The Federal Reserve and Money...Aspects which are not widely known

[Tom Nolan + 2,443]

Most people do not realize that The Federal Reserve Banks are owned by private institutions within their district.  The public is not allowed to know who the owners are.  https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-banks.htm

Most people do not realize that The Federal Reserve was initially created by a secret cabal of rich elite via deceptive maneuvers.  The group gathered secretly on November 22, 1910, then hatched their plan.  During the Christmas season of 1913 after wading through the House and Senate, the Federal Reserve Act (known then as the Currency Bill) was signed into law on December 23rd.  Insidious in its nature, the Federal Reserve Banking system is a debt-based monetary system. which in itself is a mechanism of slavery. 

(The IRS) - The Federal Income Tax was also enacted in 1913.

-- Commercial Banks --

Banks don’t lend reserves. Banks create money out of thin air every time they make a new loan: they credit your bank account with money that never existed. They don’t use reserves in the process.

When you withdraw cash from an ATM you are converting your digital bank deposits into bills, which is transforming an existing form of real-economy money (your bank deposit) into another form of real-economy money (cash).

  Reserves are basically money for the commercial banking system.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Wednesday June 15th - 2pm ET  - The world will see what happens with interest rates by The Fed.

The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System, is charged under United States law with overseeing the nation's open market operations. This Federal Reserve committee makes key decisions about interest rates and the growth of the United States money supply.

-  June 2022 - The Federal Reserve started (QT2) Quantitative TIGHTENING on June 1 .

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 

(QE) Quantitative Easing Explained by Alfonso Peccatiello who once was involved with the process.

  The True Reason Why Central Banks Do QE  https://themacrocompass.substack.com/p/portfolio-rebalancing-qe?s=r#details

EXCERPT

Pelley: “Where does it come from? Do you just print it?”
Powell: “We print it digitally. So as a Central Bank, we have the ability to create money digitally.’’.

Jerome Powell - ‘‘60 Minutes’’ interview, May 2020

In a famous interview released on May 2020, Jerome Powell stated Central Banks can print money in digital format.
And he is right, they indeed do that when they embark in policies such as QE.

But he forgot to mention that what they print is bank reserves, which is money only for commercial banks and not for us common people.
And that these bank reserves don’t have legal tender, they can’t be used to transact in the real economy and most importantly they never reach the private sector.
Never....

A LIST of LINKS to various documentaries, videos and articles concerning MONEY and the ECONOMY - Scroll to the last 10 paragraphs of the article:  https://www.minds.com/CorbettReport/blog/your-guide-to-the-new-economy-1309334974591143949

https://www.corbettreport.com/federalreserve/

[Meredith Poor + 895]

34 minutes ago, Tom Nolan said:

Most people do not realize that The Federal Reserve was initially created by a secret cabal of rich elite via deceptive maneuvers.

Anti-Semitic tirade. Not necessarily limited to Jews, but certainly inclusive. Some people know how to interpret the codewords. Others aren't used to that kind of language over their dinner table, so they don't know what it means.

A lot of Westerners, particularly highly educated Westerners, have pretty much lost their anti-Semitic prejudices. In many parts of the world one still sees 'mainstream' media channels publishing material that Westerners would avoid or discard. This is one of the markers of a non-Western author, someone being subsidized by a hostile sponsor.

Edited June 15, 2022 by Meredith Poor
Add last paragraph

[Meredith Poor + 895]

26 minutes ago, Tom Nolan said:

Banks create money out of thin air every time they make a new loan: they credit your bank account with money that never existed. They don’t use reserves in the process.

This is correct. Congressional budget authorizations are 'permission' for Federal agencies to spend money, and spending money means employing people. Work gets done, products are created, and money is 'printed' to match the product that has been created. As long as product is created in parallel with money printing, the value of money remains roughly constant.

Loans to private entities are also 'permission'. If someone loans me $1 million to build a factory, I've been 'authorized' to spend $1 million for the specific purpose of hiring contractors to build a building and to fit it out with machinery. If I do anything else with it it's 'conversion', which is a polite way of saying 'fraud'.

At the point where dollars are taken back in to the 'US Treasury' they are 'destroyed'. The government 'prints' money, and it 'shreds' it. However, a lot of money is never taxed out of the system, and accumulates in various 'black holes'. These include foreign exchange reserves, 'endowments', 'dry powder', retained earnings, overpriced stock, gold, 'collectibles', etc. If someone is buying an asset (such as land) that no one had to do any work to create, then it is simply shifting the 'hoard' from 'cash' to 'land'.

The original tirade is a textbook example of economic illiteracy.

[Tom Nolan + 2,443]

1 hour ago, Meredith Poor said:

1 hour ago, Tom Nolan said:

Most people do not realize that The Federal Reserve was initially created by a secret cabal of rich elite via deceptive maneuvers.

Anti-Semitic tirade. Not necessarily limited to Jews, but certainly inclusive. Some people know how to interpret the codewords. Others aren't used to that kind of language over their dinner table, so they don't know what it means.

A lot of Westerners, particularly highly educated Westerners, have pretty much lost their anti-Semitic prejudices. In many parts of the world one still sees 'mainstream' media channels publishing material that Westerners would avoid or discard. This is one of the markers of a non-Western author, someone being subsidized by a hostile sponsor.

Your thought process is like Looney Tunes.  You are definitely a "Woke" person.

[Tom Nolan + 2,443]

55 minutes ago, Meredith Poor said:

and money is 'printed' to match the product that has been created. As long as product is created in parallel with money printing, the value of money remains roughly constant.

Wrong.  Cite your source.

[RichieRich216 + 454]

This comes down to one thing; It's just a giant Ponzi scheme from day one!

[Andrei Moutchkine + 828]

3 hours ago, Meredith Poor said:

Anti-Semitic tirade. Not necessarily limited to Jews, but certainly inclusive. Some people know how to interpret the codewords. Others aren't used to that kind of language over their dinner table, so they don't know what it means.

A lot of Westerners, particularly highly educated Westerners, have pretty much lost their anti-Semitic prejudices. In many parts of the world one still sees 'mainstream' media channels publishing material that Westerners would avoid or discard. This is one of the markers of a non-Western author, someone being subsidized by a hostile sponsor.

This much counts as antisemitic these days? Not every secret cabal is Jewish. In case of the Fed, it was more like a J.P. Morgan cabal.

Holding antisemitic prejudices is most appropriate for European Jews (Ashkenazim) like myself, who are not semitic themselves.  Bunch of Arabs, I am telling you! (Arabs are Semites)

[Andrei Moutchkine + 828]

3 hours ago, Meredith Poor said:

Work gets done, products are created, and money is 'printed' to match the product that has been created. As long as product is created in parallel with money printing, the value of money remains roughly constant.

Delightfully, you reproduced the method the USSR used to issue rubles. It only works in the presence of a government monopoly on foreign exchange and/or foreign trade. Otherwise, you don't really know how much "product" there is  USSR relinquishing the monopoly on FX is what caused the catastrophic shortages of everything towards its end.

The current Western methodology is printing money ahead of the "production steamroller", trying to stimulate demand for additional products. This is probably also going to end badly, because a) the products in question are increasingly being produced outside the area of Western monetary supervision, and b) The money thus "printed" increasingly becomes unserviceable debt on the consumer side.

[Andrei Moutchkine + 828]

2 hours ago, RichieRich216 said:

This comes down to one thing; It's just a giant Ponzi scheme from day one!

Yes! Or macroeconomics.  (a discipline teaching us that it is OK or less bad when the government does it

[Tom Nolan + 2,443]

Wed June 15th 2 pm

Federal Reserve raises interest rates by 0.75%, most since 1994, amid effort to slow inflation

https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-june-2022-120337242.html

The Federal Reserve on Wednesday raised interest rates by 0.75%, the largest move it has made in a single meeting since 1994.

The central bank messaged that further interest rate hikes will come this year, as the Fed leans on higher borrowing costs to dampen demand and work to slow faster-than-expected inflation.

“Overall economic activity appears to have picked up after edging down in the first quarter,” the policy-setting Federal Open Market Committee said in a statement, repeating its commitment to “ongoing increases.”

The Fed decision lifts short-term borrowing costs to a target range between 1.50% and 1.75%.

In economic projections released Wednesday, the median Fed policymaker expects to further raise interest rates to roughly 3.4% by the end of the year. That would suggest another 1.75% in total rate hikes, spread across the remaining four scheduled policy-setting meetings this year.

The Fed is now messaging a much steeper path of rate hikes than it had previously forecast in March (when the median member projected a year-end short-term rate closer to 1.9%).

The urgency to move faster coincided with Fed policymakers’ expectations that inflation will not abate as fast as they had expected in their March projections. The median Fed policymaker now expects prices to rise by 5.2%, as measured by personal consumption expenditures (PCE), over the course of 2022, a faster pace than the 4.3% it had forecast in March.

The central bank also downgraded expectations on other key economic measures, expecting the U.S. economy to grow by only 1.7% this year, compared to the 2.8% it had forecast in March.

Fed officials also suggested they could see unemployment rise this year, with the median member now forecasting a 3.7% headline unemployment rate by the end of the year (which would be a notch up from the 3.6% recorded in May).

Change in plans

The decision to raise interest rates by 0.75% was an abrupt turn from last week, when markets had largely expected the central bank to follow through on its communicated strategy of raising by 0.50%.

But a hot inflation report on Friday, showing the fastest pace of price increases since 1981, showed little sign of alleviating price pressures in the month of May. Combined with other economic data showing the worst reading of consumer confidence since the 1970s, the pessimistic outlook pushed the Fed to entertain the idea of abandoning its prior plan.

The decision to raise rates by 0.75% on Wednesday was not unanimously agreed to — Kansas City Fed President Esther George dissented, with the statement noting that she favored a 0.50% move.

The Fed’s economic projections suggests a confidence among policymakers that a more aggressive rate hike path will cool inflation. Although the central bankers raised their expectations on inflation for 2022, the median member of the committee expects to see the pace of headline price increases to cool to 2.6% next year. These forecasts suggest inflation could further in 2024 to 2.2%, much closer to the Fed’s 2% target.

The next FOMC meeting will take place the last week of July.

Edited June 15, 2022 by Tom Nolan

[Tom Nolan + 2,443]

https://www.zerohedge.com/markets/fomc-2

Here's what The Fed did:

• The Fed raised its benchmark rate by 75 basis points -- the biggest increase since 1994 -- to a range of 1.5%-1.75%, in line with investors’ and economists’ expectations

• Kansas City Fed President Esther George dissented in favor of a 50 basis-point hike

• FOMC adds a line saying it’s “strongly committed to returning inflation to its 2% objective” and removes prior language that said the FOMC “expects inflation to return to its 2% objective and the labor market to remain strong”

• Reiterates path on balance-sheet reduction that took effect June 1, shrinking bond portfolio by $47.5 billion a month and stepping up to $95 billion in September

The Fed shifted its dots up to the market...

New dot-plot projections showed sharp increase from March, with federal funds target rising to 3.4% by year-end - implying another 175 basis points of tightening this year - and 3.8% in 2023, before falling to 3.4% in 2024; prior forecasts in March were for a 1.9% rate this year and 2.8% in 2023 and 2024

One crucial thing to note in the new dot-plot is that 2024 will be a year of dramatic uncertainty (and not just because of the election) with Fed members expectations ranging from a minimum of 2.0% and maximum of 4.0% - the biggest spread in FOMC history.

[Tom Nolan + 2,443]

1 minute ago, Tom Nolan said:

Reiterates path on balance-sheet reduction that took effect June 1, shrinking bond portfolio by $47.5 billion a month and stepping up to $95 billion in September

https://www.zerohedge.com/markets/qt-will-be-first-casualty-great-tightening

QT Will Be The First Casualty In The Great Tightening

by Tyler Durden

Wednesday, Jun 15, 2022 - 12:40 PM

By Simon White, Bloomberg Markets Live commentator and reporter

Wider credit spreads are likely to prompt central banks to ease up on QT sooner than expected, with the hope that interest rates will do most of the heavy lifting in reducing inflation.

The perils of tightening liquidity in a highly indebted world are becoming startlingly clear (again). Risk assets are getting clobbered, but even more worrisome for central banks is the widening of credit spreads.

The reason is the sharp fall in excess liquidity. It is excess liquidity -- liquidity created above and beyond the needs of the real economy -- that keeps assets supported. When it is in decline as it is currently, assets no longer have a safety net, leading to risk aversion and spread widening.

Balance-sheet reduction from the Fed, the ECB et al will contract liquidity yet more. But just as rising liquidity floats all boats, falling liquidity can simultaneously sink them all. Every dollar of the monetary base supports $10 of credit, but every $1 destroyed in QT takes $10 of credit with it.

QT therefore stands to be the first casualty in the move to tighter monetary policy in the US, Europe and elsewhere. Indeed, Europe took a step towards this with its announcement today that it would be flexible in using PEPP redemptions to support bonds. This is potentially an early shift towards dropping sequencing altogether, allowing the ECB to raise rates while the balance sheet is neutral or expanding.

The Fed, like the ECB, also finds itself in an impossible position. Growth in the US is easing at an increasing rate, meaning a recession could be on the cards in the not too distant future. The Fed will very likely have to pause or even reverse course much sooner than it or the market currently anticipates -- although that is not the story for today’s FOMC, with a 75-bp hike baked in.

Nevertheless, watch US high yield and junk credit spreads carefully -- especially in the days after the FOMC’s announcement -- as they could yet push the Fed in a direction the ECB is already heading in. Credit spreads are the most direct link between the real economy and markets, and when credit blows out it triggers the self-reinforcing feedback loops between asset prices and the health of the economy that lead to the regime change of a recession.

Credit spreads across the board in the US have been widening with increasing speed, with high-yield spreads close to doubling this year. Leading indicators show that spreads are set to get even wider.

Credit will come under increasing pressure, and could force the Fed to take action, just as occurred in 2020 when it announced its corporate credit facility. Easing up on QT would be an obvious option to support excess liquidity, while rising interest rates (hopefully) continue to restrain consumer inflation.

~~~~~~~~~~~~~  ZH says...

ECB TELLS STAFF TO PREPARE NEW ANTI-CRISIS TOOL FOR APPROVAL It's called QE

[Tom Nolan + 2,443]

4 minutes ago, Tom Nolan said:

Every dollar of the monetary base supports $10 of credit, but every $1 destroyed in QT takes $10 of credit with it.  (from article above)

QT Will Be The First Casualty In The Great Tightening

[Tom Nolan + 2,443]

Oil Prices Fall On Biggest Fed Rate Hike Since 1994

By Tom Kool - Jun 15, 2022, 1:30 PM CDT

In its largest hike since 1994, the Federal Reserve raised rates by three-quarters of a percentage point, or 75 basis points, with oil prices responding by drawing down just under 1%. 

Wall Street had largely anticipated a 75-basis point hike, and oil prices were down 1% on Wednesday, ahead of the Fed meeting, regaining some ground by the time of the rate hike announcement. 

At 2:13 p.m. EST, just minutes after the Fed release, Brent was trading down 0.62% on the day, at $120.42. WTI was trading at $118.10, down 0.70%.

The Fed also signaled that more rate hikes were to come, with another potential three-quarters of a percentage point hike in July. A half percentage point hike is possible for September. 

In a Wednesday press release the Federal Open Market Committee (FOMC), said “overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures”.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks,” the FOMC statement read. 

The rate hike follows a half-percentage point hike in May. 

Oil prices also settled lower on Tuesday in anticipation of an interest rate hike of 75 basis points. Earlier expectations were for a 50-basis-point hike. The shift in sentiment came after a strong consumer price index report for May raised expectations of a much higher rate hike. 

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:

• Saudi Arabia Cuts Oil Volumes To China For July
• Oil Prices Spike As OPEC Reveals Production Loss For May
• The Oil Price Rally Shows No Sign Of Slowing

https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Fall-On-Biggest-Fed-Rate-Hike-Since-1994.html

[Ron Wagner + 706]

10 hours ago, Andrei Moutchkine said:

Yes! Or macroeconomics.  (a discipline teaching us that it is OK or less bad when the government does it

It is not funny though. It is a fast growing worldwide tragedy that is being perpetrated knowingly. It will mostly harm the poor and middle classes and will greatly minimize the middle class. It is what happens when leaders are not controlled by the people in this era of world economics. Bankers, billionaire cronies, and their underlings attempt to take control of the people. In democracies they elect people who promise things that they do not follow up on, while acting to enrich their allies and cronies and even family. In dictatorships it is much more pronounced. 

[Andrei Moutchkine + 828]

51 minutes ago, Ron Wagner said:

It is not funny though. It is a fast growing worldwide tragedy that is being perpetrated knowingly. It will mostly harm the poor and middle classes and will greatly minimize the middle class. It is what happens when leaders are not controlled by the people in this era of world economics. Bankers, billionaire cronies, and their underlings attempt to take control of the people. In democracies they elect people who promise things that they do not follow up on, while acting to enrich their allies and cronies and even family. In dictatorships it is much more pronounced. 

You should say thank you to the Soviet commies for pioneering employees having rights, which is why you have a middle class to start with. Western capitalism had to respond in kind, or lose. Now that the godless commies are largely gone, your middle class is to be replaced by 1st generation Elbonian immigrants who will work for food. (Or so the theory)

[Andrei Moutchkine + 828]

1 hour ago, Ron Wagner said:

It is not funny though. It is a fast growing worldwide tragedy that is being perpetrated knowingly. It will mostly harm the poor and middle classes and will greatly minimize the middle class. It is what happens when leaders are not controlled by the people in this era of world economics. Bankers, billionaire cronies, and their underlings attempt to take control of the people. In democracies they elect people who promise things that they do not follow up on, while acting to enrich their allies and cronies and even family. In dictatorships it is much more pronounced. 

BTW, it is official now that Princeton University found what is kinda obvious to me already

https://www.bbc.com/news/blogs-echochambers-27074746

https://www.businessinsider.com/major-study-finds-that-the-us-is-an-oligarchy-2014-4

USA is an oligarchy, not a democracy. That is, your personal impact on actual policies as a regular voter is exactly zilch, regardless if you vote for the moron or the dimwit.

Edited June 16, 2022 by Andrei Moutchkine

[Andrei Moutchkine + 828]

[TailingsPond + 1,006]

9 hours ago, Ron Wagner said:

In democracies they elect people who promise things that they do not follow up on, while acting to enrich their allies and cronies and even family.

Trump in a nutshell.

 

Edited June 16, 2022 by TailingsPond

[Tom Nolan + 2,443]

People need to realize that politicians (on both sides of the aisle) are only puppets. 

Look at who owns The Federal Reserve.  Who manipulates the narrative?

[Andrei Moutchkine + 828]

16 hours ago, Tom Nolan said:

People need to realize that politicians (on both sides of the aisle) are only puppets. 

Look at who owns The Federal Reserve.  Who manipulates the narrative?

A bunch of banks, some of whom are foreign and outright dodgy.

[Tom Nolan + 2,443]

Markets and Geopolitics intersect in the Great Game being played in Ukraine. The West’s economies are diverging as a result of inflation shocks and looming recession. Divergence will play into Russian’s hands, and presents a clear market strategy: Buy Dollars and Sell Europe.  https://www.zerohedge.com/markets/age-divergence-buy-dollars-sell-europe

[Tom Nolan + 2,443]

Rates on U.S. 30-year mortgages see biggest one-week increase since 1987

By:Reuters

U.S. housing finance giant Freddie Mac said on Thursday the average contract rate on a 30-year fixed-rate mortgage rose by more than half a percentage point to 5.78%, the greatest one-week jump in 35 years. ... https://www.fxempire.com/news/article/rates-on-u-s-30-year-mortgages-see-biggest-one-week-increase-since-1987-1036359

[specinho + 467]

On 6/16/2022 at 3:50 AM, Tom Nolan said:

Oil Prices Fall On Biggest Fed Rate Hike Since 1994

By Tom Kool - Jun 15, 2022, 1:30 PM CDT

In its largest hike since 1994, the Federal Reserve raised rates by three-quarters of a percentage point, or 75 basis points, with oil prices responding by drawing down just under 1%. 

Wall Street had largely anticipated a 75-basis point hike, and oil prices were down 1% on Wednesday, ahead of the Fed meeting, regaining some ground by the time of the rate hike announcement. 

At 2:13 p.m. EST, just minutes after the Fed release, Brent was trading down 0.62% on the day, at $120.42. WTI was trading at $118.10, down 0.70%.

The Fed also signaled that more rate hikes were to come, with another potential three-quarters of a percentage point hike in July. A half percentage point hike is possible for September. 

In a Wednesday press release the Federal Open Market Committee (FOMC), said “overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures”.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks,” the FOMC statement read. 

The rate hike follows a half-percentage point hike in May. 

Oil prices also settled lower on Tuesday in anticipation of an interest rate hike of 75 basis points. Earlier expectations were for a 50-basis-point hike. The shift in sentiment came after a strong consumer price index report for May raised expectations of a much higher rate hike. 

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:

• Saudi Arabia Cuts Oil Volumes To China For July
• Oil Prices Spike As OPEC Reveals Production Loss For May
• The Oil Price Rally Shows No Sign Of Slowing

https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Fall-On-Biggest-Fed-Rate-Hike-Since-1994.html

from 1.5% to 1.75% is the largest hike?

If one has 10k saving left, the interest rate would be generating 175 bucks, or 25 bucks more...........

[kshithij Sharma + 78]

On 6/15/2022 at 7:27 AM, Meredith Poor said:

Anti-Semitic tirade. Not necessarily limited to Jews, but certainly inclusive. Some people know how to interpret the codewords. Others aren't used to that kind of language over their dinner table, so they don't know what it means.

A lot of Westerners, particularly highly educated Westerners, have pretty much lost their anti-Semitic prejudices. In many parts of the world one still sees 'mainstream' media channels publishing material that Westerners would avoid or discard. This is one of the markers of a non-Western author, someone being subsidized by a hostile sponsor.

I think it is well known about a theory that Titanic was intentionally weakened at the hull so that it sinks in order to get rid of several prominent elites who opposed setting up Federal reserves. Titanic was owned by Morgan group.The antisemitic rumours targeting Rothschilds are all created by church in connivance with rich feudal lords to divert the attention from others.

 

On 6/16/2022 at 11:43 AM, Tom Nolan said:

People need to realize that politicians (on both sides of the aisle) are only puppets. 

Look at who owns The Federal Reserve.  Who manipulates the narrative?

It is more than banks. Banks are only a means to implement the will using financial manipulation. The basis of this power are 2 groups:

1) Who owns the resources like oil, neocolonial assets, industries etc. - feudal lords (who later became hereditary Capitalists)

2) Who supplies the physical infrastructure & support - church - which goads and convinces people about how all these help in implementing god's will