Wednesday, December 20, 2017

Fed Manipulation: Notes and Bonds

If you recall in last week's piece, I used the words of an old rocker, "Lies" in correlation to what the new chairman of the FCC was going to do to net neutrality. I could play it again and again whenever I discuss the Federal Reserve.
New Boss, Same as the old Boss
Powell is in and Yellen is out, but there will be no noticeable difference at the Fed. In her outlook for 2018 Yellen said that the Fed will continue to raise interest rates at a gradual pace. She called for a replay of 2017 with three expected increases. However, the market does not believe her or the new guy. This is why long term rates have not risen. If you were to use simple math, you can see through the continuing lies by the Federal Reserve who manipulate our economy. A by-product of their effort is to punish savers and give benefits to spenders.
Notes and Bonds
The global market has shifted to negative interest rates and if you compare our Ten-Year Bill to world markets you can see that clearly. It is not my point here to compare the US with various countries in the global community. The point is well know, but what is not considered is the fact that the Federal Reserve is already utilizing negative interest rates here in our country. The following price scheme will point you to this fundamental manipulation by the Federal Reserve.
Term                                                          Yield
1-year                                                          1.69%
5-year                                                          2.15%
10-year                                                        2.35%
30-year                                                        2.68%
The Fed has repeatedly claimed that its inflation goal is 2% and our economy has not achieved that mark on a yearly basis. In fact, at the last meeting, two members voted against the rate increase. Fed member Evans said his conscience would not let him vote for the higher rate due to our low inflation.
If this guy grew up in my neighborhood and stated that BS, he would have two black eyes. This guy and the whole Fed get me so upset that I have to go off mark for a brief reminder.
There are three things that we all need every single day. We need a place to live - shelter. In winter we need heat and in summer we need air-condition. We need to eat every day and if we work, transportation which is energy. In fact, energy is utilized in all aspects of life. We need it at home and work. Guess what? The Fed does not include in its inflation guide those three items. In their LYING EYES they BS about better computers and TVs which lower inflation. Do they realize what rent costs? Do they realize the cost to buy a home? Do they understand how states constantly increase taxes at a much higher rate than 2%? Do they ever go grocery shopping? The price of gasoline went up 7% just last month.
Back to Evans: His conscience? These people have no conscience. They are bureaucrats. The true purpose of the Federal Reserve is to protect the banking system. It is nothing more than socialization for banks.  How about Randy Quarles? He got the job as Vice-chair at the Fed. His role is supervisor of banks. He just stated that he will recluse himself from any decision on Wells Fargo because they hold his home mortgage. He also has stock in the company and his family has a long history tied to Wells Fargo. In fact, his wife's brother, Spencer Eccles, sold a bank he ran to Wells Fargo in 2000. So, Randy sold his stock. Isn't that special? Conscience? Wells Fargo is the company that was caught stealing funds from its clients. This happened over a year ago and Quarles just sold his stock because he has a conscience. Get out of town! This the type of people who work at the Fed.    
Now, with that quick update, let us go back to the notes and bonds.
The yield on one year does not continue at the same rate for five years. If you subtract the two yields, there is only a point .46 difference. How can that be? It gets worse. Now, you add another five years and you only receive a point .20 profit. It gets so bad that I don't have the vocabulary to describe the next level of lies. You go out twenty more years after the 10-Year note to the 30-Year Bond and you receive only a point .33% yield increase???
Do the math! For those old enough subtract today by thirty years. In 1987 how much did a car cost as compared to today? A house? Rent? How much was gas? These people and this institution should be abolished! They are slowly destroying our currency, our economy and our way of life. They only protect the status quo.
News Flash: 
The government said it expects to sell $1.3trillion in notes and bonds in 2018. This will continue for as long as the Fed can continue this game of deception. The government spends money that they don't have and continually provide benefits like tax cuts and deductions to the rich which only adds to the total of money that needs to be raised. However, consider this: our interest rates are among the highest in the world. This should make the dollar strong except it isn't. This is going to end badly which is why I say, End the Fed!