Oops The Fed Did It Again

I guess the definition of a lunatic is a man surrounded by them.

-- Ezra Pound

Is the Fed playing mind games with the masses or is it simply another version of the Britney Spears hit song “Oops I did it again”? Only this time they did not. They keep saying that they are ready to raise rates and then suddenly just before the moment to pull the trigger draws near, some unforeseeable event springs up, and they kick the can down the road again. Two questions comes to mind

Why the intense focus on what the Fed might or might not do; has the press run out of real stories to focus on? Come on, we are talking about a measly 0.25% hike. In the worst of scenarios, this should be treated as a hiccup and not a major tragedy.

Secondly, history indicates that the markets tend to trend higher for up to two years after the first rate hike. Thus, a rate hike should be viewed as a positive event as it would indicate all was well. But perhaps all is not well, and that is why the crowd is panicking at the mere thought of a hike.

We, however, believe that this boring Fed-might-raise-rates story is a non-event and have said so many times in the past.

The Fed is hesitating so much in raising rates because they know that the economy is not really strong. However, what is more, important is they are trying to gauge if the public is buying the nonsense that the outlook is improving via all the manipulated data that is being put out? If they sense that the public is buying this nonsense, then they will initiate a tiny rate hike. To some degree, it appears that the public is buying this nonsense. Whatever move the Fed makes, their ultimate aim is to find a way to embark on another wave of QE. Look at the World’s markets; while the US markets look okay, the emerging markets are taking a beating and its just a matter of time before the contagion spreads to the U.S. The only way to prevent this is to flood the markets with hot money.

The Fed is still trying to gauge if the crowd has bought into their drug-induced theme, which states that all work and no play makes Jack a smart chap. We used to use the word sadly, but is that really the appropriate word to use if the crowd does the same thing over and over again? Perhaps instead of saying sadly, we should instead begin the sentence with, insanely the crowd appears to be buying into this theme. Is the economy really improving?

The most recent jobs numbers masked a dark story. Unemployment held steady at 5.1%, but only 59.2% of Americans have a job. The difference is the unemployment rate only counts people who don’t have a job and are actively looking for one. The labor force participation rate is perhaps a more accurate gauge of the economy. It includes people who’ve given up, don’t want to, or can’t work, and it fell to 62.4% last quarter Full story

If this story is taken at face value, the economy should be in tatters and people should be rioting. Instead, all appears calm; the masses suffer silently and lay the blame on forces they claim to have no power over. As long as they take this approach that is exactly how things will play out. It is, for this reason, the Fed is not raising rates; they know that they have just barely managed to create the illusion that things are stable. They are in no hurry to pop this bubble. While many call the Fed stupid and short-sighted; the truth is that at every twist and turn of the road, they have walked away unscathed. While the gold bugs wait for their day in glory (many have already passed away waiting for that glorious day to dawn), they do not understand that even if gold moves to 10,000 which it will not, the Fed has, is and will still win the game.

Even if gold could miraculously surge to $100K it would mean nothing; if you control the printing press, you just push the pedal to the metal and print a lot more and problem solved.

Never get caught up in any battle, for a battle is one of many in a war. The idea should be to win the war and not the battle. Before engaging your opponent, look around, gauge the situation and plan a course of action. The masses are frozen, they bitch and moan about how bad things are, but when push comes to shove, they opt for being shoved, instead of pushing back. In the end, their role as history indicates is that of cannon fodder. Do not feel sorry for the masses and do not attempt to educate them. Should you decide to undertake this unworthy venture, your reward will be a fistful of pain.

The masses are infamous for punishing the wrong person for the wrong crime. There is no such thing as a good Samaritan in the land of investing. A good Samaritan is usually a dead Samaritan and heroes usually have very short life spans. Pay attention to history, you will never see the masters of deceptions or the shadowy elite players move out of the shadows and try to play the role of a hero or a good Samaritan. These roles are created for the masses; they are sold a bag of lies, and they gladly buy into this mumbo jumbo.

No matter what the nuts out there state; the Fed is not hell bent on raising rates, they are not scared or nervous about anything, and they backed into a corner. They have backed everyone else into a corner, and the ones that are scared are the ones makes these idiotic proclamations. The Fed might raise rates, but their goal is to find an excuse that the masses will buy hook line and sinker, to come out with another round of QE. The whole purpose of this experiment is to find out just how far the crowd can be pushed with the proper brainwashing. Right now they are taking notes so that the central bankers of the future can build on these lessons and push the envelope even further. The reason there is no repeat of 1929 is because they took notes and learned from their mistakes. These guys are nefarious geniuses. They give the impression of being impotent, but they are omnipotent. So how do you win? The answer is simple. Throw your silly emotions and bias out of the window and ride on their coattails. End of story.

It is wrong to think that misfortunes come from the east or from the west; they originate within one's own mind. Therefore, it is foolish to guard against misfortunes from the external world and leave the inner mind uncontrolled.

-- Buddha