The Definitive Fed Statement Thread

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Lemonyellowschwin's picture
Lemonyellowschwin
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The Definitive Fed Statement Thread

It is 2:38 EDT.  The Fed Statement has been out for 23 minutes.  Do you know where your money is?

http://www.nytimes.com/2009/03/19/business/economy/19fed.html?_r=1&hp

The Fed is printing more than $1 trillion and is directly monetizing the debt by buying up long term treausries to the tune of $300 billion.

Incredible.

How can this be regarded as anything other than bearish for treasuries and the dollar in the long term?  There is not enough money in the world to fund our debt anymore.  That much seems clear.

P.S.  Looks like gold has shot up about $40 since the fed annoucement.

 

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Re: The Definitive Fed Statement Thread

yes, I think it's safe to say the gold correction is over, at least for a time. If you're holding dollars, look out below!

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Re: The Definitive Fed Statement Thread

Yep,

 

Glad I did not sell my gold position when people were saying it would tank.

 

Ken

 

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Lemonyellowschwin
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Sorry, Can't Get Over It

Since the Fed's incredible announcment:

USD index chart

Gold

It seems to me that the Fed is making a very deliberate choice here to cause inflation and depreciate the dollar.  Since they can print $1 trillion at will, what can possibly stop them?

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Mike Pilat
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Re: The Definitive Fed Statement Thread

trust yourself, not the government when you see prices start to rise. it it looks like inflation, feels like inflation, sounds like inflation...then you know why it IS inflation

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Re: The Definitive Fed Statement Thread

I have never so many straight up or down (vertical) charts in the markets before. I can't believe that these extreme price movements will have any significant longevity. It will be interesting to see how these markets fair by Friday. The moves in the market look emotional, and the market will probably move against them in short order. No matter what happens, thank you Dr. Martenson for preparing us. 

Jeff 

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Lemonyellowschwin
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Re: The Definitive Fed Statement Thread

Hello everyone,

I have been trying to find the forum but I can not.  I believe one of the indicators Chris had that SHTF is beginning is the steep decline in USD and the steep increase in gold cost.  Is this just a momentary issue or is the the beginning? 

I hope Chris and anybody that wants to will comment on this issue.

 

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Mike Pilat
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Re: The Definitive Fed Statement Thread

I suggest calling your representative or senator at 202-224-3121
and letting them know that you are upset that the private Federal
Reserve has so much central control over our entire economy that swings
like today happen on their statements. Mentioning the promise to print
a trillion would be good too. Mentioning the Ron Paul bill (HR 1207) to
audit the Fed would be icing on the cake.

I think we are at a critical time and our representatives are at
least somewhat open-minded. If the public rallies for the cause,
perhaps we can get the bill to pass. Surely, We The People have a right
to know what the Fed is doing (or plans on doing) with the value of our
hard earned savings.

It takes 2-3 minutes to leave a message. There is no hold time, just
tell the operator the name of the senator or representative you wish to
speak with and leave a message on a machine or with an aide. There is
no excuse (in my opinion) to not voice your concerns, assuming you are
as concerned as I am.

Thank you,

Mike

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Re: The Definitive Fed Statement Thread

I'm pretty sure the Chinese will "appreciate" destroying their savings..

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Re: The Definitive Fed Statement Thread

yeah, it's a dangerous positive feedback loop. we devalue the currency, which causes china to dump the dollar, which causes further devaluation. it's a slippery slope.

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Re: The Definitive Fed Statement Thread
Yesterday  I sent over 300 emails from my list and  www.conservativeusa.com.Subject How high is a $Trillion Dollars? Content from one of The Crash Course chapters.  Mostly to talk shows and newspapers. Only 3 returned. No fear of spamming because these folks are used to getting tons of emails everyday. Very easy to do. Hope some or all of the members will do same. I plan to send summaries from all 20 chapters Tag www.thecrashcourse.com.  Your comments are welcomed.
Also sent 3 emails suggesting they consider having Chris Martenson as a guest. These 3 shows have millions of loyal fans and are will be most receptive to asking Chris to join their show. [email protected], [email protected], and [email protected] It would be a gaint step forward to have Chris on any of the shows. The more members who contact all three will increase the chances exponentialy.
Below is a response from one of the emails. Chris or one of the staff will need to contact www.[email protected]
 7. HOW CAN I SUGGEST AN INTERVIEW AND/OR SHOW TOPIC?

Email us at [email protected]

If you are an author or an author's publicist, please send us a non-returnable review copy of the book or galley with contact information, including a phone number, plus any supporting materials to:

The Diane Rehm Show
WAMU 88.5 FM
4000 Brandywine St. NW
Washington, D.C. 20016-8082

We will contact you only if Diane is interested in an interview

Also sent emails to
 The U.S. debt is around 50 Trillion!  How did the U.S. get into this mess?
It's time we come together or we are doomed.
stay well,
Thomas Moore
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Re: The Definitive Fed Statement Thread

It should be very interesting to see how China and the rest of the world responds to this move.  Barney Frank said that he thinks the Chinese are bluffing.  We all will find out in a matter of days.  This is a dangerous game the Fed is playing.  It goes along with this AIG issue.  The bonuses are a side issue to the billions of money that went out through AIG!  I feel like I am in a bad movie and the sad thing is, most of the public has no idea what is happening.....

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Re: The Definitive Fed Statement Thread

 

 

I think that I have this FED thing figured out. 

If I can get someone to write me a check for $1,000,000,000,000 then I can write them a check for $1,000,000,000,000. Then we will both be rich.

 

Any takers??

 

Ken

 

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Re: The Definitive Fed Statement Thread

This has been talked about for years and it has finally begun.  It will be interseting to see how things unfold from here.

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Re: The Definitive Fed Statement Thread

well, i thought it this would happen (buying up longer term bonds) but not until the 30 year treasury yield hit 4% or higher.

the reason i thought fed was going to do this is simple, that at the heart of all of obama's plans is the mortgage yields. the HASP (housing bailout program) depends on the ability for people to refinance at a better mortgage rate, but with all the inflationary pressure the fed has pumped into the system it raises 30 year treasury rates and mortgage rates. and now they are adding another $1T into the pressure cooker, this is another of your typical short term gain-long term loss scenarios. in the short term; bond yields dip, stock market peaks... but eventually gravity will prevail and the market will reverse course because the fundemenals don't support this.

obama's HASP better move with a vengeance to refinance these 5 million homeowners because the window of opportunity is very very short.

question. with all the bullets being shot from the fed, 0% fed funds, quantitiave easing, buying up long term securities, isn't it amazin we are only at 7500 on the dow? shouldn't we be at 18,000 or 19,000? oh yeah.... the fundementals suck!

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Re: The Definitive Fed Statement Thread
kenc wrote:

Glad I did not sell my gold position when people were saying it would tank.

Does the IMF and the Fed start dumping gold?  Hmmm.

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Re: The Definitive Fed Statement Thread

WOW! What a day. I was at a lecture on stem cell research policy when my phone started vibrating with trade confirmations I never expected... WHAT? My order to sell long bond futures at a limit of 130 closed? That's IMPOSSIBLE! They were at 124 and sinking fast just two hours ago... They can't possibly be at 130 now... The ONLY way that could happen would be as a result of unprecedented reckless buying by the Fed. But surely that can't be the answer... Not in the face of China's warnings less than a week ago! It just didn't seem possible that our government could be doing something so stupid, so I rushed home to figure out what was happening.

What scares me the most is that watching the coverage on Bloomberg for the last 2 hrs. People just don't get it. Bernanke is getting accolades for his "brave and prudent action to solve the credit crisis". This nut case is going to single-handedly take down the sovereignty of what was once the greatest nation on earth, and our own financial press is too goddamned stupid to comprehend what's happening in front of their eyes. It's sickening.

I have to believe that Chris is fast at work on a new Martenson report about this, and I'm chomping at the bit to read it. My interepretation is that Bernanke just told Premier Wen, "Hey, we heard your comments last Friday and our answer to you is F-YOU! We're America and we'll do whatever we want. Screw your need for reassurance that you'll be paid back. We're America and you're not!". I fear that Wen's answer will be "Oh yeah? Well, we're China and you're not, and we're the creditor nation you stupid jerks".

I think this is going to be the beginning of something big. I'll probably increase my short DX position as soon as we see a little bounce from today's action, and I've already increased my short long bond position.

Put your seatbelts on, folks... This is going to be an E-ticket ride for sure.

Erik

 

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Re: The Definitive Fed Statement Thread

mpelchat,

The "warning from Chris" you're thinking of is his advice to look for a situation where treasury yields are increasing while the dollar index is decreasing. That would signal a decoupling of the usual relationship between a currency's strength and its sovereign yield, and would mean that the dollar collapse has begun.

That's not quite what happened today, but in a way it's close. Today's action was a dramatic down-move in the dollar index, but it occurred in its usual correlation to treasury yields. The fed's announcement that it would buy long bonds pushed treasury prices up, and therefore yields down. If we'd seen treasury PRICES collapsing on the same day that the DX collapsed, that would be the signal Chris has warned us to watch for. This wasn't quite that.

However, it's important to realize that the move UP in treasury prices (down in yields) was artificial. It resulted from the Fed's announcement that it was about to do something really stupid. Many of us view this move by the fed as bearish in the long-term for treasury prices.

So in other words, we didn't see the signal Chris has warned of today, but it's quite possible that we'll see it in the future. The DX got hit hard and I expect it would continue to decay. If we see treasury prices fall at the same time (yields returning to where they were before today's announcement), that would be the big danger signal. It didn't happen today but I think today's action gives strong reason to watch very carefully. I think that signal is coming very soon.

Erik

 

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Re: The Definitive Fed Statement Thread

I suspect that the FED fears another round of deleveraging that was starting to look imminent before bernanke's BS coupled with pandit's lies set off the latest 'rally'. Now the rally has tailed off, perhaps we are at the start of a tedious pattern that oscillates between a market plunge, resulting in renewed dollar strength followed by new monetisation by the fed resulting in renewed dollar weakness and a market jump. Iterate.

Over time this will destroy the dollar, except that other currencies are doing the same. It will be interesting to see whether the ECB follows suit.

It may take a while for the dollar to come down though, with many 'false starts' in the gold spot price that could lose people a lot of money (or make a lot if you have the strength to buy in the dips). Also, we should distinguish between the $ coming down to 'fair value' wrt other fiat currencies (i.e. losing its reserve status) and going into hyperinflation.

An at the end of all this, surely gold can only go ballistic when joe six pack  rejects fiat.

I think we are a long way from that now, because while J6P is getting his food and water, he'll be more concerned with paying his bills and debts. I can't see true hyperinflation until food shortages begin to occur.

 

 

 

 

 

 

 

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Re: The Definitive Fed Statement Thread

Anyone taking bets on when they start printing $1000 bills and stop minting coins?

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Re: The Definitive Fed Statement Thread

I think they're going to attempt a new (international???) currency system before we start printing much bigger bills...our government's not so stupid as to not have a backup plan to all of this.

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Re: The Definitive Fed Statement Thread

"I think they're going to attempt a new (international???) currency system"

Yeah, Special Drawing Rights. IMF unit of account. The only blockages to this are:

1) US must give up the veto it currently enjoys, since it has 15% of the votae and 85% of the vote is required to carry any imf motion.

2) The other IMF members all need to agreeto whatever is proposed, to the tune of 85%....

Not going to be sorted in out in a single G20 meeting methinks. 

 

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FED BUYING $300 T IN TREASURIES. . cnn link

I just posted this on a new forum title: FED BUYING $300 T IN TREASURIES. .

 http://money.cnn.com/2009/03/18/news/economy/fed_decision/index.htm

 Yeap the beginning of the end. Just one more detail in place and we can watch the house of cards collapse. 

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Re: FED BUYING $300 T IN TREASURIES. . cnn link

Ben was good to me today, but I cashed out of my positions because I dont know how investors will digest the latest "twist." 

 

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Re: The Definitive Fed Statement Thread

It was only last week when Erik started a thread about having an uneasy feeling something big was about to happen. Good call.

All we could guess at is that they would do something stupid.

Mish still thinks deflation is too overwhelming for the fed to overcome. I think he is overlooking the inflationary effect of foreigners cashing out their dollars and treasuries. Which leaves us, I think, continued deflation in residential and commercial real estate, collapse of the commercial bond market, with a falling dollar driving up import prices. The markets are getting ever more volatile with prices flying in both directions.

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Re: The Definitive Fed Statement Thread

This could be a sign that the government and the Fed are afraid that treasury sales would fall far short of their needs - the Fed has probably been buying treasuries more than we know.  China has said they may reduce their dollar holdings or at a minimum, reduce future purchases of our debt.  

It is amazing that with all of our debt problems we are binge borrowing at a time when expenses need to be slashed. This is more suicidal than simply imprudent.  I think it is safe to say that the dollar is in trouble.

Larry

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Re: The Definitive Fed Statement Thread

remember march 18, 2009.

i am trying to look into my crystal ball to see the next future event the fed will do. this is hard to do since they have really run out of runway space and this economy is not taking flight. the only other event i can foresee is a takeover of banks (even more than before) so that these refi's from the HASP can get smoothly passed through. since, like i said before, the refinancing of these homes seems to be their only solution to this problem.

does anyone else have predictions as to what the govt will do in the near future? what ammo do they have left? are they done meddling?

imho, i don't think they are done messing with the economy because they don't possess the courage to let this system collapse in favor of new and improved free market some years later... albeit, without the same two party system intact.

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Re: The Definitive Fed Statement Thread

During Bubble II, the Fed was adding about $50 billion a year to
permanent reserves. They did this by purchasing Treasurys from primary
dealers -- never directly from the Treasury. This was mainly for the
sake of appearances, and also to enrich the primary dealers. But once
the Bank of England openly admitted that they were going to 'print
money,' the Fed took this as a long-awaited opportunity to come out of
the closet and publicly confess to their depraved inflationist
proclivities. No more dainty sniffing of glue in the toilet; now we're gonna mainline it
with an intravenous drip on network TV. Hit me, Bennie.

Of course, the Fed does not actually have $1.5 trillion
of buying power with which to expand its balance sheet. In fact, its
net worth is about nil. But thanks to a 'legal tender' law, it can buy
$1.5 trillion of assets with overdrawn checks, and those overdrawn
checks will circulate as acceptable currency. If yours and my overdrawn
checks were declared 'legal tender,' then we could go on a similar
spree. Without that legal shield, of course, we would be arrested for
check fraud and jailed.

But since the organized crime cartel
running this country has decided to finance itself with large-scale
counterfeiting, our mission is to forecast the next moves in this mafia
chess game. Like most folks handicapped with a PhD Econ, Ben analyzes
his counterfeiting in static terms -- I counterfeit $300 billion of
cash; buy $300 billion of Treasurys; rates drop 50 basis points -- free money magic. What
Ben misses is that the economy is a dynamic system. Having diluted the
currency's purchasing power by say 10 percent, in a year or two prices
will rise 10 percent. Then interest rates will be hiked to 12 percent
so that lenders can earn a 2 percent real return. At that point, most
people are worse off than before, because inflation is raging and
interest rates are in double digits. But Usgov is better off, because
it has devalued its debt by 10 percent. And inflation makes income and
excise tax receipts go up. Sweet.

The slightly more sophisticated
PhD Econs say that all this stimulus will be withdrawn before
double-digit inflation arrives. To them, I say review the minutes of
the last meeting. If today is analogous to the 1929-1933 depression,
that day down the road when the Fed tries to shrink its balance sheet
back to 'normalcy' is analogous to 1937. In 1937, as inflation started
to rise and stocks were bubbling, the Fed tried to throttle back from
its near-zero interest rates. It doubled the discount rate from 1 to 2
percent, and also doubled reserve requirements. Industrial production
plunged, unemployment soared, and stocks crashed 50 percent in 13
months.

Ben Bernanke faces the same dilemma a couple of
years down the road, if he doesn't get lynched before then. Either let
inflation run away ... or shrink the Fed's balance sheet, and watch the
economy crash and burn in the ditch. Just as we've been saying all
along, there is no good answer. There is no optimum policy. There
is no 'easy way out.' THERE ARE ONLY DIFFERENT FLAVORS OF UGLY TO
CHOOSE FROM.

The moral of this story is that going on an epic
crime spree to rescue the economy is not an intelligent choice. Robin Hood Ben
aims to steal from the creditors and currency holders, and shower the
proceeds on his cronies. Overall, as any third-grader unencumbered by an
advanced edumacation can work out, this redistribution of purchasing
power will afford no net benefit to the economy. We have been
impoverished by previous malinvestment. Inflation not only can't fix
the problem of malinvestment -- it will assuredly make it worse by
causing more malinvestment in the future in 'inflation hedges.' Real
estate, anyone? Collectibles?

After graduating Robert McNamara, George W. Bush
and Ben Bernanke, I really think Harvard should be closed down and
converted into a pig farm. Then it would at least be adding rather than
subtracting social value.

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Re: The Definitive Fed Statement Thread

After chuckling out loud at your conclusion, Machinehead, my 10 yo daughter asked what I was laughing about and I had to look up trenchant on dictionary.com because she wanted to know what I meant when I said I was reading trenchant commentary by a poster here. Appreciate your taking the time to post....

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Re: The Definitive Fed Statement Thread

Is anybody familiar with goldmoney.com? Is it a good way to own gold?

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