Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Federal Reserve

Another Small Step Towards Sound Constitutional Mone

This article was published by The McAlvany Intelligence Advisor on Friday, February 8, 2019: 

Doug Casey, writing for his blog International Man, gave his readers a history lesson including the most important one: nearly every currency that blew up through inflation was replaced by sound money, usually gold and silver.

Wrote Casey:

In late 18th-century America, something of minimal value was often described as being “not worth a continental,” which referred to the continental dollar, the American currency at the time of the revolution.

 

The continental was paper money. It had occurred to the colonists that, as their revolution was costing quite a bit to maintain, they could go into “temporary” debt to finance the war.

 

Soon it became clear that the debt could not be repaid. Also, the printing of paper banknotes resulted in inflation. The solution? Print more of them. Further devaluation of the continental motivated the colonists to print more … then more … then still more. The continental became worthless, either for local trade or for repayment of debt.

The Founders learned the lesson:

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Wyoming Bills Would Require State’s Trust Funds to Hold “Monetary Metals”

This article appeared online at TheNewAmerican.com on Tuesday, January 22, 2019:  

Three bills presented by Wyoming legislators last week requiring the state’s treasurer to invest in gold and silver are the logical follow-up to the state’s decision last summer to declare gold and silver as legal tender, just like the Constitution demands in Article I, Section 10: “No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts.”

If signed into law, the three bills would direct the state’s treasurer to invest 10 percent of the funds held in the state’s pension fund, its reserve fund, and its mineral trust fund in gold and silver. Each bill has 15 or more cosponsors, and they are being sold to other legislators as a necessary counterbalance to those funds’ traditional holdings of government bills, notes, bonds, and other investments. This is especially persuasive, as those funds have suffered paper losses of more than $200 million thanks to investments in foreign securities.

The bills would also reinforce the state’s decision last summer to allow its residents to use gold and silver alongside Federal Reserve Notes (either paper or digital) in daily transactions, and eliminate any taxes on those transfers. That bill received overwhelming support in both the Wyoming House and Senate, and the bills presented last week are expected to get similar support.

Mike Maharrey, communications director for the Tenth Amendment Center, was delighted:

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Fed Head Powell Admits He Has Accomplished His Purpose: Stopping Trump

This article was published by The McAlvany Intelligence Advisor on Friday, January 4, 2019: 

If you stop Trump’s economy, you stop Trump. This is more and more clearly the policy of the Federal Reserve under its temporary head, Jerome Powell. Temporary because the Fed, now more than 100 years old, is the bastard child of the international banking establishment and its authority is granted only temporarily to its chairman.

The Fed’s job is to slow the Trump economy to the point where it becomes a liability for his reelection campaign in 2020 instead of an asset. How do we know this? In Powell’s Q and A following the announcement that the central bank was raising interest rates by another 25 basis points on December 19, he was asked a question about the “runoff” of bonds that it has been engaging in for months now, sucking capital out of the financial markets. Asked Heather Long of the Washington Post: “I’m wondering if the Fed has had any discussion of altering the course of the balance sheet normalization and if you could give us any thoughts on what might lead the FOMC to alter that balance sheet normalization in 2019?”

Responded Powell:

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Following Great Jobs Report, Fed Chair Says He’ll Be “Patient” Before Raising Rates Further

This article appeared online at TheNewAmerican.com on Friday, January 4, 2018: 

The jobs report issued by the Department of Labor on Friday was unequivocally positive. Every sector of the economy, save one, saw robust gains in employment, with 312,000 new jobs created in December beating forecasters’ predictions by 30,000 jobs. In addition, the DOL revised October’s and November’s numbers upward by 58,000 jobs. Even the rise in the unemployment rate from a record low of 3.7 percent to 3.9 percent was explained by the number of new people entering the job market.

The number of unemployed workers dropped by 300,000 over the last 12 months, while the labor participation rate jumped. Wages improved as well

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As Economy Slows, Bond Investors Say Fed Won’t Raise Rates

This article appeared online at TheNewAmerican.com on Thursday, January 3, 2019:  

A month ago, bond investors were predicting that the Fed would be raising interest rates several times in 2019. As the economy is now clearly slowing, those same investors are predicting the Fed has now done its job and won’t be raising rates in the New Year. Said the Wall Street Journal:

Fed-funds futures, which investors use to bet on the direction of Fed policy, on Wednesday showed a 91% probability that the central bank’s policy makers will finish the year [2019] with interest rates at or below their current levels.

 

That is a reversal from early November, when futures prices indicated a 90% probability that rates would end 2019 higher than they are now.

The latest report from the Institute of Supply Management merely confirmed that slowing economy, with its manufacturing survey published on Thursday coming in below forecasters’ expectations (which were below October’s).

The New American has been tracking and noting the slowing of the U.S. economy that has been established policy at the Fed for many months now. In November we noted that

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Who’s to Blame for the Decline on Wall Street?, Part II

This article was published by The McAlvany Intelligence Advisor on Friday, December 28, 2018:  

Less than three weeks ago, this writer opined here [at The McAlvany Intelligence Advisor] that the root cause of the selloff on Wall Street then was the deliberate intentional stalling of the economy by the Federal Reserve:

Who is the real culprit behind this volatility in stocks? The well-informed have been pointing to the actions of the Federal Reserve as the prime driver, focusing on its determination to slow the economy by raising interest rates.

 

For example, the insider bank Goldman Sachs said in late November: “The FOMC [the Fed’s Federal Open Market Committee] will likely be reluctant to stop [raising interest rates] until it is confident that the unemployment rate is no longer on a downward trajectory….”

 

In other words, the Fed is determined to keep on raising interest rates until the economy is so weak that unemployment starts to increase!

If more evidence of the Fed’s deliberate intervention in the markets were needed by skeptics, last week’s volatility on Wall Street ought to suffice. Late last week,

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What Sparked Wall Street’s Massive Turnaround Late Thursday?

This article appeared online at TheNewAmerican.com on Friday, December 28, 2018:

Most Wall Street observers were caught by surprise at the massive upward spike in stock prices that turned a 600-point down day on the Dow into a gain of 230 points. It began less than 90 minutes before the close, and by the time the market closed stocks had gained nearly four percent from the low of the day.

Michael Wursthorn, writing in the Wall Street Journal, called it a “big comeback” from “an unexplained jolt of adrenaline … that morphed into a broad rally.” All 11 sectors of the S&P 500 Index were up for the day, as were 28 of the Dow 30 stocks. Without explaining why, Wursthorn said the sudden move up was “symptomatic of the volatility that has rocked the markets this month.”

John Carey, a portfolio manager at Amundi Pioneer, reflected on what happened:

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While Wall Street Wobbles, Consumers and the Economy Continue Humming

This article appeared online at TheNewAmerican.com on Thursday, December 27, 2018:  

The Wall Street rollercoaster — down huge on Monday, up huge on Wednesday, decline on Thursday — is giving commentators, pundits, and forecasters heartburn. The Dow Jones Industrial Average (DJIA) surged more than 1,000 points on Wednesday, the first time in history, rebounding from a four-day selloff that took 4,000 points out of the Dow and put various blue-chip indexes on the verge of a bear market.

Street commentators searched high and low for the root cause or causes of the volatility. They ranged from concerns over the incipient trade war with China instigated by the president as he seeks to rebalance fair trade with that communist-controlled country, to the firing of his Secretary of State over U.S. troop withdrawals from Syria and Afghanistan. Pundits pointed to Treasury Secretary Steven Mnuchin’s attempt to calm the markets by calling big bank CEOs and reporting that all is well with their reserve ratios. This attempt backfired, especially when it was followed by reports of a gathering of the president’s “plunge protection team” consisting of Mnuchin, Fed Chairman Jerome Powell, the chair of the SEC Jay Clayton, and the head of the Commodity Futures Trading Commission, Christopher Giancarlo at the White House on Monday.

Blame for the volatility fell on

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Who gave Powell the Power to Manipulate Markets?

This article was published by The McAlvany Intelligence Advisor on Friday, November 30, 2018: 

With just two words – “just below” – Fed Chair Jerome Powell gave Wall Street what it was hoping to hear on Wednesday: a step back from his “we’re a long way from neutral” comments in early October. Wall Street finished the day higher by more than two percent. Here’s what Powell said that triggered the relief rally:

Interest rates are still low by historical standards, and they remain just below [emphasis added] the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth.

That’s a very long way from his previous comments that took 2,500 points off the Dow in the weeks following their issuance.

Nearly all the conversation was about Powell’s words, which were, according to Robert Pavlik, chief investment officer at SlateStone Wealth, “exactly what the market was expecting to hear. Obviously it has to do with the market reaction to his previous comments. He had to walk [them] back.”

There was much discussion over just what he meant by “neutral.” Two weeks ago, Charles Evans, the president of the Chicago Federal Reserve Bank who also sits on the Fed’s Federal Open Market Committee, didn’t know what “neutral” meant:

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Two Words From the Fed, and Wall Street Jumps More Than Two Percent

This article appeared online at TheNewAmerican.com on Thursday, November 29, 2018: 

While Fed Chair Jerome Powell was addressing the Economic Club of New York on Wednesday, the stock market was open, and it was listening. What it was listening for exceeded its expectations and stocks jumped in the final hours of trading by more than two percent, its biggest one-day gain since the end of March.

What was “the street” listening for?

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U.S. Government Ran $100 Billion Deficit in October

This article appeared online at TheNewAmerican.com on Thursday, November 15, 2018: 

The U.S. Treasury’s monthly statement of income and expenditures should have been a cause for celebration: Total receipts of $253 billion (a quarter of a trillion dollars) in October were 7.6 percent ahead of last October’s receipts. This is the expected result of lowering tax rates and removing onerous regulations so that the economy could breathe again.

But the celebration never happened.

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Fed to Blame for Stock Market Selloff?

This article appeared online at TheNewAmerican.com on Thursday, October 25, 2018: 

Wednesday’s selloff on Wall Street took away all the gains stocks had made since the first of the year, turning the major stock averages — the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq Composite — negative for the year.

Stock watchers blamed everyone and everything except the real culprit for the selloff: trade “disputes,” China’s intransigence, the murder in Saudi Arabia, the rise in oil and gas prices, the “migrant caravan” headed for the southern border, the rash of fake bomb attacks, fill in the blank.

Those watchers came closer to placing the blame more accurately, however, when

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U.S. Fiscal Outlook “Not Good,” Says Goldman Sachs’ Chief Economist

This article appeared online at TheNewAmerican.com on Tuesday, May 22, 2018: 

In his newsletter to Goldman Sachs’ clients published on Monday, Jan Hatzius, the investment banking firm’s chief economist, wrote, “An expanding deficit and debt level is likely to put upward pressure on interest rates. While we do not believe that the U.S. faces a risk to its ability to borrow or to repay, the rising debt level could nevertheless have [serious] consequences.”

Borrowing from the Congressional Budget Office’s analysis following the passage of the tax reform act, the two-year budget deal in February, and the massive “omnibus” spending bill in March, Hatzius projected that annual deficits will shortly exceed a trillion dollars a year, pushing the national debt close to $30 trillion in less than 10 years. He warned:

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Fed Sees Inflation Coming, Raises Rates to Head it Off

This article appeared online at TheNewAmerican.com on Thursday, March 22, 2018: 

Following the unanimous and much-anticipated decision by the Federal Reserve to raise interest rates by another quarter of a percent on Wednesday, the new chairman, Jerome Powell, said, “The economic outlook has strengthened in recent months. Several factors are supporting this outlook: fiscal policy [i.e., Trump’s tax cuts to individuals and corporations] has become more stimulative, ongoing job gains are boosting incomes and confidence, foreign growth is on a firm trajectory, and overall financial conditions remain accommodative.”

This raises the question:

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Is the Federal Reserve Working Against Trump’s Reelection in 2020?

This article was published by The McAlvany Intelligence Advisor on Friday, March 23, 2018: 

English: Short-Run Phillips Curve before and a...

Short-Run Phillips Curve before and after Expansionary Policy

In politics, according to FDR, there are no coincidences. He famously said that “in politics if something happens you can be sure it was planned that way.” The announcement by Trump that he has filed for reelection in 2020 and the pronouncement by the Federal Reserve following it may just be one of those “planned” coincidences.

The pronouncement from Jerome Powell, the new head of the Fed, was, on the surface, comforting:

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Goldilocks Stock Market Making Forecasters Nervous

This article appeared online at TheNewAmerican.com on Thursday, July 13, 2017:  

At the moment, Wall Street investors are enjoying a “Goldilocks” economy: not so hot that it pushes prices up and not so cold that it causes a recession. Translation: Unemployment is low, wages are rising, interest rates are still near record lows, the gross domestic product (GDP) continues to grow (although not as fast as President Trump would like), and inflation is under control.

It isn’t a perfect world, but to Wall Street investors it’s close.

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Trump Suggests National Debt “Deal,” Media Calls It “Fanciful” and “Dangerous”

This article appeared online at TheNewAmerican.com on Monday, May 9, 2016:  

A snippet from Donald Trump’s conversation with CNBC on Thursday raised the ire of numerous media commentators, who called Trump’s plan “unprecedented” (CNBC), “fanciful” and a “threat” (New York Times), and “tantamount to a debt default” (Yahoo Finance). Others called his remarks “reckless,” while Tony Fratto, a former Treasury official in the George W. Bush administration said, “This isn’t a serious idea — it’s an insane idea.”

What sparked the ire? The initial impetus was when Trump said, “[The U.S. Treasury is] paying a very low interest rate. What happens if that interest goes up two, three, four points? We don’t have a country. I mean, if you look at the numbers, they’re staggering.”

Indeed they are. The U.S. Debt Clock shows the national debt closing in on $20 trillion, while the economy is slumping along, with a GDP at just over $18 trillion. Put another way,

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Texas Contracts to Build Nation’s First State Gold Bullion Depository

This article appeared online at TheNewAmerican.com on Thursday, May 5, 2016:  

The Texas Comptroller’s Office has begun to receive bids from private contractors interested in building the country’s first state gold storage facility, the Texas Bullion Depository (TBD). When Texas Governor Greg Abbott signed into law the bill providing for it last July, he said it was all about saving fees being paid to store the state’s gold in New York banks:

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Is the U.S. Heading Into Another Recession?

This article appeared online at TheNewAmerican.com on Monday, February 15, 2016:  

Buried in Federal Reserve Chairman Janet Yellen’s comments to senators last Thursday were three revealing statements.

First: “There is always some chance of recession in any year. But the evidence [at the moment] suggests that expansions don’t die of old age.” Translation: Recessions result from inherent weaknesses in the system.

Second, she admitted that

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Congress Votes to Raid Fed’s Slush Fund to Pay for Highways

This article appeared online at TheNewAmerican.com on Monday, November 23, 2015:  

In its never-ending quest to spend money it doesn’t have, but not wanting to raise taxes, especially during the current election cycle, on Thursday, November 5 Congress passed a $325-billion, six-year transportation bill that is to be financed by selling off some of the country’s strategic petroleum reserves and raiding the Federal Reserve.

In its editorial complaint about the bill, the Washington Post said

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann