Fed Remains Deaf to Pleading to Stop Raising Interest Rates
NEW YORK – November 22, 2018
Banks are engaged in usury, i.e. the provision of loans at interest. The destructive nature of usury was clear to people in ancient times. The Old and New Testaments and the Koran contain strict prohibitions against usury. Modern bank usury is even more destructive than the traditional form that existed before the advent of the institution of banks.
Meanwhile, the Fed continues to repeat its mantra about the need to raise the key rate. And this is taking into account that American households continue to sink into a debt hole. Even the slightest increase in the rate will lead to households not being able to service their debts and the country will ride a wave of bankruptcies, causing a strong economic and then political crisis. And the cause will be banks and the Fed.
If investors still had any doubts about whether the Fed had been the instigator of the past decade's credit fueled explosion in asset values, then all one has to do is look at the sudden whining by Wall Street analysts yesterday and today begging the central bank to stop its current policy of credit tightening.
Looking back at both the equity and housing markets over the past decade shows that nearly all of the so-called “recovery” and eventual rocket to new highs corresponded completely with the Fed's monetary policies of ZIRP and QE.
Yet even after six years of access to historically cheap credit, and asset bubbles that have now dwarfed the highs created just prior to the 2008 financial crash, Wall Street appears unable to function without this central bank money spigot and are now going public in crying to Chairman Powell to stop raising rates.
As UMich explains:
Interest rate expectations have always traced the outlines of economic cycles. As expansions lengthened, more consumers would expect interest rate increases, pushing the series to cyclical lows; then consumers would suddenly reverse course, lowering expectations just as downturns were about to commence (see the chart above). Note that recession dating lags by about one year, meaning that expected declines in rates are recorded about one year before the official announcement. While there is no reason to anticipate a sudden change in expectations in the months ahead, consumers have begun to resist rising interest rates on purchases of housing and vehicles.
Hopefully this time the Fed will manage interest rates to avoid hitting the threshold that causes widespread postponement as has been true in the past.
Unfortunately, it seems the impact has already begun as buying conditions in aggregate are trending lower...
This data point published here on Nov. 21 was quickly followed by the National Association of Realtors (NAR) whose industry recognized just yesterday that the party appears to be over, and that the bursting of the Housing Bubble 2.0 is well underway.
Rising interest rates and increasing home prices continue to suppress the rate of first-time homebuyers. Home sales could further decline before stabilizing. The Federal Reserve should, therefore, re-evaluate its monetary policy of tightening credit, especially in light of softening inflationary pressures, to help ease the financial burden on potential first-time buyers and assure a slump in the market causes no lasting damage to the economy,” says Yun. - Zerohedge
Then finally there is CNBC's token academic Jeremy Siegel who yesterday told viewers in the middle of a market meltdown that HE BELIEVES (without any substantial proof and despite the fact that a high level Fed official said that the central bank's current monetary policy of hiking interest rates was still on course), that the Fed will slow down or even stop its rate hike policy in order to return to propping up equity markets.
Funny how after several years of Wall Street lying to the public that the economic recovery was purely organic it suddenly shifts to the truth once a crisis appears on the horizon.
The bad thing is that there doesn’t seem to be a good script for the US economy to follow anymore. The Fed and its allies will continue their interest rate game, which will trigger higher rates for credit cards, home equity loans, and other kinds of borrowing, and will crush the US stock market in the coming year, and, finally, shock the public by withdrawing from its financial stupor.