http://truthingold.blogspot.com/2013/01/the-big-lie.html
There's two problems with the above. First, if it were indeed true about the Fed ending QE by the end of 2013, think about what that would mean for interest rates, mortgage rates, the housing sector and the economy overall. If the Fed stopped buying Treasury and mortgage bonds, interest rates would spike up several hundred basis points and the economy would really tumble off the cliff.
Second, who will buy all the new Treasury debt issuance? The Fed has purchased well over 50% of all new Treasury issuance in the last three years. If there Fed were not buying this paper, who would? Seriously. Either future Treasury bond auctions will fail OR it will take significantly higher interest rates to induce new money into Treasuries to make up for the trillions the Fed has been buying. Or, of course, the Government will balance its spending and won't require additional Treasury issuance...I would lay all my money on any bet that the latter will never happen.
So I guess the FOMC minutes were a big lie. It's not the first time the Fed has suggested that QE would not continue, only to be expand it within 6-9 months. Government deficit spending = de facto QE. The second Big Lie today was with the BLS employment report. As it turns out, I found a big gaping hole in the employment report today and I have not seen anyone question the number in any of the prolific material which explains why the BLS employment report is fictitious.
You can read my analysis here: The Big Gaping Hole In The BLS Jobs Report
Needless to say, the Fed has already committed to buying a $trillion more in Treasury and mortgage debt in 2013, and unless the Fed is prepared to shoulder the consequences of ending that program rather than expanding at the end of 2013, yesterday's plunge in precious metals can be seen seen as a true gift from the markets by anyone who takes advantage of it.
http://www.businessinsider.com/feds-fire-brian-sack-federal-reserve-bank-2013-1
NEW YORK (Reuters) - Brian Sack, the former head of the Federal Reserve Bank of New York's open market operations who for the last six months served as a senior policy adviser, is to resign effective January 18.
And note Fed Heads fail to publicly follow Bernanke party line that the Fed does NOT print money ......
http://www.zerohedge.com/news/2013-01-04/liesman-fed-gets-print-dollars-bullard-indeed-we-do
Submitted by Tyler Durden on 01/04/2013 13:59 -0500
NEW YORK (Reuters) - The Federal Reserve will be in a position to think about halting its large-scale asset purchases this year if the U.S. economy improves, a top central bank official said on Friday, fingering a 7.1-percent unemployment rate as a possible goal.
Lacker and Bullard doubt present Bernanke policies it would appear.....
FRIDAY, JANUARY 4, 2013
The Big Lie
A lie always contains a certain factor of credibility, since the great masses of the people in the very bottom of their hearts tend to be corrupted rather than consciously and purposely evil, and that, therefore, in view of the primitive simplicity of their minds, they more easily fall victim to a big lie than to a little one, since they themselves lie in little things, but would be ashamed of lies that were too big - Adolph Hitler, "Mein Kampf"Most of you are aware by now that the FOMC minutes for the December meeting released yesterday contained a statement that suggested more FOMC members were interested in ending the Fed's bond buying progarm - aka QE - by the end of 2013. The precious metals were immediately hammered, while there was very little reaction in the bond market and no reaction in the S&P 500 or the housing stocks. Hmmm.
There's two problems with the above. First, if it were indeed true about the Fed ending QE by the end of 2013, think about what that would mean for interest rates, mortgage rates, the housing sector and the economy overall. If the Fed stopped buying Treasury and mortgage bonds, interest rates would spike up several hundred basis points and the economy would really tumble off the cliff.
Second, who will buy all the new Treasury debt issuance? The Fed has purchased well over 50% of all new Treasury issuance in the last three years. If there Fed were not buying this paper, who would? Seriously. Either future Treasury bond auctions will fail OR it will take significantly higher interest rates to induce new money into Treasuries to make up for the trillions the Fed has been buying. Or, of course, the Government will balance its spending and won't require additional Treasury issuance...I would lay all my money on any bet that the latter will never happen.
So I guess the FOMC minutes were a big lie. It's not the first time the Fed has suggested that QE would not continue, only to be expand it within 6-9 months. Government deficit spending = de facto QE. The second Big Lie today was with the BLS employment report. As it turns out, I found a big gaping hole in the employment report today and I have not seen anyone question the number in any of the prolific material which explains why the BLS employment report is fictitious.
You can read my analysis here: The Big Gaping Hole In The BLS Jobs Report
Needless to say, the Fed has already committed to buying a $trillion more in Treasury and mortgage debt in 2013, and unless the Fed is prepared to shoulder the consequences of ending that program rather than expanding at the end of 2013, yesterday's plunge in precious metals can be seen seen as a true gift from the markets by anyone who takes advantage of it.
http://www.businessinsider.com/feds-fire-brian-sack-federal-reserve-bank-2013-1
FIRED: Former Head Of The Federal Reserve Bank Of New York's Open Markets
 |
In the latest twist in Sack's tenure at the U.S. central bank, the New York Fed said late on Friday that Sack had announced his intention to resign. It was the second such notice in less than a year.
In April 2012 it was announced that Sack would resign his position overseeing the U.S. central bank's market-based monetary policy actions - including its quantitative easing programs - which he had held since 2009.
But on what was to be his last day on the job, June 29, the New York Fed said Sack had withdrawn his resignation and would instead stay on in a new position as adviser to New York Fed President William Dudley.
Seen as a rising star at the Fed, Sack helped it steer through the fallout from the financial crisis and tepid U.S. recovery from recession.
Through a New York Fed spokesman, Sack declined to comment.
The New York Fed's markets group deals directly with Wall Street and foreign central banks, carrying out Fed actions in the open market. Simon Potter, formerly an internal director of economic research, now heads that group.
And note Fed Heads fail to publicly follow Bernanke party line that the Fed does NOT print money ......
http://www.zerohedge.com/news/2013-01-04/liesman-fed-gets-print-dollars-bullard-indeed-we-do
Liesman: "The Fed Gets To Print Dollars"; Bullard: "Indeed We Do"
Fed mouthpieces Bullard and Lacker are out in force this morning talking the market back from the edge of yesterday's FOMC Minutes and reassuring us that the economy is going to be weak enough for a lot longer to justify the Fed's actions. However, right at the end of Jim Bullard's interview with CNBC's Steve Liesman, we got a glimpse of the reality behind the curtain as the St. Louis Fed president threw Bernanke under the purge-ry perjury bus... Following a discussion of fiscal policy uncertainty and the need to carefully spend what money we have, Liesman jokingly commented to Bullard that it is "Easy for you to say, you have a lot of dollars to spend; you get to print them!" To which the now foot-in-mouth Bullard replied, "Aaahh; indeed we do." This seems a little different from what Bernanke previously told Congress.
Forward to around the 7:45 mark (though the early discussion is worthwhile as Bullard talks the economy down)...
And Fed dissension on QE becoming visible , at least that's what the Fed minutes indicate as well as the public thoughts of the St Louis Fed...... Is the Evans position on QE ( 6.5 percent unemployment rate could signal end of QE ) fading already , as Bullard suggests 7.1 percent unemployment might be the touchstone ?
http://www.businessinsider.com/bullard-st-louis-fed-quantitative-easing-may-go-2013-1
One Fed President Says The US Could Drop Quantitative Easing This Year
James Bullard
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"If the economy performs well in 2013, the Committee will be in a position to think about going on pause" with the asset buys, St. Louis Fed President James Bullard said on CNBC television. "If it doesn't do very well then the balance sheet policy will probably continue into 2014."
Fed policymakers are increasingly concerned about the impact their purchase of $85-billion in longer-term bonds and mortgage securities are having on financial markets.
Minutes from their December policy meeting showed that "several" top officials expected to slow or stop the so-called quantitative easing program, dubbed QE3, "well before" the end of the year - news that surprised some on Wall Street and prompted a drop in stocks and bonds, and a rise in the dollar.
Bullard, a voter this year on Fed policy who is toward the hawkish end of the spectrum of Fed policymakers, is the first top central bank official to speak publicly since the minutes were unveiled on Thursday.
Bullard said he expects unemployment to "continue to tick down through 2013," adding the Fed could ramp down the asset purchases if the jobless rate drops to 7.1 percent.
"That would be probably substantial improvement and the committee could think about removing accommodation on the balance sheet side of the policy at that point," he said.
U.S. unemployment was 7.8 percent last month.
With the Fed's key interest rate having remained near zero since late 2008 to encourage economic recovery from the Great Recession, the bond purchases are meant to lower longer-term rates and to encourage investment and hiring in the broader economy.
A few more Fed policymakers are due to speak later on Friday.
Lacker and Bullard doubt present Bernanke policies it would appear.....
http://www.chicagotribune.com/business/breaking/chi-lacker-says-latest-stimulus-test-limits-of-feds-credibility-20130104,0,2630399.story
Lacker says latest stimulus test limits of Fed's credibility
The U.S. Federal Reserve's latest bond-buying stimulus plan threatens the central bank's credibility and raises the risk of future inflation, Richmond Fed Bank President Jeffrey Lacker said on Friday.
Lacker, a vocal inflation hawk who dissented at every Fed policy meeting last year, held his ground on opposing the decision to purchase $85 billion per month in mortgage and Treasury bonds until the employment outlook improves.
Lacker, a vocal inflation hawk who dissented at every Fed policy meeting last year, held his ground on opposing the decision to purchase $85 billion per month in mortgage and Treasury bonds until the employment outlook improves.
While he believes the pace of growth will remain tepid this year, around 2 percent, Lacker has repeatedly argued monetary policy is not the appropriate way to tackle the problem.
"It is unlikely that the Federal Reserve can push real growth rates materially higher than they otherwise would be, on a sustained basis," he told a meeting of the Maryland Bankers Association.
"I see an increased risk, given the course the committee has set, that inflation pressures emerge and are not thwarted in a timely way."
STAYING ALERT
Lacker's comments come just a day after the release of minutes from the Fed's December meeting caught investors by surprise because of widening concern about the potential negative side effects of unconventional monetary policy.
The report showed several members of the Federal Open Market Committee foresaw a chance that asset purchases would need to be slowed or halted altogether before the end of 2013.
That appeared to conflict with hints that the open-ended program might remain in place even if output growth picks up steam in coming years. But it was certainly in line with Lacker's message.
"I intend to remain alert for signs that our monetary policy needs adjustment," said Lacker.
U.S. employment data on Friday showed the economy added 155,000 jobs last month, in line with forecasts but still too modest to bring down the jobless rate, which stands at 7.8 percent.
"It is unlikely that the Federal Reserve can push real growth rates materially higher than they otherwise would be, on a sustained basis," he told a meeting of the Maryland Bankers Association.
"I see an increased risk, given the course the committee has set, that inflation pressures emerge and are not thwarted in a timely way."
STAYING ALERT
Lacker's comments come just a day after the release of minutes from the Fed's December meeting caught investors by surprise because of widening concern about the potential negative side effects of unconventional monetary policy.
The report showed several members of the Federal Open Market Committee foresaw a chance that asset purchases would need to be slowed or halted altogether before the end of 2013.
That appeared to conflict with hints that the open-ended program might remain in place even if output growth picks up steam in coming years. But it was certainly in line with Lacker's message.
"I intend to remain alert for signs that our monetary policy needs adjustment," said Lacker.
U.S. employment data on Friday showed the economy added 155,000 jobs last month, in line with forecasts but still too modest to bring down the jobless rate, which stands at 7.8 percent.
The Fed said in December it would keep interest rates near zero until unemployment gets down to 6.5 percent, as long as inflation projections remain shy of 2.5 percent. The central bank's official inflation target, adopted last year, is 2 percent.
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