”
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The Treasury must also sell new bonds to replace the immense amounts of T-Bills that are maturing. The more T-bills the Fed buys to keep interest rates at zero, the more it drives foreign and domestic buyers out of the Treasury market. This is also true of the U.S. dollar. This sets up the Fed’s Hobson’s Choice, which is the term for an illusory choice, i.e. a choice in which only one option is offered.
The sudden emergence of End the Red rallies in Germany is a fascinating development spreading throughout Germany protesting the corrupt and dying Rothschild NWO global status quo. One of the key targets of these groups is the Rothschild U.S. Federal Reserve system, which is the core cancer infecting the entire planet.
According to the organizer of these rallies, they have now spread to up to 100 cities and have a combined attendee base of around 20,000. What is also interesting, is that the mainstream media in Germany is calling them Nazis. In Germany, if you don’t support Central Banking, this apparently means you are a Nazi. What a joke.
Future generations will look back at Central Banking as we look back at slavery.
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- If the Fed continues QE, it destabilizes the Treasury market that funds U.S. government deficits, and the hegemony of the U.S. dollar.
- If it ceases QE, interest rates will rise as non-central bank buyers will demand an actual return on their capital.
- Rising rates will crush the echo bubbles in housing and the stock market, which has been propped up by dividend-paying stocks and speculative issues purchased with Fed-supplied “free money.”
- For the Deep State, there is no choice: dollar hegemony is paramount.
- Rising interest rates and the fate of financiers who have over-leveraged the Fed’s free money are not even secondary.
The Fed believed that five years of free money and incentivizing risk would heal the economy. They were wrong. The real economy is more fragile and dysfunctional than ever due to the distortions created by Fed policies [Keynesian Economics], while the top 1/10th of 1% have feasted on the asset bubbles inflated by these same policies.
We discuss the fact that neoliberal capitalism has become terrorism and that the ‘terrorists’ don’t see themselves as any different than Halliburton or Chevron, producing glossy prospectuses filled with gory facts for prospective investors. In the second half, Max interviews Luke Rudkowski of WeAreChange.org about crowdfunding, cryptos, independent media and mass protests in Berlin against the U.S. Federal Reserve Bank.
Meanwhile, beneath the crony-capitalist [communism’s centralization scheme] celebration of new asset bubbles, the foundations of the nation’s fiscal security–the Treasury market and the U.S. dollar–have been undermined and destabilized by these same Fed policies. Those who focus solely on the Fed assume the ruling Elite is monolithic: unified in worldview, strategy and goals.
I believe this is overly linear and overly simplistic: there are competing elites, and nations fall when their elites experience profound disunity.
Though the Fed is doing its best to mask its abject failure and lack of choices with public relations (“Pay no attention to what’s behind the curtain!”), the reality is it has no choice to tapering and eventually ending its gargantuan spew of credit and its unprecedented and destabilizing purchases of assets.
This crisis is simple to summarize: the paper claims on wealth so far exceed actual wealth that something’s gotta give.
- Something’s Gotta Give: Rothschild’s 1919 Silver Fix: Iceland Reminds The World ~ The Power Of The U.S. 1776 Revolution ~ Wait Until You See The Whites Of Their Eyes!
- SAVE THE BANKS ~ SPREAD THE DEBT: Labor Force Participation Plummets by 63.7% ~ Government Food Stamps Increases To 46.5 Million Citizens ~ But Unemployment is only 8.3%? ~ Here’s His Trick!
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- NWO Imploding: 611 Resignations From World Banks, Investment Houses, & Money Funds ~ Getting Out While They Can!
- How Free Americans Became Slaves To The Rothschild Bankers: Glass Steagall Act Will Stop Them ~ You Know, The One Billy Clinton Repealed In 1999 That Allowed The Housing Bubble!
- Paul Ryan Helps Americans Cut Back On Their Medicare, Medicaid, & Other Necessities, That We Fought & Died For: All In Order To Pay For The International Banking Bailout ~ Which Was Orchestrated By Fraudulent Mortgage Credit Derivatives That Caused The Housing Bubble!
- Orchestrated Housing Bubble – McCain Erases 100,000 Middle Class Jobs On F-22 Raptor – While Obama Prints Out Trillions Of Dollars For Fabricated Debt By International Banks.