"International Jew" Bernanke Tells Us 'How It Will Be'!

From the NSP News Service: Now see, what did we tell you a post or two ago: this Nation is headed for a bad fall, and it will be at the hands of Bernanke and the Federal Reserve. This financial institution, which ought to be abolished, pledges to hold America hostage if the desired performance of market and bond trends do not meet its wishes. Aside from actually ushering in a second depression which will make both the 1929 market crash and the so-called recent "great recession" look like a champagne-filled party, the article excerpted below reveals who actually runs the United States:  President "Jew Money" Bernanke. Who is Barack Obama? Apparently, he's a fellow who sits in the White House, signs a few Bills, pushes some papers around, and then takes vacations and plays a lot of golf.  Save what money you can, Aryan America, and start storing up on necessities (or start growing your own), because within, say 2 - 3 years, the American economy as you know it will have ceased to exist.

-- Karl Wolff III, Director of Communications, NSP.  1488!

 

 

I'm sure that everyone reading this knows that Federal Reserve Chairman Ben Bernanke's speech July 10 moved markets. The Wall Street Journal's headline -- "Fed affirms easy-money tilt" -- says it all.

When you are on the "verbiage standard," as we now are, the noise level can be quite high.


However, I think the fact that all markets responded (and all accounts I have read regarding Bernanke's comments interpreted them as the remarks of someone very reluctant to taper) means that was the message he wanted to deliver.

As I said in my July 10 column on my website (subscription required) before Ben's speech:

"If by some miracle the economy strengthens, the Fed will cut back the amount of bonds it is buying, but remember, that will not be anything that could remotely be considered tightening, and between now and then our central bankers will try to jawbone longer-term interest rates lower. So they may have a game plan to be slightly less 'accommodative,' but they are liable to talk a whole lot easier than whatever they pretend their policy is going to be. And as those last two sentences should make clear, the noise factor is liable to be exceedingly high."

 The predicament the Fed is in is that it is in the process of "losing the bond market," and it is trapped. It can't even hint about reducing its buying by a measly $20 billion (which used to be a big number but is a rounding error nowadays, when it comes to monetization) because of how bonds -- and, at some point, stocks -- misbehave whenever the subject comes up.

As far as the eye can print 
The takeaways of what our Fed chairman had to say were that "highly accommodative monetary policy" would be needed for the foreseeable future, and that he finally made a point that I think many of us could agree with, which is that the unemployment rate of 7.6% might "overstate the health of the labor market." Bernanke also made it clear that the Fed would not raise rates for some time, even after we hit 6.5% unemployment.

In short, Bernanke corroborated all of the points that have been espoused by those of us who have felt that we understood the DNA of the Federal Open Market Committee doves. They really don't want to stop printing unless the employment gains are very strong. Which means fretting over taper talk is silly, for two reasons:

• The economy will not be strong enough, I don't think.
• And even if it is, the kind of tapering Fed officials are talking about is really quite small.

 However, I don't want to lose sight of the fact that while Bernanke (and many others) thinks the bond market is declining because the Fed appeared to talk tough, some of us believe that the bond market is actually in the early stages of taking away the printing press from the Fed. If market participants finally get it through their heads that tapering, let alone any sort of tighter money conditions, is off the table and bonds can't make a substantial rally back near the old highs, then we will probably be able to conclude that the Fed has "lost" that market. (If bond holders begin to discipline the Fed, we will be on our way to the funding crisis I have long warned of.)

It's his way or the high-yield way 
This is all very subjective, and we will have to see how it plays out. But what Bernanke made clear is that if the Treasury market doesn't cooperate with him (or the stock market, for that matter) he will respond.

This is the Bernanke quote that I think really got people's attention: "And I guess the final thing I would say in terms of risks of course is that we have seen some tightening of financial conditions, and that if, as I've said and as I said in my press conference and other places, that if financial conditions were to tighten to the extent that they jeopardize the achievement of our inflation and employment objectives, then we would have to push back against that."

So there you have it. The Fed is essentially trapped. If the financial markets don't continue to go higher, or if the bond market doesn't stay where the Fed wants it, it will fight that. Therefore, down the road, if interest rates move higher and the Fed thinks they shouldn't, it will take action (i.e., "push back against that"), which will only reinforce the idea that the Fed has indeed lost control of the bond market, and the ramifications of that will be quite ugly. Said differently, the Fed will conclude that any rate rise against its wishes is unwarranted and resist that, which will make matters worse.

To be sure, taking action premised on that outcome is not today's business. For now, markets are joyous and, at this point, stocks have really set themselves up for disappointment as we go through earnings season. Of course, now that Bernanke has promised stock bulls that he has their back again, the response to negative news will be that much more informative.

The two points I think we want to take away are that the Fed can't even talk about tapering, and the question of at what interest rate will the bond market really fail.