US Federal Reserve announces it is raising short term interest rates. (16 Dec 2015)

[ThePythonicCow]

The US Federal Reserve (Fed) just announced that it is raising short term interest rates a quarter point, and that it will continue with further raises, as needed, through 2016.

This is the first time that the Fed has raised its short term rate since June of 2006, almost a decade ago.

Wow!

Raising rates will cause a *major* failure in the derivative market, which is 100x larger than the US Treasury market. The Fed just lit the fuse on a directed energy weapon which will bring about the destruction of the banks that own it. This means that the Fed really works for the bastards that own those banks, and that they are deliberately starting an uncontrolled demolition of the US Petro-Narco-Dollar monetary system.

Initially, the US Dollar will become even more scarce, causing any person, company or nation in excess debt denominated in US Dollars to threaten bankruptcy. The Dollar will become -very- scarce.

Oil in $US/Barrel will fall further, to <= $30 barrel (it already fell earlier today, to about $35 per barrel). This places immense stress in the oil frack'ing industry, which is deeply in debt and cannot make payments at such low prices.

The Fed, over the last century, oscillates between building up flammable kindling wood (lots of debt extended to those who cannot repay in hard times, personal, corporate and national), and setting that kindling wood afire (pulling back on the easy credit). Since they (well, their bosses) know when and how they are doing this, this gives them increased control over all, each iteration, and increased wealth and power.

The time has come to blow up the Fed, it's major owning Wall Street and Euro banks.

Essentially, Janet Yellen, Fed Chairwoman, walked into the announcement press conference wearing a suicide vest, and pulled the fuse to light it.

The immediate effects will not be felt on Main Street, USA. But I expect that soon there will be a major failure of some emerging market nation or some major bank.

(This new thread continues, in some ways, a longer running discussion on the Global Currency Reset (http://projectavalon.net/forum4/showthread.php?76591-Global-Currency-Reset--SDR-s-and-the-New-Bretton-Woods-by-JC-Collins-&p=1030164&viewfull=1#post1030164) thread.)

[ThePythonicCow]

Well, we may have our first "crash" already ... ZeroHedge.com website seems to be down :). It's a very popular financial market news site.

(P.S. - Not down ... just very slow.)

(P.P.S. - Down now (52 minutes after the Fed announced), at least momentarily. My browser says "Firefox can't establish a connection to the server at www.zerohedge.com.

The site could be temporarily unavailable or too busy. Try again in a few moments.")

[ThePythonicCow]

David Stockman, a very smart and experienced analyst in Washington, from back in the days of the Reagan administration (early 1980's) when he was the youngest member of Reagan's cabinet as Director of the Office of Management and Budget, calls this Federal Open Market Committee (FOMC, aka the Fed) decision "the greatest financial market inflection point since 1929", in his blog post earlier today: Today Will Be a Watershed Moment for Financial Markets (http://davidstockmanscontracorner.com/tomorrow-will-be-a-watershed-moment-for-financial-markets/).

Excerpts from Stockman's post:

...
That’s why I’m calling today’s FOMC meeting the most crucial inflection point since 1929.

We have reached the apogee of history’s greatest credit inflation. Now we’re hurtling into a prolonged worldwide deflation. You can already see this deflation in the plunge of oil, iron ore, copper and other commodity prices.

The Bloomberg Commodity index has fallen 70% since its 2008 peak. And it has now reverted to levels not seen since 1999 — while falling lower by the day.
...
To wit, this bubble was global like never before. Just two big figures give you some idea of its immense magnitude.
...
Here’s the thing. Nearly $20 trillion of fiat central bank credit has been injected into the world financial system over the past two decades, and this high-powered money has, in turn, triggered the greatest expansion of financial credit in human history.

[ThePythonicCow]

As Jesse explains briefly in the post Fed Raises Benchmark Rate 25 Basis Points (Jesse's Cafe) (http://jessescrossroadscafe.blogspot.com/2015/12/fed-raises-benchmark-rate-25-basis.html), the Fed implements this policy decision by paying banks more interest at the reverse repo window.

The Fed acts like a pawn shop for the big banks. If a bank has some assets, such as a bond or treasury note, and needs some cash overnight, it can borrow from the Fed, using the asset as collateral. This is like taking your big screen TV to the pawn shop, to get enough money to pay the rent, until your paycheck comes in. They call this the "repo window." The Fed will also work the reverse direction, exchanging assets they have for the bank's money, and paying interest on that to the banks. They call this the "reverse repo window."

This reverse repo rate is the interest rate that the Fed will be raising now ... paying the banks more interest on the "cash" that the banks deposit in this Fed's "savings" account (interest accumulated and credited daily.) This is the way that the Fed "drains" excess liquidity from the banking system, by paying the banks higher interest to deposit the cash with the Fed.

The punch bowl is being removed. The Fed and its major bank holders and the governments they control have been pumping up the credit markets, in a series of ever bigger bubbles, for decades now. The party is over, the last, largest, punch bowl is being carted out of the ballroom now. The hangover will be world wide and immense.

[ThePythonicCow]

To extend my punch bowl analogy, some of the party goers were already feeling ill with the initial signs of delirium tremors from alcohol withdrawal. The high yield junk bond market (debt to those least able to repay) was exploding in the last few weeks, with a couple of junk bond mutual funds announcing their collapse and failure last week.

When the party started, decades ago, the punch was strong, high alcohol, content. The punch in my analogy is debt, and the potency of debt is how much you can earn on borrowed money. If you can borrow $1 and use that to earn $10, that's potent. I managed to do that back in the 1970's, borrowing about $2000, to get a computer science degree that paid back 10 to 50 times that, per year, for 30 years following ... a good investment ... wonderful punch ! If you borrow $1 and can't earn enough with that money to even pay back the loan, you go broke ... that's weak punch.

Over the years, the punch has gotten weaker and weaker. Now a $1 borrowed won't even earn a $1 income. US students who borrowed $50,000 or $100,000 for a college degree in order to get a part time job flipping hamburgers are seeing this. Frack'ing companies who borrowed Billions to pollute our water supplies with toxic chemicals, to get oil out of the ground at a cost of $50 or $80 per barrel, that they can only sell for $35 a barrel, are seeing this. Emerging market nations that borrowed Trillions for infrastructure to provide China with raw materials, now that the US Dollar is increasingly scarce, and China's trade (both import and export) has fallen off a cliff, are seeing this.

So as soon as the punch bowl disappears through the Fed's swinging doors into the kitchen, some of the party goers, those already in the worst shape, will become deathly ill.

This is the way of the Rothschild/Morgan/Rockefeller/... banking dynasty, and has been for a couple of centuries now. Pump and dump, on ever grander scales (along with some other nefarious schemes.)

[ThePythonicCow]

Some of the headlines from Wolf Richter's WolfStreet.com (http://wolfstreet.com/), this last week, showing the current economic stresses:

China’s Steel Industry Bleeds, Prices Collapse, Losses Mount (http://wolfstreet.com/2015/12/09/chinas-steel-industry-teeters-prices-collapse-losses-mount-and-even-the-government-gets-gloomy/)
How Junk-Bond Contagion Hits Stocks (http://wolfstreet.com/2015/12/13/how-the-junk-bond-rout-hits-stocks/)
Freight Shipments Hammered by Inventory Glut, Weak Demand (http://wolfstreet.com/2015/12/15/freight-shipments-plummet-as-inventory-glut-bites/)
Spain’s Biggest Bankruptcy Ever Hits Banks, Mexico, Brazil, Descends into Bitter Farce (http://wolfstreet.com/2015/12/15/spains-biggest-bankruptcy-ever-hits-banks-mexico-brazil-descends-into-bitter-farce/)

[ThePythonicCow]

This reverse repo rate is the interest rate that the Fed will be raising now
More details here: Fed Reveals Rate Hike "Plumbing" Details: Removes Cap On Reverse Repos, Limits Each Counterparty To $30 Billion (http://www.zerohedge.com/news/2015-12-16/fed-reveals-rate-hike-plumbing-details-removes-cap-reverse-repos-limits-each-counter).

The Fed is removing the daily limit on aggregate borrowings through its overnight reverse repurchase facility (the "reverse repo window"), previously set at $300 billion.

The Fed will be sucking up cash, removing "excess liquidity", without practical limit now.

In a word (well, two words): Global Deflation.

[AriG]

Paul,

Thank you for the insight into today's developments!

From a Main Street perspective, how will this impact the majority over the next four quarters? What sectors are most likely to be hurt?

[TargeT]

Paul,

Thank you for the insight into today's developments!

From a Main Street perspective, how will this impact the majority over the next four quarters? What sectors are most likely to be hurt?


Short term will be good, commodity prices should trend down (oil will get cheaper, steel & copper etc..) ultimately what will happen is a hard call, there's so many large pools of USD out there; someone getting crazy and dumping dollars could change this around quickly... or we (more likely) go into deflation.

http://d2dp98nruyknlg.cloudfront.net/cdn/farfuture/xLAVw_Z7QqqEaPWJWg-HT1XrSIMk4ckoqD8QhwFXDZ4/mtime:1383136982/images/ia-deflation-cycle.gif

[ThePythonicCow]

From a Main Street perspective, how will this impact the majority over the next four quarters? What sectors are most likely to be hurt?
All sectors, all nations, world wide, except for a few indigenous peoples totally "off the grid" :).

Every individual (except a few Rothschilds and such), every business from a lemonade stand to Exxon Mobil, and every political organization, from your local school board or water district, to the United States, China and the European Union, will be asking itself: If my income fell dramatically due to this depression, can I still "pay the rent", make my debt payments, and avoid being homeless, hungry, bankrupt, or facing a revolution of starving unemployed citizens.

[AriG]

From a Main Street perspective, how will this impact the majority over the next four quarters? What sectors are most likely to be hurt?
All sectors, all nations, world wide, except for a few indigenous peoples totally "off the grid" :).

Every individual, business and organization, from your local school board or water district, to the United States, will be asking itself: If my income fell dramatically due to this depression, can I still "pay the rent", make my debt payments, and avoid being homeless, hungry, bankrupt, or facing a revolution of starving unemployed citizens.

Do you think that by adjusting gradually, quarter over quarter, any effort will be made to offset depression if production trends downward, or do you think that is the ultimate goal - world wide depression?

[ThePythonicCow]

or do you think that is the ultimate goal - world wide depression?
Yes - that is the goal.

The Fed made that absolutely clear today, when it lit the fuse that will blow up the balance sheets of the very banks that supposedly own the Fed.

[AriG]

or do you think that is the ultimate goal - world wide depression?
Yes - that is the goal.

The Fed made that absolutely clear today, when it lit the fuse that will blow up the balance sheets of the very banks that supposedly own the Fed.

Any other possible outcomes?

[ThePythonicCow]

Any other possible outcomes?
The key question in my mind is what follows the crash.

For the last couple of centuries at least, the Rothschild-Zionist's and associates have used these booms and busts to gain more control over humanity, in pursuit of world control.

The signs that I can see point to this happening again, with the BRICS nations being the "good guy" anti-synthesis to the "bad guy" Western institutions (bank, corporate, government, ...) ... but all ultimately playing the "big game."

But I can't see very far into the future, or very far into the depths of this evil.

[AriG]

Any other possible outcomes?
The key question in my mind is what follows the crash.

For the last couple of centuries at least, the Rothschild-Zionist's and associates have used these booms and busts to gain more control over humanity, in pursuit of world control.

The signs that I can see point to this happening again, with the BRICS nations being the "good guy" anti-synthesis to the "bad guy" Western institutions (bank, corporate, government, ...) ... but all ultimately playing the "big game."

But I can't see very far into the future, or very far into the depths of this evil.

What country is the target this time?

[ThePythonicCow]

What country is the target this time?
The countries on planet earth :).

[AriG]

What country is the target this time?
The countries on planet earth :).

But certainly not all at once? That hasn't been the MO previously. Are you saying that this is the end game? That all economies are being targeted at once? They won't win that. The people of the world will not tolerate being starved out en masse, will they? If they attempt this, there won't be anything left to control.

[TargeT]

What country is the target this time?
The countries on planet earth :).

But certainly not all at once? That hasn't been the MO previously. Are you saying that this is the end game? That all economies are being targeted at once? They won't win that. The people of the world will not tolerate being starved out en masse, will they? If they attempt this, there won't be anything left to control.

Problem:
world wide monetary crash

Reaction:
How could they let this happen, we need reform! * my prediction

Solution:
World monetary fund, central control, the ultimate "fed" in a globalized version.


This has been hinted at for quite a while, this may be the "pivotal" move in that direction.

[ThePythonicCow]

What country is the target this time?
The countries on planet earth :).

But certainly not all at once? That hasn't been the MO previously. Are you saying that this is the end game? That all economies are being targeted at once? They won't win that. The people of the world will not tolerate being starved out en masse, will they? If they attempt this, there won't be anything left to control.

The stresses will vary by nation and region, but just as the economic boom of the last few decades has involved heavy global trade and banking, so shall the crash and "Greater Depression."

The US Dollar hegemony, with its Euro, Pound and Yen cohorts, was world wide. It must fail, spectacularly, in order to open the door for the new world wide monetary hegemony, controlled more by "global NGO - non-govermental - organizations." The immense rise in power of the Fed and its big Western bank owners will be mirrored by an immense fall, much faster and uglier.

And the Fed itself has just lit the fuse to commence this (barely) controlled demolition of the current monetary system.

[Morbid]

i strongly believe that this is the year for those who are aware to set up a space around themselves to be self-sufficient and safe. as families and friends go down financially one by one it would be a good call to group together and build communities. those in the cities and relying on finance to survive might be hit hardest.

[AriG]

What country is the target this time?
The countries on planet earth :).

But certainly not all at once? That hasn't been the MO previously. Are you saying that this is the end game? That all economies are being targeted at once? They won't win that. The people of the world will not tolerate being starved out en masse, will they? If they attempt this, there won't be anything left to control.

The stresses will vary by nation and region, but just as the economic boom of the last few decades has involved heavy global trade and banking, so shall the crash and "Greater Depression."

The US Dollar hegemony, with its Euro, Pound and Yen cohorts, was world wide. It must fail, spectacularly, in order to open the door for the new world wide monetary hegemony, controlled more by "global NGO - non-govermental - organizations." The immense rise in power of the Fed and its big Western bank owners will be mirrored by an immense fall, much faster and uglier.

And the Fed itself has just lit the fuse to commence this (barely) controlled demolition of the current monetary system.

So what will it be replaced with? I don't think many here are fans of the monetary system, even in theory, let alone practice. What will take its place?

[WhiteLove]

From a Main Street perspective, how will this impact the majority over the next four quarters? What sectors are most likely to be hurt?
All sectors, all nations, world wide, except for a few indigenous peoples totally "off the grid" :).


Haha LOL :bigsmile:

[AriG]

Well, on that note, I think I will do my planning for Spring. Extra everything in the ground. Never hurts. Although... if this monetary reset happens? No one will be able to keep their land... the government will tax it to pieces just to keep the lights on.

[Rocky_Shorz]

hmmm, with Rothschild owning Canada, maybe this is the attack on the Fed Ben said was being asked for supported by BRICs...

who needs an army when a simple financial move will cause the same thing...

[KiwiElf]

Scarily, a Japanese web (news) article reported yesterday that we (NZ) are going into economic collapse! Ummm not that I'm aware of but the "signs" are starting to show.

[TargeT]

Well, on that note, I think I will do my planning for Spring. Extra everything in the ground. Never hurts. Although... if this monetary reset happens? No one will be able to keep their land... the government will tax it to pieces just to keep the lights on.

its no fun ruling with no one to rule...

the common man will feel discomfort, maybe even extreme discomfort probably not much else.

I don't envision the world becoming post-apocalyptic or zombies walking the street or anything like that.

[Dennis Leahy]

...who needs an army when a simple financial move will cause the same thing...
This is precisely what John ("Confessions of an Economic Hitman") Perkins has told us is the new methodology for war: first, it is a financial war. If financial weapons are not powerful enough, next they "send in the jackals" (covert operatives to destabilize and topple), and finally, if that also fails, they resort to boots-on-the-ground and bombs-falling-from-the-sky (conventional warfare.)

So here it starts with financial weapons.

Then the jackals? This is different than individual countries to be decapitated (leaders toppled), but probably the same chess moves. Those that will be suicided or declared as "ruthless dictators who murder their own people!" will be the few world leaders that do not fall in line to the NWO plans, as written.

Finally, "bombs bursting in air?" If any populations of citizens rise up and refuse to acquiesce to the NWO plans, they will be labeled as terrorists, and killed. (Western corporate media will cheer-on the demise of "the terrorists" as will all of the scared, stupid people who never even tried to wake up.

====================

^hey, this is my 5000th post at Avalon! Drinks are on me! I'm serving pure, clean, slightly alkaline water with low total dissolved solids. Hold up your glass if you're thirsty! :Music: :dancing:

[Zionbrion]

Its interesting on the MSM they are sprouting that stocks rallied today because the confidence brough about by the rate hike. Last time when the rate hike was lingering stocks started doing terrible because of fears of the rate hike.

What do you make of this Paul?

[ThePythonicCow]

Its interesting on the MSM they are sprouting that stocks rallied today because the confidence brough about by the rate hike. Last time when the rate hike was lingering stocks started doing terrible because of fears of the rate hike.

What do you make of this Paul?
I guess that today's rise in blue chip stocks was window dressing. They (the big banks, their lackey hedge funds and the Exchange Stabilization Fund) pushed stocks up, to put a pretty face on the Fed's raising its short term reverse repo rate.

If I were in the markets, I'd be sorely tempted to short the S&P500 and go long the VIX, right now. Sucking "excess" Dollar liquidity out of the markets will soon (likely this month) cause another Lehman crash, only bigger. The derivative market is humongous ... it's bets on interest rates, currency exchange (forex) rates, and petro and commodity prices. Something will blow ... that market cannot withstand a major Fed policy reversal, not can it continue to withstand continuation of the current monetary deflation (aka strong dollar.) A big bank or an emerging market nation will soon end up in the Intensive Care Unit. Then anyone who still holds stocks will look back at today and wish they had sold.

[Ahnung-quay]

I just posted another thread regarding DHS Terrorism Bulletin released today too. I'm feeling that the U.S. is a big target.

[ThePythonicCow]

I just posted another thread regarding DHS Terrorism Bulletin released today too. I'm feeling that the U.S. is a big target.
Definitely the US is "on the menu" ... it's been the capstone of the current monetary system.

[robinr1]

I gotta ask....who are they are big target from?......and what exactly is this entity who is targeting the usa gonna do>?





I just posted another thread regarding DHS Terrorism Bulletin released today too. I'm feeling that the U.S. is a big target.

[ThePythonicCow]

I gotta ask....who are they are big target from?......and what exactly is this entity who is targeting the usa gonna do>?

I don't understand the question "who are they are big target from?".

What they intend to do, so far as I can guess, is to control humanity.

[mgray]

It's still early for stocks. Let's look at them on Friday. The biggest problem with rate rise is the Fed has to suck out between $800 billion to a trillion out of the economy in order to get the rise through reverse repo.
Not exactly a good time for that with junk bond dislocation and year end window dressing by traders.

Also no word on whether Fed will continue to roll over maturing debt into new debt.

That's why I suggest we wait for the market to digest the news.

[TargeT]

Interesting take pre-rate hike.

fPjiL6vYt6k

[ThePythonicCow]

Jim Willie of the GoldenJackass.com is out with his latest monthly HatTrick newsletter, and opens his comments on this Federal Reserve raising of its short term interest rate target with these words:


The Jackass admits not to expecting the rate hike, since suicidal. However, as part of the greater RESET picture, it could very well be that the American bankers were given marching orders by the new sheriff. This is just as I understood the Fed's actions, and Jim's views on it.

(By "new sheriff" he means China.)

[Ewan]

Ewan, grazing grass in the field, suddenly looked up and bleated "China?" in a surprised and confused tone.

[Pam]

Interesting take pre-rate hike.

fPjiL6vYt6k




Thanks for the video, I think Christopher Greene does a really good job explaining things. He is new to me, but I think I'll check out some more of his stuff.