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Fed Admits It’s Running Out of Bullets

FOMC signals that bond purchases may stop

WASHINGTON (MarketWatch) — For the first time since the financial crisis started five years ago, the Federal Reserve has at last made its first signal that its extraordinary loose monetary policy will start to get tougher.

To be sure, the change isn’t gigantic. There’s no sense that interest rates will increase from the near zero levels that have lasted for over four years.

And the Fed only last month initiated a new bond-buying program, to top off a plan to add more mortgage-backed securities that had only been around since September.

But, the minutes show, the central bank is starting to say, enough is enough. Of the crowd that supported bond buys, a few say they should continue until the end of the year, and several said it could stop, or slow, well before then.

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Fed Debated QE End in 2013 Amid Concern Over Total Assets

Federal Reserve officials, expressing concern over their swelling balance sheet, began debating an end to their unprecedented bond-buying as early as this year even while preparing to boost stimulus to a new record. http://www.bloomberg.com/news/2013-01-04/fed-debated-qe-end-...

My question is what going to

My question is what going to happen when this phony money come back to the states(estimate in April)and when the 100 year old charter expires with the Fed. From what it looks like the tax's collector is going to have a bad year.

Out of bullets?

Or their feet are shot up to a pink goo?

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

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I like sites like CL.
No middle man.
private enterprise and advertizing/selecting a business- is free.
If your a fraud the community calls you out, and CL lets most things ride and never takes a side- unless you violate the very few terms of service.
Thats why Law enforcement is all over them with the media.
They hate what CL does to big business.
CL brings it home locally to the little guy, and its FREE4ALL.
I hope thats where we're going.
CL is in every country practically.
same set up same tos.

"OH NO! He has a SON?" Neoconservatives and Liberals EVERYWHERE!

Rand Paul 2016

kill us with inflation now.

kill us with inflation now. then people burn all of their dollars for warmth, we'll be hit with severe deflation and the only ones holding the dollars are the ones with the printing press!

old news

CollapseReport called it on July 20th...

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I was watching CCTV news and they were interviewing a Chinese economist around 25 yrs old.
He said computers can do one thing to perfection and that is figuring numbers and math.
Then went on to say brokers will no longer be needed because computers dont know greed and theft.

It is amazing what comes on Chinese American news, CCTV and he interviews they conduct.
Our leaders are on their station telling the truth while they lie to Americans on our own stations.
CCTV is awesome news- the only thing is when they interview the chinese they are only showing the socialist answers to problems.
More rules and regs- never a free market solution allowed on air concerning chinese fiscal/law issues.
They say the Chinese gvt always needs to do more.
But then end the statements with "more transparency" is needed..

"OH NO! He has a SON?" Neoconservatives and Liberals EVERYWHERE!

Rand Paul 2016

nothing here but BS. They

nothing here but BS. They can't stop. If they stop they will collapse the whole economic system. When the whole economic system collapses and dumbass jill and joe sixpack finally get it figured out that they have been FUCKED in every which way possible by the numbskulls they elected they will revolt. When those idiots revolt it will be the end for the powers that be. YES it will eventually collapse to that point but those morons in the FED and Government will destroy the dollar to buy themselves time before it does.

Michael Nystrom's picture

Sierra, what is the endgame?

They can't keep printing forever, and apparently they can't stop.

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

Where do the trillions go?

The criminality of the FEDERAL RESERVE is blatant and apparent. We need to have the justice department end this insanity.

The Fed ran out of bullets a long time ago

The Fed ran out of bullets a long time ago. If the Fed actually had some magic bullets to shoot at the demons bedeviling this downbeat economy, don't you think they would have shot them a long time ago? At this point everything the Fed does, like for example QUANTITATIVE EASING, is nothing but a rain dance.

Ed Rombach

Michael Nystrom's picture

A Rain Dance

Good one Ed.

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

Don't worry

They have plenty of more tools in the tool box. They have both the resources and influence.

Not saying it will be a tidy job but there are still options imo.

They are bankers afterall, they can still throw in a few more shells into the game.

https://www.youtube.com/watch?v=IFLa_tl4Rk0

donvino

they have 2 to 3 years at the

they have 2 to 3 years at the max.

One merely has to look at the treasuries

and what today's announcement caused there: http://pigbonds.info/

Now stop for a second and think about what just happened. Yields rose 7.1% on 5year and 3.8% on 10year bonds.. and all they did is some of them said they were MAYBE going to stop creating money out of thin air before the end of this year!

Can you imagine what it would do to the bond market if they actually stopped let alone raised the rates?!

There is no way they will stop printing money, they are between a rock and a hard place and although there are two ways out, both painful, they will choose the historically politically more favorable - money printing. Count on it.

Exactly

Debt is the name of the game. If they did allow rates to rise, we would see that the emperor has no clothes... The entire Gov revenue would go just to pay the interest on the debt. All hell would break loose. Maybe that's what they want but it is much easier to orchestrate a war and kill millions of people with bombs.

Geez

Thought you meant literally ran out of bullets. They just bought millions of rounds of ammo ya know. Be specific when you do headings please.

skippy

This is not "running out of bullets"... it's BS

It's just a market signal of NOTHING meaning "hey, we're not going to QE your @sses forever, so dont get used to it."

That's the sum total of what it means.

Michael Nystrom's picture

It meant a little more than that to the Gold market

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s...
(down 1%)

And to the US Dollar
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s...
(up 1%)

- - -

It definitely means SOMETHING. If the Fed isn't going to QE Congress's @ss forever, then who is? Anyway, we already knew they weren't. If something can't last forever, eventually it ends. This ending is coming a little sooner than expected.

The Fed is sending the austerity signal: We're cutting you off. Time to sober up.

Whether that news comes from your banker or your bartender, as I said below, it is inherently deflationary. No one ever wants to quit the juice.

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

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Gerald Celente called it all falling down, sometime in March.

"OH NO! He has a SON?" Neoconservatives and Liberals EVERYWHERE!

Rand Paul 2016

Not so sure.

What you are saying is it's good for cash.

But if right after that inflation comes back in a hurry, which it certainly can given the unprecendented TRILLIONS in credit created over the past few years that banks have been hoarding, cash holders can get KILLED.

Nothing's really changed. One's net wealth should have a risk hedge for inflation and a risk hedge for deflation. A little of this. A little of that.

If you don't have food storage, that's a good place to start because it will save you money in an inflationary scenario. Or, if you lose your job in a deflationary scenario you have food. A little silver works well that way too. But not more than 10% of total wealth.

Michael Nystrom's picture

No one is sure

Not you, not me either. Now that we have that out of the way, we can continue with the speculation.

How is the inflation going to come back? The inflationists have been warning of that since 2008. Yes, we've had some inflation, but not the hyperinflation that was feared. Overall, in spite of all of the credit creation by the Fed (it irks me so much when people say "money printing"), the economy has just been treading water. Bernanke has always been more concerned about deflation than inflation.

The only way money gets into the system is through lending, and that still isn't happening. Interest rates are low, money is cheap, but only if you can get a loan. And the banks aren't lending.

I don't doubt we'll see inflation down the line. But not yet. The only one spending is the government, and that is going out of style, politically. It is no longer "politically correct," as it were.

So yeah, diversify. Keep your eyes peeled. Debt is great in an inflationary environment, but it will kill you in deflation.

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

Thank you Michael.

The lending HAS BEEN happening. That's what the QEs are. In this case it was lent to the banks who didn't lend it further (or didn't lend much of it further).

Yes, interest rates might go up, but there's literally TRILLIONS of QE dollars sitting in bank ledgers.

As you rightly point out, they make money by lending it further. Right now it's to offset the lost hedges they made.

If the risky bets the banks made tank and/or the government contracts spending, it can go deflationary.

If the bets dont totally tank or if the government really doesn't cut spending, whether or not rates go up, the money will get lent further, resulting in inflation.

This statement from the Fed was merely a signal that the unlimited spigot may not be so unlimited. It was intended to influence a reverse in the rate inversion.

Michael Nystrom's picture

Hey, thank you.

The reverse in the rate inversion worked - at least for today. This is a proxy for the 30-year yield:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s...

Rates took a big jump today. We'll see if it was a one day anomaly, or the start of a trend. Like I said somewhere else on this thread, price is the ultimate reality. I stole that from Richard Dennis: All known information is reflected in price.

While I personally lean towards deflation, I try to keep as open a mind as possible, and always monitor gold, the dollar and short + long term interest rates. I think this is going to be a pretty interesting year!

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

Starting to shake my faith in currency collapse

Could it be that the Fed will actually pull the plug in 2013 to let interest rates rise and strengthen the dollar?

I don't think so, but most Schiff-heads will be wiped out if they do. Maybe this whole thing will collapse in the opposite way that I have been preparing for.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

Michael Nystrom's picture

You have to know that the Fed is not stupid

They have the ability to read the Daily Paul too! lol.

They know as well as anyone else that they can't keep "printing" forever.

Furthermore, they're not "printing" they're creating credit. There is a big difference. Creating credit does no good if there are no borrowers. Thus the Fed is stuck buying up government bonds. I don't think they're buying them directly from the Treasury - they're buying them from primary dealers. (Have to keep up appearances that they're not simply monetizing the debt.)

The article says that either 1) The Fed thinks the economy will recover, or 2) The Fed realizes that the program isn't doing much good. Well it is unlikely #1, and #2 is like, duh.

Maybe they read Ed Rombach's report here on the DP: How to Defuse the Debt Ceiling Time Bomb. Maybe they're getting worried about holding too much USG debt. Maybe they're afraid they're going to get whacked by Congress. Maybe they're worried that they're getting fattened up on debt and then they'll be killed and eaten like a Christmas goose.

It is treacherous up there at the top. The Fed was created by an act of Congress, it could just as easily be killed by Congress, and all the debt they're holding be wiped off the balance sheet with the swipe of a pen. Why not? It was created by a swipe of the pen...

To be mean is never excusable, but there is some merit in knowing that one is; the most irreparable of vices is to do evil out of stupidity. - C.B.

The Fed isn't stupid, but it is in a box

It basically has two choices:

(A) Keep buying debt to force low interest rates which will weaken the dollar.

(B) Let rates rise which will weaken the economy.

Eventually (B) has to happen no matter what they do, but I thought they'd keep trying (A) until inflation was way out of hand. I've been betting on inflation, not deflation. Look at what happened to gold stocks today like Goldcorp. Barrick, IAG, etc. They are getting crushed in anticipation of the Fed killing the bull market in gold. The Ron Paul/Peter Schiff stock portfolio took a tremendous hit today. So did mine. :(

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

Michael Nystrom I did tests

I still can't reply to your comments.

Please fix this problem.

P.S. twice banned Thomas aka Pollman says he has more accounts here --- please take care of that...if you can.

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sometimes LL can suck & sometimes LL rocks!
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Number 2's picture

Tom I'll have to check

In the meantime, can you try replying to this comment. This is a test account that I use.

- Nystrom

You're a good man,

Michael!

We owe you a lifetime of thanks.

They that give up liberty for security deserve neither.