Tag: Jerome Powell

Ep. 583 – Powell + Biden Speak, Trillion Dollar Giveaways

The Kapital News

Ep. 583 - Powell + Biden Speak, Trillion Dollar Giveaways

00:00 / 00:34:16

Just when you thought multi-trillion dollar deficits for the past couple of years was bad enough, wait…there is more! The one-two punch from monetary and fiscal authorities keeps coming with no end in sight. The government, especially the Democrat party wants to continue with the massive spending spree and the Federal Reserve is more than happy to continue to finance such profligacy. Of course nothing is free and the results will be higher direct taxes at every level, federal, state, and local, higher inflation, lower living standards, and fewer opportunities. One cannot fix a global debt crisis with even more debt. Yet no policy maker regardless of political party or monetary institution wants to take responsibility or accountability for their years of reckless and criminal behavior. We do not have the right to steal from future generations, yet that is exactly what it means when we run these types of annual deficits and accumulate a national debt of over $28 trillion and growing!

Today was the conclusion of the FOMC meeting and as expected the Fed left the Federal Funds Rate unchanged at 0.00-0.25 percent. They also maintained their stance with respect to their QE program whereby they will continue to purchase at least $120 billion per month of US Treasuries and mortgage-backed securities. Last week their balance sheet hit a record high of over $7.8 trillion. Fed Chair, Jay Powell, continues to reiterate that inflation expectations will be transitory and will be a result of base effects, due to the low levels seen last year due to the lockdowns. In effect, he is stating that the Fed is just going to wait and see what happens next year, because the base effects will be in play through the remainder of this year. So a large print on inflation may very well occur and the Fed will just presumably shrug it off and say it is only due to base effects. We wonder if the people who have to pay higher prices will be so nonchalant about their currency being devalued?

Finally some tougher questions were asked of Jay Powell, but most likely simply due to the obvious absurdity of their policies and rhetoric. For instance, questions were asked with respect to the real estate market, which is currently hitting all-time highs with prices and other metrics. It was then asked with this as a backdrop, why then does the Fed continue to purchase $40 billion per month of MBS? It may be understood and even accepted that during the GFC, housing prices were collapsing and MBS were toxic assets and the Fed was attempting to inject liquidity into the system via these purchases. That was then and this is now. The GFC was an emergency and thus they justified their actions because of the falling house prices. Now, we have prices at all-time highs and the Fed also states that the economy is recovering – so where is the emergency to justify these purchases? A fair and basic question that received a terrible answer or better yet a non-answer, but at least the question was asked. On the other side, however, giving credit where credit is due, Jay Powell did admit that rising housing prices are pricing people out of the market, especially younger people, and that this is problematic. This is true. Yet does he not understand that much of this is a direct result of monetary policies that he is responsible for and fiscal policies of which his institution finances? This summarizes who and what we are dealing with.

This evening President Joe Biden gave an address to a joint-session of Congress. In his hour long speech he promised trillions of dollars in new spending on top of the trillions of dollars already passed to be spent during his short-time in office. There is completely no understanding of basic mathematics that exists within Congress, especially within the Democrat party. For instance, the Biden administration wants to increase taxes on the wealthiest of individuals and corporations. And presumably, with this extra tax revenue all of these new and old programs will be funded. Well not so fast. We are on track to spend nearly $8 trillion this year alone! This will give us an annual budget deficit of over $4 trillion. Our deficit will be larger than the entire amount of tax revenue that is brought in, which is around $3.5 trillion. Further, if you take $8 trillion and divide by 52 weeks in the year, you get around $154 billion of spending per week! And this is just the federal government. So, you can confiscate 100 percent of Jeff Bezos’ net worth, not just income, but everything the man owns, and it will only finance the US federal government for one full week! Yeah it does not add up and look who is in control of the education system – yep the government. These programs are outrageous, un-American, and unconstitutional. Yet none of that is going to stop them from trying to pass more legislation and spend trillions of dollars that we do not have – thus stealing it from future generations and robbing them of their prosperity and opportunities. This is all only going to get worse. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Inflation #Spending #Debt #Gold #Silver #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Revolution #Protests #Peace

Ep. 557 – Fed Gives Markets A Pot Of Gold

The Kapital News

Ep. 557 - Fed Gives Markets A Pot Of Gold

00:00 / 00:29:43

The knee-jerk reaction to the conclusion of the press conference by Federal Reserve Chair, Jay Powell, was positive for the equity markets, as they closed in the green after trading in the red for much of the day. So for the time being, a pot of gold was given to the markets. Now one day does not make a trend and this could easily reverse. However, when the Fed is seemingly committed to keeping interest rates low until at least 2023 and probably longer if they can, they are sending conflicting signals. On the one hand, they want to note how resilient the economy is and how it is likely to grow at a solid rate this year; and yet on the other hand, despite record high equity and real estate markets, an economy they claim is resilient and growing, still somehow needs the Fed to keep interest rates at record lows for the next few years at least?! Something does not add up. This is no surprise, as the Fed is always talking out of both sides of its mouth. They are also well aware that markets nor the economy like higher interest rates and yields on notes and bonds. Recall what occurred during Q4 of 2018 as the Fed attempted to reduce their balance sheet and raise the Federal Funds Rate. All it took was a Funds Rate of 2.4 percent and a 10-year Treasury note slightly above 3 percent to bring equity markets down 20 percent. Now, with the economy weaker, and trillions of dollars more in debt, even lower rates and yields will prick this bubble. However, such increases are exactly what is needed to help rid the markets of malinvestments and zombie corporations. There is no easy way out of this quagmire.

Since the GFC and the implementation of QE, the global economy has been living through the largest economic experiment ever conducted and it also happens to be the biggest wealth transfer in human history as well. Policymakers and central bankers are aware of the fragility in the system. This is evidenced by their actions of attempting to keep interest rates low and to put downward pressure on yields, should they begin to rise. They know the patient, the economy, is weak. But they cannot state this obvious truth because it is they who would be to blame for the mismanagement of the economy and financial markets. So instead of leadership and accountability, we shall have cowardice and more of the same implementation of one asinine policy after the next. How will this end – in blood and tears. When will this end is up for debate. But if yields and interest rates continue to climb higher, and one nation after the next continues to protest and riot because of the now brutal intersection of economic, political, and societal problems, then the end of this economic charade may be fast approaching. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Markets #EndTheFed #bananarepublic #FoodPrices #FireCongress #USA #Liberty #Leadership #Gold #Silver #Bonds #Debt #Commodities #Protests

Ep. 534 – Economic Match Made In Hell

The Kapital News

Ep. 534 - Economic Match Made In Hell

00:00 / 00:30:38

It is highly evident that the sunlight between the Treasury Department and the Federal Reserve no longer exists. The merger has been underway for years and is nearing its completion. Talk about the United States turning into a banana republic, well here it is. If you thought last year was a wild ride with respect to fiscal and monetary support, buckle up, because you ain’t seen anything yet. We know that Congress (Democrats), the Treasury Secretary, and Fed Chairman, are all hand-in-hand when it comes to the $1.9 trillion spending bill proposed by the Democrats and Biden administration. The argument is all about returning to full employment and how the passage of this bill will help to secure that goal. Furthermore, the Fed is completely behind it and willing to finance the deal (because we do not have the money), also arguing that full employment is their goal as well and how the Fed will remain accommodative until that end is met. Recall that one of the mandates of the Fed is to achieve and maintain full employment. The other is to achieve and maintain price stability.

This is just the opening salvo for what is going to be fiscal and monetary authorities gone wild. The $1.9 trillion is more about transfer payments, unemployment benefits, assistance to state finances, Covid-19 programs, and perhaps increasing the minimum wage to $15 per hour than anything else. This means that the Democrats will likely continue onward with the spending spree and attempt to tackle healthcare, the environment, and infrastructure. Some of these measures will likely pass and the cost is unknown, but it will be in the hundreds of billions, if not trillions in aggregate by the time the dust settles. The Congressional Budget Office is already predicting a national deficit north of $2 trillion for this fiscal year alone and this figure does not take into consideration any of the above spending measures.

Speaking of jobs, for the week ending 6 February, 793,000 Americans filed an initial jobless claim, which was above market expectations. The prior week’s figure was revised upward by 33,000 to rest at 812,000. For all programs, for the week ending 23 January, 20.4 million Americans continue to receive some form of unemployment insurance. This is a week-over-week increase of nearly 2.6 million. This would give us an unemployment rate closer to 14.3 percent as opposed to the official rate of 6.3 percent. We are nearly one year into the lockdowns and restrictions, and we continue to witness this type of carnage in the jobs market. This is after several trillions of dollars were flushed into the system. So what makes $1.9 trillion so magical if several trillion dollars could not stop the damage?

The Federal Reserve’s balance sheet hit a new all-time high at $7.44 trillion dollars. Some $30 billion above its previous high. With respect to M1 and M2 money stock, both of these measures are near their respective all-time highs, which were hit within the last few weeks. These numbers will continue higher as fiscal and monetary policies continue their expansion. This is by definition inflation and will prove utterly destructive to the financial system, and more importantly to the real economy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Markets #Fraud #Fake #FireCongress #Liberty #USA #Inflation #Gold #Silver #Jobs #Bailouts #Spending #Recession #Depression #Protests #bananarepublic #EndTheFed

Ep. 533 – Fake Unemployment!

The Kapital News

Ep. 533 - Fake Unemployment!

00:00 / 00:34:42

Jerome Powell, the Chairman of the Federal Reserve, made some comments this afternoon, and one in particular pertained to stating that the “real” unemployment rate is closer to 10 percent. The BLS just released the jobs report last Friday and informed us that the official unemployment rate is 6.3 percent. This is quite the discrepancy. So what gives? The Kapital News believes this is the first of many one-two punches to be thrown by Treasury Secretary, Janet “Dingbat” Yellen, and Jay Powell. Recall that Yellen was the former Chair of the Fed. This past weekend, Yellen made comments supporting the $1.9 trillion spending package being proposed by the Biden administration, arguing that its passage will help return the US economy to full employment. This is hogwash. Nevertheless, we now have Mr. Powell arguing with official government statistics, which is highly uncommon, and also arguing that monetary policy will remain accommodative until we once again reach full employment. Clearly, something is afoot. Especially when one considers how important the “independence” of the Fed is in the eyes of Fed officials. They always note how important it is for the government to stay out of the business of the Fed. So why is the Fed so concerned with the policies of the government? Wouldn’t this invite political interference into their decision-making?

The Kapital News believes that the Federal Reserve along with the Treasury Secretary, know that they are trapped. They know that their fiscal and monetary policies have run their course and are at their end. But they also do not want to take any responsibility for their actions since the GFC and so they would simply rather continue with the same policies as opposed to admit their mistakes and change course. This pride or perhaps complete ignorance and incompetence has proven to be and will continue to be extremely expensive and destructive to the economy. The inflation that has thus been generated will continue to make its way throughout the global economy. The first to be affected has been and remains financial assets, but inflation has also been hitting healthcare costs, commodities, and food. It is in these latter groups where the most destruction will occur. Most people do not own financial assets, but everyone needs food and energy. Even with respect to financial assets, as prices go higher for equities and housing, it prices much of the population out of these markets because they cannot afford them. It is one thing to be in a position where one cannot afford equities and/or housing. It is a completely different situation when they cannot afford their utilities, transportation, medical care, and food. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Fraud #FakeMarkets #Fake #Bailouts #FireCongress #bananarepublic #EndTheFed #Recession #Depression #Inflation #Gold #Silver #USA #Liberty

Ep. 494 – Biden’s Economic Dream Team Is Really A Nightmare

The Kapital News

Ep. 494 - Biden's Economic Dream Team Is Really A Nightmare

00:00 / 00:32:23

President-elect Joe Biden released more names today to fill positions within his economic team. These characters are all familiar names as many have held posts within the Obama Administration. As The Kapital News likes to say, “it’s a revolving door down there in Washington, DC.” It is quite remarkable, yet also not surprising, that such people will be filling these positions. Remarkable in the sense that no one seems to have any basic common sense for what is going on in this country. Evidently, the same people who are responsible for past and current economic calamity are now back in the fold – apparently so they can be responsible for the future economic calamity. This makes zero sense. However, what can be deduced is that the incoming Biden Administration must be fine with how things were managed in the past and thinks that’s how things should be managed going forward. This becomes the definition of insanity. And of course, it will continue to be the American people who are responsible for the bill. This will be paid through taxation, inflation, a stagnant economy, higher costs of living, lower living standards, few opportunities, and more debt. Just when you thought 2020 was nearing its close – we have all of 2021 to contend with in the aftermath of all of these flawed policies. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Debt #Bailouts #EndTheFed #BananaRepublic #Inflation #Gold #Silver #Liberty #Revolution #USA

Ep. 491 – Yellen: No Checks, No Balances

The Kapital News

Ep. 491 - Yellen: No Checks, No Balances

00:00 / 00:34:24

Today’s title has a couple of meanings. First, since we’re a first world banana republic, we have no checks to write because there is no balance in the Treasury to cover them. Further, the only way we really show a balance in the general fund is because we print the money like it’s going out of style – because it is. Then of course, the United States government is supposed to be a system of checks and balances. But how can our system truly function as such a system, if there exists a central bank, the Federal Reserve, that is accountable to no one? Presidents, Representatives, and Senators can be voted in and voted out by the people. The President can override Congress with a veto. Congress can override the veto should enough votes exist. Congress can impeach and remove a President. The Supreme Court can rule actions and legislation to be unconstitutional. Yet, if and when central bankers set interest rates and embark upon other policies, there is no one who can overturn their decision. These “officials” are not elected, and thus cannot be voted out by the people. So where is the check and balance to their power? This is exactly the problem.

Now, with President-elect, Joe Biden, beginning his transition into the White House, he is starting to pick his cabinet. Continuing with yesterday’s discussion, we highlight his pick of Treasury Secretary of Janet Yellen. Yellen was the former Vice Chair and Chairman of the Federal Reserve. She was very a much a part of implementing and overseeing quantitative easing. She is also an advocate for granting the Fed the ability and authority to purchase equities outright. While she makes such a claim in a veiled way – make no mistake that she believes this is something Congress should consider doing – granting the Fed such powers. She, like many of her predecessors and successors, are destructive to the United States of America. Their policies are the root of our economic malaise in conjunction with actions taken by our government. It has been and remains to be a great concern that these policies are going to become even more extreme, and thus worsen and add to the damage. It’s a revolving door in Washington, DC and this is further evidence that our elected officials care not about the health of our country. The people need to wake up before it is too late. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Markets #Jobs #Debt #USA #Inflation #Recession #Depression #Gold #Silver #EndTheFed #BananaRepublic #Liberty #Revolution

Ep. 490 – Yellen + Screamin’

The Kapital News

Ep. 490 - Yellen + Screamin'

00:00 / 00:34:15

So here we have it! It’s vaccine Monday once again and right on cue, AstraZeneca comes out and announced the results of their vaccine’s efficacy. This is now three Mondays in a row – Pfizer, Moderna, and AstraZeneca, respectively. However, today’s news was further bolstered by the announcement that former Chairman of the Federal Reserve, Janet Yellen, is getting the nod to become the next Treasury Secretary. Of course she will need to be confirmed by the Senate, but since she has been confirmed before, there’s really no reason to think why she won’t be confirmed again. Now, The Kapital News can come up with trillions of reasons as to why she should not be confirmed, but you get the point.

The stock market loved this news and why wouldn’t that be the case? Equities rose considerably under the Yellen-Obama tenure. This is thanks to record low interest rates, and quantitative easing being the norm for the past decade plus. This monstrosity of a policy continues and now with a one-two punch at Treasury and the Fed – what could possibly go wrong? Again, The Kapital News can provide a trillion scenarios, but you get the point in that the addicts on Wall Street will continue to get their hit and in larger doses. This is destroying, if it hasn’t already killed the patient, with the patient being that of the US economy. For that matter, it’s really the global economy since these actions are being undertaken in an orchestrated manner.

What’s so sad of course, is the fact that tens of millions of Americans are still going to food banks, collecting unemployment insurance, facing eviction(s), and massive uncertainties ahead, yet global equities continue reaching new heights. This is massive fraud and contributing greatly to wealth and income inequality. This is a recipe for political, social, and economic disaster because this is not the result of production, productivity gains, and prudent valuations. No, this is at the hand of easy credit and trillion dollar liquidity injections. In short, this is a first world banana republic and the funny money is inflating financial assets into the stratosphere. Just wait until this is reflected in commodity prices and general consumer prices. The inflation is already here – now await it’s truly destructive force and the coming stagflation and potential hyperinflation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Gold #Debt #Silver #Recession #Liberty #Revolution #EndTheFed #BananaRepublic #Depression #Bailouts #USA

Ep. 450 – Government Out of Control

The Kapital News

Ep. 450 - Government Out of Control

00:00 / 00:33:27

The Congressional Budget Office, CBO, is out with their projections for debt, deficit, spending, and revenue levels out to 2050 – and it ain’t a pretty picture. Even accounting for the effects for COVID-19 and the government response thereof, deficits are expected to increase to 5 percent of GDP by 2030 and to a whopping 13 percent by 2050. For context, the average deficit as a percentage of GDP has been 3 percent for the past 50 years. Following suit, the federal debt will increase to a record size of the economy when it hits 107 percent of GDP in 2023. This trend, unfortunately continues and hits a striking 195 percent of GDP by 2050. The CBO even remarks about the fragility of the economy and it will likely not be able to tolerate higher interest rates. Also noting that inflation may be on its way depending on how the government decides to “finance” the debt. And lastly, warning of a potential fiscal crisis and/or decline in the value of Treasury securities. All of the above points have been discussed at length by The Kapital News – most of which on a near daily basis. This is nothing short of a government that is out of control. And sadly, neither the President, nor VP Biden, are likely to comment on this fiscal disaster, nor address the structural issues that have led us to this destination, nor have a realistic plan to address it. The lack of honesty and leadership is a tragedy in and of itself.

In other news, the US dollar index is rallying, putting downward pressure on precious metals, some commodities, and likely stock prices as well. Is this a rush to “safety” in the US dollar? Or is liquidity starting to dry up once again, thus causing an increase in demand for US dollars in response to all of the US dollar denominated debt(s) that are outstanding and due? This is something worth monitoring. Interesting to note, however, is that the 10-year Treasury has barely moved and has been range-bound for quite awhile. Perhaps this fact throws water on the safe-haven play, as one would also expect to see falling yields in such a scenario. Today, Federal Reserve Chairman Jay Powell and Treasury Secretary Mnuchin, gave testimony on the state of the economy and the various efforts undertaken to revive the economy. Long-story short, they are requesting more spending and cannot figure out how to get money in the hands of small businesses, but have no problem giving it to major banks and large corporations – American or otherwise. And lastly, with rising COVID-19 cases in Europe, UK Prime Minister, Boris Johnson, made a public announcement urging Brits to social distancing and utilize other measures to get the numbers down, and should numbers continue to increase, then lock-down 2.0 is the likely outcome. Other countries may follow suit. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Debt #Deficits #Recession #Depression #Inflation #USA #BananaRepublic #EndTheFed #Liberty #Revolution #Gold #Silver

Ep. 381 – The DC Power Play

The Kapital News

Ep. 381 - The DC Power Play

00:00 / 00:34:58

A power play in DC appears to be taking shape regarding the economic response from the Fed and the government in relation to COVID-19. Over the last couple of weeks, the argument between a liquidity crisis and a solvency crisis has been and continues to be discussed. This is likely to be at the crux of this particular DC power play. Because after all, no politician or policymaker wants to be the one holding the bag when all of this comes crumbling down – so, they’re setting the stage for the blame game.

On the one hand, we have the Federal Reserve, where Jay Powell accurately notes that there is a difference between a liquidity and solvency crisis. It is on the liquidity side of the ledger where the Fed can be most “effective.” They can print money and expand the money supply at-will. They can flood the financial system by utilizing a number of lending facilities – and they have. However, this does not solve the solvency crisis that surely awaits us. Here, the Fed Chairman has been stating that he believes Congress and the Administration should take a bigger role through fiscal measures as opposed to relying solely on monetary ones. Here is where the power play or blame game starts to form. The Fed can show via various statistics, such as their balance, that they have thrown trillions of dollars into the system to keep the financial plumbing moving along – in conjunction with other measures. Now, while they claim they still have ammunition, it would be prudent for the government to step in even further, is their argument – the Fed is passing the baton of responsibility. “Hey, we here at the Fed have done our part, look at exhibit, A, B, C, etc… now it’s your turn Uncle Sam.” So now the ball is in the hands of Congress and the Administration – a huge and slow moving political machine – what could possibly go wrong? So, if the solvency crisis does unfold, meaning a considerable amount of businesses, (of all sizes), file bankruptcy and/or liquidate, then a lot of this blame will fall squarely on the shoulders of the government – at least this is what the Fed is trying to position for. Will the Congress and/or Administration allow this to happen?

No one wants to step up and be the leader. No one wants to step up and admit to our many faults as a country, as a society, as individuals. No one wants to speak the harsh truths of the matter with respect to so many subjects. No, no. But what we can do without hesitation, is burden future generations who have nothing to do with this, and have them pay for it with lower living standards, higher costs, and lack of opportunities. All for the purpose of returning things back to “normal.” Normal by the way is insanity personified, and completely unsustainable, but as our podcast highlighted yesterday, Nobody CARES. It will thus be interesting to see how the government handles the solvency crisis and who they seek to blame. It’s a power struggle, it’s a money struggle, it’s a reputation struggle, and it’s a legacy struggle. And on top of it all, it’s a Presidential election year. We told you 2020 was going to be interesting and it’s only May! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Bailouts #USA #EndTheFed #Congress #Liberty #Revolution #Gold #Depression

Ep. 380 – The Nobody CARES Act

The Kapital News

Ep. 380 - The Nobody CARES Act

00:00 / 00:32:24

This is of course a direct criticism of the multi-trillion dollar monstrosity known as the CARES Act. The bill that was passed by Congress with bipartisan and Presidential support in response to COVID-19. Well, just like any title of a bill – it’s usually the exact opposite that transpires – so in this case, it’s the Nobody CARES Act.

Today via a virtual Senate hearing, Treasury Secretary Mnuchin, and Fed Chairman, Jay Powell, gave their testimony as to the progress of the CARES Act. During today’s podcast, we highlight a few of the key points. These pertain to: not all of the money that has been appropriated has been spent, the Fed will utilize leverage if and when they put this money to use, the base case of the US Treasury is that on a net-net basis, there will be losses, questions asking if there will be conditions to receiving any funds, especially by large corporations, such as guaranteeing that employees are kept on payroll and/or brought back from being laid-off, the money supply, limitations to the Fed’s balance sheet, discussion of Treasury issuing 50 and/or 100 year bonds, and asking how the Fed’s purchases of junk bonds, is a help to the people…all this and more as we dissect this new banana republic. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Bailouts #Jobs #USA #Depression #Gold #Protests #EndTheFed

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