Mortgage Fraud is the new 40

Democrats who tried to skewer president Trump on business fraud, an ultimately doomed to fail effort, are one by one getting caught with their mortgage fraud pants down. It seems like every Democrat has been doing it. Here's the latest one, ousted Fed governor Lisa Cook.

The Fed gets it finally (way late mind you)

The Federal Reserve chair Jerome Powell capitulated; he's admitted he was wrong on the impact of tariffs and the markets responded, positively and strongly.

Last Friday in Jackson Hole, Federal Reserve Chairman Jay Powell finally – and grudgingly – admitted what the Trump team has been saying all along: tariffs don’t fuel inflation. 

At most, tariffs create a one-time adjustment in prices, not the kind of runaway spiral that demands punishing rate hikes. And even that one-time bump may be negligible if, as we have long argued, foreign exporters – not American consumers – shoulder most or all of the burden. 

The implication is clear: whether the impact is zero or merely a one-time step-up in prices, there is absolutely no justification for the Fed to hide behind "tariff uncertainty" as an excuse for overly restrictive interest-rate policy. 

Now it's time for the Fed to act.  The words themselves are not enough and the U.S. rates are well behind the global curve: 

Global rate spreads underscore just how out of touch the Fed is with the rest of the world. The European Central Bank’s deposit facility sits at 2%. The Bank of Japan holds near 0.5%. China runs its seven-day repo at 1.4%. Against that backdrop, the Fed’s 4.25%–4.50% target range remains a glaring outlier – more than 200 basis points above Europe, nearly 400 above Japan, and triple China. 

It's time to act decisively. If Powell does, watch out; the economic boom will be that much bigger. 

What did he just say???

Is it idiocy or pathological liars at the top levels of our overlordship?

Important pivot in inflation coming soon (but not really).

I recently discovered Mark Moss via the video below. He talks about how he expects inflation (and therefore eventually interest rates) to come down significantly, very soon.  He explains that it's happening due to formula manipulation, rather than real world improvements, and if he's correct that is very dangerous.  

It's also political. The BLS is very political. Take a look at Shadowstats (which he does mention) if you don't believe me. But if inflation and interest rates do drop to the extent Mark Moss is predicting, this is where the political matters.  It's important for the Republican congress to be aware of this and start getting out in front of it to take credit for it.  Don't play the reactionary game and instead GOP, go on offense.

Here's Mark Moss.  The video is a bit long but worth watching through entirely.

I'm not convinced the Fed will change rates very quickly, but it will happen eventually in response to the rates. That has political implications too but also a real impact on consumers as opposed to fake inflation numbers.  Lower rates will stimulate demand and borrowing. 

Get ready for worse

Higher interest rates mean more pain. Higher interest rates way faster means a lot more pain.  Higher interest rate inevatible and unfortunately necessary at this point due to past and current bad decisions. Thank you Democrats and Federal Reserve fools.

Inflation still sucks, badly

The Federal Reserve is trying to fight inflation by raising interest rates aggressively.  It's helped, but it's clear they are going to have to do a whole lot more.

Trading Economics:

The annual inflation rate in the US eased for a second straight month to 8.3% in August of 2022, the lowest in 4 months, from 8.5% in July but above market forecasts of 8.1%. The energy index increased 23.8%, below 32.9% in July. Smaller increases were reported for gasoline costs (25.6% vs 44%) and fuel oil (68.8% vs 75.6%) while inflation sped up for natural gas (33% vs 30.5%) and electricity (15.8%, the highest since August 1981). On the other hand, inflation rose for food (11.4%, the most since 1979), shelter (6.2%, the most since 1984), and used cars and trucks (7.8%). Compared to the previous month, consumer prices were up 0.1%, following a flat reading in July and compared to forecasts of a 0.1% drop. Meanwhile, core CPI, which excludes volatile energy and food prices, increased 6.3% on a year, the most since March, and up markedly from 5.9% hit in both June and July.

Inflation is nowhere near done. And it's worse than these numbers show.   There's a wheat shortage going to hit this fall, there are supply chain issues, there are fuel issues despite Let's Go Brandon running around the world begging for oil after shutting it down in the U.S. wherever he could, and most importantly, there are serious money supply issues.

Specifically to the latter point, the Fed has flooded the world with American dollars (as have other central banks around the world with their own currencies), there is simply too much money in circulation which decreased the value of each individual dollar.  That's inflation and monetary policy is still the biggest culprit.

The Fed has no choice but to hike interest rates substantially and it is going to hurt a lot of people, HARD. Anyone owing money will end up paying substantially more in interest payments.  This is in addition to quantitative tightening, which is seemingly is not doing as aggressively.  

This supposedly 'transitory' inflation has a long shelf life still. And that means rate hikes, and that's why the Dow Jones is taking a beating today. People know that, and know it will hurt businesses.

Understand why inflation happens, in 15 minutes

Milton Friedman was a brilliant economist.  Not only did he win the Nobel Prize in 1976, but he is able to explain economics in ways that anyone can understand.  Here, in under 15 minutes, he explains inflation; it's causes and what can be done about it.  Sadly, it's as relevant today as it was in his heyday because well, Let's Go Brandon and feckless and stupid leadership at the Federal Reserve.

The Do Nothing Fed

Federal Reserve chairman Jerome Powell announced nothing new.  No rate hike, but it's coming soon.  We've heard that before. This was a do nothing announcement. 

The supply chain woes continue, unabated

There are supply chain issues, no doubt.  They have have not been fixed. They are not the biggest factor in creating inflation, that would be money printing.  But supply chain issues do shift the supply curve and fewer goods, mean higher prices.  That's fundamental economics.  But so too is money printing leading to inflation.  

The point here is that the Let's Go Brandon administration has left the supply chain issue in a terrible state,  and the apparently progressive federal reserve has kept the minting of more currency going (they keep threatening to taper the monetary stimulus but have yet to do so, and are also erroneously keeping interest rates low allowing inflation to surge).  Meanwhile the administration is trying to push for trillions more in spending that supposedly is 'free'. They are wrong on all counts and as long as this continues, inflation will only get worse.

NOTE: I know these explanations are all too brief, but the underlying truths are still valid. A fiscal policy of spend, spend spend, and a very loose monetary policy are a deadly combination. They will turn America into Turkey or Venezuela if they are not stopped. The thin wall against it right now is Democrat Joe Manchin. We cannot rely on his steadfastness and resoluteness to go on indefinitely.

Yellen out in Feb at the Fed

President Trump has made a choice for a Chairman of the Federal Reserve.  I don't know much about him but it's a replacement for an Obama appointment so it can't be any worse most likely.

President Trump announces Jerome Powell as next Fed chair nominee from CNBC.

Yellen downloads belt tightening onto banks

Let me get this straight, Quantitative Easing (printing more money) is okay, but big banks should be required to hold more money to weather financial shocks.  Setting aside the notion that stricter reserve requirements for banks run counter to quantitative easing efforts,  is Yellen actually expecting a financial jolt? Is she downloading the belt tightening onto banks?  What's driving this?

...They said it could be a sign that the Fed under Yellen will take a more aggressive stance on bank regulation.

In her speech, Yellen said further actions to address risks, such as requiring firms to hold more capital, would likely apply only to the largest, most complex banks. But she suggested that other requirements could be applied more broadly to medium-size banks and non-bank financial institutions.

Karen Shaw Petrou, an analyst who heads Federal Financial Analytics in Washington, said Yellen also appeared to be signaling a desire to ensure that in tightening rules for big banks, regulators don't just drive risky behavior into less regulated areas of the financial system. These areas are often called the shadow banking system.

"The threat is if all you do is regulate the big banks, the risk will move to the non-banks," Petrou said. "Yellen is signaling that the Fed will seek to address that problem."

It sounds like it might be more about regulation and control as far as the drivers of this thinking goes. But the timing is oddly curious. 

Yellen at the Fed

If The Telegraph is to be believed, the next Fed chair (whom the author of the piece, Ambrose Evans-Pritchard, seems to highly regard) is going to keep pumping.

After an entire article in which Yellen gets praised, the lead of the story is buried near the final paragraph;

So there we have it. The next chairman of the Fed is going to track the labour participation rate. Money will stay loose. Markets have been spared again. The Brics can breathe easier.

This leaves me deeply uneasy. We are surely past the point where we can keep using QE to pump up asset prices. My view is that emergency stimulus should henceforth be deployed only to inject money directly into the veins of the economy as an adjunct to the US Treasury, by fiscal dominance, as deemed necessary.

So despite all her supposed savvy and prescient skills, she's going to do exactly the wrong thing.  The article fills me with unease as much for all the misguided praise as for the correct conclusion.

Why Today's Dow Jones Recovery ISN'T Rainbows & Unicorns

The Dow Jones (DJIA) rebounded by over 400 points today after yesterday's Monday reaction to the Friday downgrading of the U.S. government's credit rating.  The market rebound is being attributed to the Fed's comments today that the interest rates will not change for the next two years.  Good news if you believe it.

Saturday Learning Series (sorta) - Money as Debt

Money, explained in Money as Debt. What is it, and how is it created? Watch and see. But be warned. What starts out as an explanation of how banking came about, veers radically, into deliberate propaganda. Still I urge you to stick with it because it provides a learning of a different sort - how easily those seeking to learn can be misled.

Bernie Sanders, socialist, asks an important question.

It appears the Federal Reserve aid to the ailing banking sector went in no small amount to European financial institutions. While not alone in questioning the logic of the move of a country facing it's own solvency issues bailing out foreign institutions, Vermont Senator Bernie Sanders, asks one of the right questions (via FT);

“We’re talking about huge sums of money going to bail out large foreign banks,” said Bernie Sanders, the independent senator from Vermont. “Has the Federal Reserve of the United States become the central bank of the world?”

Sanders is a socialist.  Yet even he gets it.  It doesn't matter whether European banks have a presence in the U.S. or not - the bailout money was to keep financial institutions afloat. But not all institutions were meant to be protected.  That money comes from American taxpayers (or more correctly, future taxpayers). It is simply not meant to bail out Barclay's. Let Britain do that if it's needed. Or more appropriately, let the banks who have made bad lending decisions fail and it will teach the survivors a lesson - namely, be smarter about your lending decisions. And as a side note, another lesson is to keep the government out of lending decisions.

Anything You Can Do, I Can Do Better

Chris Dodd, not yet retired, has come up with yet another plan to usurp non-governmental entities and/or powers and consolidate them under the auspices of the federal government. Individually, Democrats may truly believe that the government can do certain things better than the private sector, but collectively, they are turning America not into a nanny state, but rather a highly centralized authority with far too much control over the economy among other aspects of civilization.

What I fail to understand is why organizations like the ACLU, all the way down to left-leaning individuals who see big brother around every corner when it comes to everything don't seem to see the compounded results of incrementally passing bits of power, and bits of freedom to the government. Surely, civil liberties are impacted whenever a government tries to take over a part of the economy, no? Does anyone really believe that the government can make decisions better than companies can make for themselves? Or better than we can make for ourselves?

The NY Times has the details (HT Amanda Carpenter) which include;

A new “resolution authority” to seize and dismantle any systemically important financial institution on the verge of failure.

and this,

Currently, the Federal Reserve oversees bank holding companies and state-chartered banks that are part of the Fed system; the Office of the Comptroller of the Currency oversees national banks; the Federal Deposit Insurance Corporation oversees state banks that are not members of the Fed system; and the Office of Thrift Supervision oversees savings and loans.

Mr. Dodd has expressed support for a proposal that would leave the Fed with oversight over only the largest bank holding companies, those with $100 billion or more in assets, currently totaling 23.

Wikipedia provides a reasonable summary of the purposes of the Federal Reserve;

• To address the problem of banking panics
• To serve as the central bank for the United States
• To strike a balance between private interests of banks and the centralized responsibility of government
• To supervise and regulate banking institutions
• To protect the credit rights of consumers
• To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of
• maximum employment
• stable prices, including prevention of either inflation or deflation
• moderate long-term interest rates
• To maintain the stability of the financial system and contain systemic risk in financial markets
• To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
• To facilitate the exchange of payments among regions
• To respond to local liquidity needs
• To strengthen U.S. standing in the world economy

Now if the Federal government wants to strip away some of that and bring it in house, you have to ask - does the government think it can do any better? Like it has with health care reform, Medicaid waste or the post office? Do you trust them to get this right? The Democrats seem to be the party of continual onslaught of liberty. It seems as though they won't be happy until the government controls every aspect of your life.

"Hey, you want to grab a coffee and a donut?"
"Sure, let's call Central Planning."

Interestingly the GOP does not support this but Chris Dodd is pressing ahead because there's an urgency to it. Not an urgency to problem resolution - his mention of urgency is related to the countdown clock on the Senate;

“Clearly we need to move along,” Mr. Dodd said, speaking after Mr. Corker’s news conference. “What I’m facing mostly is what I call the 101st senator, and that is called the clock, and particularly, in an election year, that clock becomes a rather demanding member.”

In other words, get it done while you still have the votes. Senator Dodd, who is not going to run for re-election knows that time is running out for Democrats, and anything they want to get done has to be done fast (consequently without much deliberation). He may have learned from the Scott Brown victory in January derailing the Democrats health care push that time is short, but he hasn't learned that the Senate was built to require bi-partisanship. It was built to require a lot of thought on matters. As much as Republicans will rue those same designs when they are back in the majority in 2010 or 2012, it's a fact of political life in America.

Then again, facts are often mere inconveniences to Democrats.