Tag Archives: Federal Reserve

Repo Madness

07 Tuesday Jan 2020

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2020 is off to a rocking great start! That is if you’re a criminal banker. And, the money just flows!!!

… means the Fed just injected a total of $99BN to keep the levitation party going, and confirms that the repo market remains paralyzed.

Worse, any attempts to drain liquidity from the repo market, or generally slow down the shrinkage of the balance sheet, will be met with failure. It is also another indication that the repo market now holds the Fed hostage, with Powell now trapped in not only injecting liquidity via QE4, i.e., the monetization of T-Bills, but continued reliance on repos in the $250BN range.

Of course, should the Fed threaten to pull even a bit more liquidity than the market is comfortable sacrificing, and stocks get it. The flip side too: as long as the Fed keeps growing the balance sheet at a rate of about $100 billion per month, the market meltup will continue.

Best economy ever! As they boasted the other day, it is now virtually recession-proof.*

*”virtually recession-proof” does not preclude the (mathematically certain) proposition of depression or total collapse.

The Wealth Tax We Need (but will Never Get) – from TPC

31 Tuesday Dec 2019

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Taxes…

Wherein Perrin PROPOSES a Tax

I know. I was shocked too. But, it’s a new year (happy 1998!) and we must all change with the times. Everyone can agree that if America needs something, then it’s a privatized college football league. If there’s anything else, then it’s another tax. All the cool politi-critters are a squeaking away about it – like fat stupid rats locked in the cheese factory. If the peeps could be roused from the sofas and the Netflix-Sackler Family comas, then they’d be on-board too. And, this is not an idea that I come to lightly. Careful study of the articles even here at TPC gives credence to the popularity of the phenomenon.

MB lamented both the death and the fiscal failings of The Textile Man: “There’s so many folks out there that bust ass every October & December to make those property tax payments & here he was just not paying them.” Our esteemed editor, just last week, pondered why the home county folks “don’t pay their damned property taxes…” Seriously, you scofflaw slackers! If you don’t turn over your money (and, is it really ever “yours”?), then how can the good Sheriff continue to pay Commy Traig or whomever hundreds of thousands of dollars per year!? Any and all local political corruption depends on your financing. Do your damned jobs!

Da hit the national tax scene hard, heavy, and nobly with his Letter to the 2020 Democratic Nominee: “we still need a wealth tax for the good of us all.” Here, here! You darn tootin’ we do!

I have not spoken with Bess, Kayla, Fred, the Sheriff, or the Sharif about this, but I know for certain they are all in agreement.

Da was right – we need a wealth tax. It’s time for the truly wealthy to pay their fair share. And, truly, who’s wealthier than … The Federal Reserve? Back in October, I replied, in agreement, to Mr. Millsaps heartfelt thoughts as follows: “How about a 100% tax on all Federal Reserve assets, real, fake, and potential? I’ve got an idea…” Well, I do. Here it is…

ALL AT TPC…

Is This the Annual Repo Number???

27 Friday Dec 2019

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I’ve been morbidly interested in the Fed’s latest act of national homicide for whatever reason. It’s been more than difficult to keep track of exactly how much fake money they’ve pumped out. This could be it:

Global stock markets have been on a torrid run in 2019, adding more than $17 trillion in total value, according to Deutsche Bank calculations.

The value of global equities began the year just under $70 trillion but has now surpassed $85 trillion, according to a chart from Deutsche Bank’s Torsten Slok.

The banner year for equities has been helped by easier monetary policy and political developments around the globe.

Central banks around the world have taken a more dovish approach, boosting markets. The Federal Reserve has cut its benchmark interest rate three times this year, and the European Central Bank cut its already negative rates even further.

$17 Trillion in dove shit! Ridiculous, I know. The real number is probably much higher.

But It’s So Convenient

20 Friday Dec 2019

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Get your direct deposit today?

With reports of direct deposits failing to clear still ongoing, Bloomberg reported that the Federal Reserve was investigating “the second significant disruption in 2019 of a payments service administered by the U.S. central bank.”

As we first reported earlier (see below) key transactions – most notably funding via direct deposits – were delayed after ACH – which stands for the Fed’s Automated Clearinghouse System – experienced delays, but it is now up and running.

“The FedACH service, which processes transactions for commercial banks, is currently operating normally after experiencing delays in processing yesterday afternoon and early this morning,” Jean Tate, a spokesman for the Atlanta Fed which hosts the central bank’s Retail Payments Office processing ACH transactions, said in an e-mailed statement, despite reports that some banks bank clients still had not received their monty.

“Some customers experienced delays in receiving confirmations of yesterday’s transactions. Federal Reserve technical staff continue to investigate the root cause of the issue.”

Not to worry! The sorcerors are looking into it. “Monty,” the root cause of all evil…

A Wealth of Taxes

17 Tuesday Dec 2019

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Large corporations, those wily government entities, pay next to no taxes.

About 400 of America’s largest corporations paid an average federal tax rate of about 11% on their profits last year, roughly half the official rate established under President Donald Trump’s 2017 tax law, according to a report released Monday.

The 2017 tax law lowered the U.S. corporate tax rate from 35% to 21%, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes.

In the first year of the law, the amount corporations paid in federal taxes on their incomes – their “effective rate” – was 11.3% on average, possibly its lowest level in more than three decades, according to a report by the Institute on Taxation and Economic Policy, a left-leaning think tank.

Yeah, yeah. Whatever. This did get me thinking though. My comrades over at TPC, two of them, have of late been defending taxation with zeal. One promoted the “wealth” tax. That… How about a corporate wealth tax? One aimed primarily at private banking corporations? One in particular. This particular private bank has assets and wealth that must be imputed given the bank’s unique ability to create such out of thin air. I suggest a putative assessment of infinity. The tax could be levied accordingly. Now, since we have no need for infinite money, I think a rate (or number) sufficient to PAY OFF EVERYTHING should do it. One time. No more debt of any kind. And then, abolish said private bank and send its owners packing. Yes?

Voodoo Economic News

17 Tuesday Dec 2019

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Trade. Stock market. Interest rates. BAWK! The sorcerors wave their magic wands and all is well(?).

The trade deals, while not nearly as ambitious as Trump promised, have lessened one of the biggest drags on the U.S. economy: uncertainty. While some industries still face significant tariffs and final details remain in flux, business leaders say at least they know what the situation is likely to be in 2020, offering more clarity than they have had since Trump’s trade war commenced nearly two years ago.

“Tariffs will be much more stable for quite a while,” Larry Kudlow, Trump’s top economic adviser, told The Washington Post. “Some of the obstacles to growth, including the Fed and trade uncertainties, are being removed, and that will have a powerful positive impact on the economy.”

Hold up. Did Kudlow just say they’re removing the Fed???

The Math Gets Harder

13 Friday Dec 2019

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It’s so hard to keep up with QE Infinity at this point.

In other words, instead of QE4 the Fed will flood the repo market with a firehose of liquidity.

Here is how Curvature’s Skyrm summarized this:

One word: “Massive”. A few more words: The largest series of RP operations ever! The Fed announced it’s RP operations schedule for the next few weeks and it’s huge!

Here are my calculations:

There are two existing $25 billion term operations over the Turn already in the market totaling $50 billion

The Fed committed to at least a $150 billion overnight operation on year-end

A REG-start year-end operation on the day before year-end of $75 billion

Between now and year-end a total of 6 term RP operations totaling $225 billion

All total, I count the Fed committed to pump $500 billion in the Repo market over year-end. Naturally, the Turn (12/31-1/2) rallied a bit today. Trading from 4.25% yesterday to 3.80% today

A firehose is generally reserved for a fire. In other news, those main excuses for this, about taxes and treasury swaps, appear to be falling apart.

The Man Behind the (Market) Curtain

12 Thursday Dec 2019

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The Sorceror in Chief is propping up the markets. No, really.

Powell’s presentation marked a heel turn from earlier this year. Stocks tanked in July after Powell described the Fed’s first interest rate cut in a decade as a “mid-cycle adjustment,” because investors interpreted the remark as a signal the relief monetary policymakers were providing was only temporary. Now, however, “the cuts look much more permanent,” Grant Thornton chief economist Diane Swonk wrote in a note. “The vote to hold rates unchanged was unanimous, the first time that all agreed on what the Fed should be doing since May 2019.”

And 13 of the 17 members of the Fed officials setting policy indicated they expect the borrowing rate to remain untouched next year, while four projected one hike. As recently as September, nine of the policymakers projected at least one rate hike next year.

Investors had largely priced in the Fed’s decision to hold rates steady, but stocks rallied modestly on Powell’s post-meeting comments. Major indexes snapped a two-day losing streak, with the S&P 500 closing up 0.29 percent and the Dow Jones industrial average climbing 0.11% on the day.

“Markets liked Mr. Powell’s assertion that he would want to see a ‘significant’ and ‘persistent’ increase in inflation before he would want to raise rates, and he again drew attention to the undershoot to the target in recent years,” Pantheon Macroeconomics chief economist Ian Sheperdson wrote in a note. “Mr. Powell’s view is not shared by all his colleagues, given that most of them expect rates to rise slightly over the next three years while core inflation is expected to be little changed. But markets put much more weight on the views of the Chair; that’s probably the right approach.”

Bubbe is as bubble does.

Short of a Full Accounting

09 Monday Dec 2019

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Much like the criminal government, the criminal central bank just can’t tell the truth about anything. If they even know what’s going on. With REPO BUCKS! they do not.

Federal Reserve officials have attributed the problem to a rush of corporate tax payments and settlement for an unusually large settlement in Treasury bond auctions.

However, the BIS said that while those two factors help explain some of the problems, they fall short of a full accounting.

“None of these temporary factors can fully explain the exceptional jump in repo rates,” the bank wrote.

Other factors the institution cited include the heavy reliance on the “Big Four” banks for funding, the increased role that hedge funds are playing on the demand side for funding, and the adjustments that market participants are making following an extended period of ample reserves that has changed over the past two years.

…

Fed officials have puzzled over the banks’ unwillingness to lend into the market when the Sept. 17 disruption happened. Discussion has centered around the role that post-financial crisis capital regulations have played as well as the interest the Fed continues to pay on bank reserves.

Such reluctance in the future poses continued threats, the report said.

Puzzling! A total mystery that we will never understand. Ah well, back to the TeeVee. It’s only the economy and whatnot. Sorcery = a puzzle.

The Goose that Laid the “Illegal” Golden Egg

07 Saturday Dec 2019

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We all know that gold is only supposed to flow OUT of America. This doesn’t cut it.

At a U.S. Senate subcommittee hearing Thursday, Sen. Marco Rubio called illegal gold mining in Latin America a “direct threat” to U.S. national security that has become “far more lucrative than drug trafficking” — and noted that billions of dollars worth of the illicit precious metal is entering American consumer markets through Miami.

“There is a major human toll if we do not get control of this problem,” said Rubio, citing a cornucopia of evils unleashed by illegal mining including human trafficking, corruption, disease, mercury poisoning, drug smuggling, widespread deforestation in the Amazon basin and the enrichment of powerful criminal groups and rogue governments like Nicolás Maduro’s regime in Venezuela.

But American consumers are scooping up gold with little awareness of where it comes from or who gets hurt. The metal is used not only by the jewelry industry but also in electronics such as smartphones and tablets. Rubio said 58 percent of imported U.S. gold comes from Latin America. Miami International Airport, the closest U.S. port to Latin America, has long been the nation’s leading gateway of gold.

It’s almost like the people want a gold standard or something. I wonder why? It surely couldn’t be the Fed continuing to flood the world with fiat. Every day, the same headline.