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Are We Being Set Up For A Crash? Stocks Hit A Level Only Seen During The Bubbles Of 1929, 2000 And 2007

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stock-market-overvalued-public-domainWill the financial bubble that has been rapidly growing ever since Donald Trump won the election suddenly be popped once he takes office?  Could it be possible that we are being set up for a horrible financial crash that he will ultimately be blamed for?  Yesterday, I shared my thoughts on the incredible euphoria that we have seen since Donald Trump’s surprise victory on November 8th.  The U.S. dollar has been surging, companies are announcing that they are bringing jobs back to the U.S., and we are witnessing perhaps the greatest post-election stock market rally in Wall Street history.  In fact, the Dow, the Nasdaq and the S&P 500 all set new all-time record highs again on Thursday.  What we are seeing is absolutely unprecedented, and many believe that the good times will continue to roll as we head into 2017.

What has been most surprising to me is how well the stocks of the big Wall Street banks have been doing.  It is no secret that those banks poured a tremendous amount of money into Hillary Clinton’s campaign, and Donald Trump had some tough things to say about them leading up to election day.

So you wouldn’t think that it would be particularly good news for those banks that Trump won the election.  However, we seem to be living in “Bizarro World” at the moment, and in so many ways things are happening exactly the opposite of what we would expect.  Since Trump’s victory, all of the big banking stocks have been skyrocketing

Financial stocks in particular have been on fire. Citigroup (C) and JPMorgan Chase (JPM) are up about 20% since Donald Trump defeated Hillary Clinton — and that makes them laggards!

Morgan Stanley (MS) has gained more than 25%. So has troubled Wells Fargo (WFC), despite the lingering fallout from its fake account scandal. Bank of America (BAC) is up more than 30%.

And so is Goldman Sachs (GS) — the former employer of both Treasury Secretary nominee Steven Mnuchin and Trump chief strategist Steve Bannon.

But are these stock prices justified by the fundamentals?

Of course not, but during times of euphoria the fundamentals never seem to matter much.  Stocks were incredibly overvalued before the election, and now they are ridiculously overvalued.

Earlier today, a CNBC article pointed out that the cyclically-adjusted price to earnings ratio has only been higher than it is today at three points in our history…

“The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble,” Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.

Newman said even if the market’s earnings increase by 10 percent under Trump’s policies “we’re still dealing with the same picture, overvaluation on a very grand scale.”

And of course a historic stock market crash immediately followed each of those three bubbles.

So are we being set up for a huge crash in early 2017?

There are some out there that believe that this is purposely being orchestrated.  For example, Mike Adams of Natural News believes that the markets “will be deliberately and destructively imploded under President Trump”

Right now, the U.S. stock market is surging, with the Dow leaping toward 20,000, a number rooted in fiscal insanity and delusional expectations. There are no fundamentals that support a 20,000 Dow, but fundamentals have long since ceased to matter in a financial world hyperventilating on debt fumes while hallucinating about utopian economic models that will soon prove to generate fools instead of real wealth.

Today I’m going on the record with a prediction that I’ll offer with near absolute certainty: The rigged markets that now seem to defy gravity will be deliberately and destructively imploded under President Trump for all the obvious reasons. There will be financial chaos like we’ve never seen before: Investors leaping off tall buildings, banks declaring extended “holidays” that freeze transactions, and California pensioners slitting their wrists after they discover their promised pension funds were just vaporized by incompetent bureaucrats.

On the other hand, there are others that believe that Trump is just walking into a very bad situation and that a crash would be inevitable no matter who was president.

History tells us that there is no possible way that stock prices can stay at this irrational level indefinitely.  But for now a wave of optimism is sweeping the nation, and many of those that are caught up in it will get seriously angry with you if you try to inject a dose of reality into the conversation.

But like I said yesterday, let’s hope that the optimists are correct.  A survey that was just taken of 600 business executives found that 62 percent of them were optimistic about the U.S. economy over the next 12 months.

Incredibly, that number was sitting at just 38 percent the previous quarter.

For the moment, business leaders seem to be quite thrilled that we have a business executive in the White House.

Hopefully Donald Trump’s business experience will translate well to his new position.  And it is certainly my hope that he is as successful as possible.

But even during the campaign Trump talked about how stocks were in a giant bubble, and the euphoria that we have seen since his election victory has just made that bubble even larger.

Throughout U.S. history, every giant financial bubble has always ended very badly, and this time around will not be any exception.

Trump may get the blame for it when it bursts, but the truth is that the conditions for the coming crisis have been building for a very, very long time.

  • Cinderella Man

    Nope they can’t blame him. Besides he can just use the Obama line “The recession I inherited.”

  • I Think I’ll Eat Some Almonds

    I remember a guy by the name “JAZZ” that use to post here earlier this year.

    I remember he use to comment over and over saying “The DOW to 20K this year baby.”

    Does anyone know if he has a blog anywhere. I would like to read it.

    • GoldenGirl

      I was wondering about Jazz, too. Don’t know if he has a blog, but I do know that he reads Martin Armstrong. Lots of good information to be found there.

    • samurai sword

      No clue about the blog. A market forecaster Jazz was not, however.

      He was right about the markets hitting new highs, but for all the wrong reasons.

      He continually referred to U.S. economic “strength” as the impulse pushing market valuations to new heights. If you’d mention share buybacks or fed funny money bidding up asset prices, he’d just ignore you and keep parroting the same nonsense over and over. No doubt he thinks Donald Trump is the reincarnation of Ronald Reagan.

      Don’t think so, Jazz.

      • Bill G Wilminton NC

        You Are Right About Jazz Being Right For All The WRONG Reasons…..I Voted For Trump Who Is Not A Reincarnation Of Reagan….Lets See What Trump Does !!

  • Bill

    When I read about this fact on CNBC earlier today I new it would be highlighted on here tonight. My thought then still remains: is it a set up?

    • socalbeachdude

      Nope. Just IRRATIONAL EXUBERANCE run up to extremely levels and that has been going on ever since March 9, 2009 by manic peculators drunk on false perceptions and higher than kites on hopium.

  • K

    Are we being set up? Yes. As I stated in an earlier article. Crash mpt too lomg after trump takes office.And the protesters, the college kids, and a long list of other folks. Will believe he caused it all.

    • socalbeachdude

      Manic speculators are the ones setting the stock markets up for huge crashes as the PE earnings have been driven to nosebleed levels by manic speculators bidding up stocks with total disregard to underlying fundamentals which have been in decline – including earnings – for the past nearly 3 years.

      • PutGodFirst

        Algos is ramping this up to lure in all the retail investors before the switch is pulled. Same as it was in 01 and 08

        • K

          100% correct.

        • socalbeachdude

          So-called algos only do what they are PROGRAMMED TO DO BY PEOPLE.

  • socalbeachdude

    The stock market’s oldest indicator just flashed red – Brett Arends

    I hate to rain on this parade. But the latest lurch upwards in stock prices has just taken market valuations up into the skybox levels, according to the market timing measure with the longest pedigree on Wall Street. It’s just gone from flashing amber to flashing red — meaning, if it’s right, that there is now a significant and rising risk of a crash, and a bigger risk of simply very poor returns.

    This has little to do with President-elect Donald Trump, by the way — and much more to do with President Ulysses S. Grant and all his successors.

    Wall Street’s jump this week has taken the S&P 500 SPX, +0.22% to an eye-watering 27.9 times the corporate earnings of the past 10 years. That’s according to data compiled by Yale finance professor Robert Shiller and some simple math.

    This is about the same level that the market hit just before the crash of 1929, and is far higher than was seen in 2007, for example, or during the ill-fated boom of the late 1960s. The last time we saw the stock market this expensive on this measure was early in 2002 — just before stocks plummeted.

    http://www.marketwatch.com/story/the-stock-markets-oldest-indicator-just-flashed-red-2016-12-08

  • William Roach

    When Trump cuts the head off the monster/molester . Every thing that is connected will die. They would rather destroy everthing then hand it over to the peope. Good luck folks may the lord JESUS CHRIST have mercy on our souls. Try to find compassion for others durning the tribulation. And never stop praying for the children .

    • socalbeachdude

      Donald Trump is not cutting the head off anything, and the biggest beneficiary of Donald Trump being PResident-elect has been Goldman Sachs.

      Goldman Sachs shares (a DJIA 30 component) are now up more than 40% since November 8, 2016 when Donald Trump was elected to become the next President of the United States and are the biggest reason the Dow is soaring!!!

      • Thomas D Guastavino

        Thats why I bought stock in Goldman. Can’t beat ’em, join ’em

  • socalbeachdude

    HOW STOCK PRICES CRASH…

    Equities (stock) markets are merely EXCHANGE CLEARANCE MECHANISMS BETWEEN BUYERS AND SELLERS OF EQUITIES. The value of any and all stocks at any given time is ONLY WHAT A BUYER IS WILLING TO PAY A SELLER TO BUY SHARES OWNED BY THE SELLER.

    As sellers outnumber buyers on any stock the price of that stock axiomatically falls correspondingly and the amount of money any buyer is willing to pay a seller becomes lower and lower until a price is reached at which the next buyer is willing to part with their money to the seller to purchase a stock. Market capitalizations (the total value of all outstanding shares of particular stocks times their market valuation per share) fall accordingly.

    When stock markets crash it is because of an EXCESS AMOUNT OF SELLERS COMPARED TO BUYERS and the bid prices for stocks plunge as sell orders go unfilled until they drop to lower prices. When sell orders substantially exceed buy orders then the MARKET MAKERS assigned to each stock have to step in and buy stocks on their own accounts to support clearance of stock sell orders. In the first case above, money to clear stock sales and cash out the sellers comes from other buyers in the markets. In the second case above, money to clear stock sales comes from the MARKET MAKERS from their own cash accounts.

    • LIZ THE SHIZ

      DUH !!!! except for some

    • jox

      Can’t you troll in normal letters, not bold, as any other troll?

      • Lennie Pike

        Bold letters sometimes can help camouflage b.s.. This is not one of those times.

  • socalbeachdude

    Stock markets ALWAYS CRASH FROM THE TOP and we are now at record level levels in the US stock markets despite the underlying fundamentals rapidly deteriorating over the past nearly 3 years.

    • LIZ THE SHIZ

      once the fed starts to tighten interest rates the bubble will burst and the insiders will make more billions on advance knowledge through shorts,puts,calls and derivitives

      • socalbeachdude

        What has driven the stock markets is very simply MASSIVE STOCK BUYBACKS. The Federal Reserve is not permitted to own any equities (stocks) and has nothing to do with the stock markets at all in the United States.

        The Federal Reserve is MERELY A CENTRAL BANK and a very conservative one at that. There is no “punch bowl” or “sugar bowl” at all from the Federal Reserve to banks or anyone else. BANKS GET THEIR FUNDS TO LEND FROM CUSTOMER DEPOSITS and the Federal Reserve only sets 3 interest rates – none of which matter at all to the US economy.

        The only 3 rates that the Federal Reserve is involved with setting are:

        1) Federal Discount Rate – currently 1.00%

        2) Federal Funds Rate (which it influences) – currently the range of 0.25% to 0.50%

        3) Federal Reserve IOER (Interest On Excess Reserves) – currently 0.50%

        The ONLY applicability of the Federal Funds Rate is INTERBANK BORROWING to clear nightly transaction balances which is now practically NEVER UTILIZED as the banks are awash in trillions of dollars of EXCESS RESERVES and have no need to borrow from each other.

        • jaxon64

          “you lost me with this BS, “Federal Reserve is not permitted to own any equities (stocks) and has nothing to do with the stock markets at all in the United States”.
          So control, essentially of cash volume, interest rates and easy cash fixes to those who ARE doing the buybacks have nothing to do with the market—–you talk a good game.
          and
          PS: Brett Arends was another avid Hillary supporter who is acting butthurt–this guy is a regular on CNBC, MSNBC and CNN–as well as writing the Hit-book on Romney during 2012 about the corrupt Bain capital group

          • samurai sword

            There is a wealth of evidence for the claim that the Federal Reserve covertly and discreetly intervenes in the equities markets.

            If you google “does the Federal Reserve manipulate the stock market” there are literally thousands of pages of supporting information. Granted, much of the evidence (that I’m familiar with, anyway) is anecdotal and circumstantial, but in this case ironclad proof isn’t necessary. All that’s needed is a set of reasonable beliefs and a little common sense.

            On the face of it, to assert that the fed has nothing to do with the stock market because it would violate the Federal Reserve Act is ludicrous. Why would an organization whose very EXISTENCE is unlawful according to the highest law of the land feel constrained by a lessor law?

            Beach dude doesn’t address that. All he does is repeat the same talking point over and over, like a trained parrot.

            It has been pointed out countless times by people with decades of experience in the markets that the anomalous trading patterns, which seem to materialize out of nowhere and which invariably push valuations to a specific level — at which time trading ceases — can only be explained as manipulation.

            Then you have Fed officials admitting openly that they goosed the markets to induce the wealth effect. Does this mean they purchased equities? Who knows. The fed has resisted all attempts at an independent audit.

            My position is that the Federal Reserve — a private banking cartel staffed by unaccountable bureaucrats — is not constrained by anything other than its own private agenda.

          • socalbeachdude

            Laughably false. There is no such “evidence” whatsoever to support such inane and totally false assertions.

          • Lennie Pike

            Beautiful!

          • socalbeachdude

            The Federal Reserve certainly does not in any way “control interest rates” in the United States. All interest rates that matter to the US economy are SET IN THE US TREASURIES MARKETS which are a $13 trillion a year market in which around $7 trillion new US Treasuries are issued each and every year.

            Corporate buybacks of stock are what have driven stocks to record high levels along with MANIC SPECULATION in total disregard to the deteriorating underlying fundamentals which have been worsening dramatically since 2014. That has nothing whatsoever to do with the Federal Reserve.

          • Lennie Pike

            He does talk a good game, but not good enough. Keep fighting him Jaxon 64 and you will reel him in. I did in the Italian bank article and threw him back in but he survived. Now you’ve got him on the line.

            Yeah, in large part it is about my ego, I know I should be more humble.

          • Lennie Pike

            You and samurai sword.

        • LIZ THE SHIZ

          oh really, the Fed is a private entity comprised of banks which hold equities in their investment and trading accounts

          • socalbeachdude

            The Federal Reserve exists only because it was CREATED BY CONGRESS and is fully subject to oversight by Congress and must comply with all of the rules set forth in Federal Reserve Act. It is a quasi-public-private entity which rebates more than 94% of its profits each year to the US Treasury.

          • jox

            Of course you are not going to read the documents I provided to you from the FED and the Bank of England. To parrot and copypaste comments you don’t need education.

          • socalbeachdude

            I would suggest you read your own citations as they in no way support your totally incorrect and erroneous assertions.

        • jox

          Banks don’t get the funds to lend from the customers deposits. You know nothing about the fractional reserve banking, and so the rest of your comment is wrong.

          • socalbeachdude

            There is no such thing as “fractional reserve banking.” You are simply confusing RESERVE REQUIREMENTS with a very false notion in your head.

          • jox

            You have no idea on how banking works. Please read “Money creation in modern economy”, published by the Bank of England. Thus perhaps you will stop writing this nonsense in bold characters.

          • Lennie Pike

            He knows how it works.

          • samurai sword

            He knows how to cull information, repeat himself, and hurl insults.

            When someone makes a claim with which you disagree, you address the claim by proving a good reason to doubt it. That involves more than just denying it and ridiculing the person who made it.

            For instance, I said below that the existence of the Federal Reserve was unconstitutional and backed up my claim by citing several sources, including a former professor of Constitutional Law. He responded by contradicting me in his usual heavy-handed manner and then calling the professor “nutty.”

            So how do you reason with someone like that? You don’t.

            I’m no psychologist, but the dude clearly has a desperate need to appear informed and “superior” to other mortals.That’s why I referred to him as a megalomaniac in my reply to jox.

            That’s also why I’m hoping someone puts the straitjacket back on him so the rest of us can get back to commenting unmolested.

          • Lennie Pike

            I agree 100%. “He knows how it works” meant that he knows the truth about the fed but is either lying, or intentionally playing the straightman so that we will correct him with the truth.

          • socalbeachdude

            Laughably false, dude.

          • jox

            Ok, now I understand you. I agree.

          • socalbeachdude

            There is absolutely nothing even slightly “unconstitutional” about the Federal Reserve and the Federal Reserve Act has been fully upheld by the Courts in the United States.

          • samurai sword

            Beach dude has his delusions and his fantasies, which to him are as real as his own existence and which he defends like a rabid dog.

            And if you disagree with him, and even cite evidence from reliable sources, you’re an ignoramus and your statements are bogus and laughably false.

            Make your case and then move on. I realize now that engaging in a mature discussion of opposing viewpoints with this megalomaniac is not possible.

            I’m hoping Michael considers blocking his IP so that the rest of us can go back to enjoying the discussion.

          • socalbeachdude

            It is YOU – obviously – who is wallowing in absurd delusions and fantasies and I would suggest you learn about banking and how the Federal Reserve works at:

            http://www.FederalReserve.gov

          • jox

            I’m against censoship on the forum, but with this kind of people perhaps it’s the only possibility. He floods the forum with so many comments in bold characters that every civilized discussion is prevented.

          • samurai sword

            I agree, but at some point the line must be drawn.

            Barring censorship/IP blocking, perhaps the best way to deal with this psycho is just to ignore him. Treat him like a pariah. After all, it’s the attention he’s after, not a civilized discussion.

          • socalbeachdude

            Talk about ad hominem nonsense. I would suggest you start attempting to comprehend the actual facts related to the issues of money and banking rather than attempting to criticize the totally accurate information I have provided.

          • samurai sword

            An ad hominem occurs when a responder directs his arguments “to the man” instead of to his opponents claim or claims. In the post to which you refer, I was responding to jox, not to you. So obviously there was no ad hominem here.

            My comments in this thread about your character are perfectly true, and it is clear that others agree. You are annoying, and your lengthy, largely copy-and-paste posts in bold lettering are full of unnecessary jargon. It’s quite obvious you feel a desperate need to “impress” people.

            I said it before and I’ll say it again: you are incapable of arguing logically or in a civil manner. When someone corrects you and provides good grounds for his claims — as I did in when citing the IMF and Bank of England to show that banks don’t lend using depositor’s funds — you respond by launching into irrelevant tirades or by simply repeating the point in dispute over and over. Neither one “proves’ anything.

            If you can show me, using authoritative sources (and not some link to a thousand-word document) that lending deposits is standard banking practice (which it isn’t), I’ll concede the point. Until you do, I’ll continue to believe that you are not only wrong but hopelessly confused.

          • socalbeachdude

            All of my comments are 100% accurate, correct, and true. I would suggest you reread them and attempt to actually comprehend them.

          • socalbeachdude

            It is YOU who has “no idea on how banking works” and I would suggest you learn about how the Federal Reserve works at :

            http://www.FederalReserve.gov

          • jox

            How funny. That’s everything you can say. Look, read Money creation in the modern Economy, from the Bank of England, or Modern money mechanics, from the Federal Reserve Bank of Chicago, learn something, and come back.

          • socalbeachdude

            The sources you cite DO NOT IN ANY WAY SUPPORT YOUR TOTALLY BOGUS AND ERRONEOUS ASSERTIONS. Go read them yourself and attempt to comprehend what they do say. What I stated is 100% accurate and correct.

          • Spectrum

            You’re wrong. You should educate yourself, admit it, and swallow your ignorant pride.

            The whole money lending process is a scam which the greedy banks capitalise on to make immense profits. There is much information on how this works. YouTube has videos that explain it in relatively simple terms for the layman.

          • Lennie Pike

            Laughably correct.

        • samurai sword

          “banks get their funds to lend from customer deposits.”

          Not true. Banks NEVER lend customer’s deposits.

          A loan is new money in the form of credit, which is created by the bank for the borrower’s use.

          In its quarterly bulletin from 2014, here is what the Bank of England had to say about the origin of loans:

          “The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
          . . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”

          So why banks need customer’s deposits then? Simple. It is often the easiest and cheapest way to keep their books balanced. Banks that lack retail deposits can borrow from money markets, usually Federal Reserve funds market where banks sell their excess reserves to other banks.

          • socalbeachdude

            Your totally false and preposterously laughable notions about money and banking stated above show your extreme ignorance regarding money and banking operations.

            BANKS ALWAYS LEND CUSTOMERS’ MONEY TO DEPOSITORS and that is the very purpose of RESERVE REQUIREMENTS which are in force through the Federal Reserve to require major banks to only lend up to 90% of customers deposits while retaining at least 10% in reserve in liquid cash to meet any anticipated deposit withdrawals.

            I would suggest that you learn about RESERVE REQUIREMENTS which simply mean that no major bank may ever loan out more than 90% of the customer deposit funds it has in total and must ALWAYS KEEP A RESERVE OF 10% OF THOSE FUNDS.

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

            At this stage, BANKS ARE AWASH IN VAST EXCESS RESERVES AMOUNTING TO ABOUT 33% OF CUSTOMER DEPOSITS IN THE US and there is NO PRACTICAL APPLICABILITY OF RESERVE REQUIREMENTS AT ALL.

            Under no circumstances may any bank ever lend out more than 100% of its customer deposits less the amount of required reserves which is presently 10% for most banks and which allows lending out up to 90% of customer deposits and not a single penny more.

            Federal Reserve Reserve Requirements

            http://www.federalreserve.gov/monetarypolicy/reservereq.htm

            Your nonsense regarding “fractional lending” is totally bogus and simply does not exist in reality at all. NO MAJOR US BANK MAY EVER LEND OUT MORE THAN 90% OF ITS CUSTOMER DEPOSITS DUE TO RESERVE REQUIREMENTS which are now 10%.

            The excess reserves held by the banks of QE funds are merely EXCESS RESERVES in the Federal Reserve accounts of those banks that earn IOER which is now 0.50% and are SITTING PARKED IN THOSE ACCOUNTS with around $2.6 trillion in those excess reserves accounts inside the Federal Reserve is as clearly confirmed by the H.6 report.

            Money Stock Measures – H.6

            http://www.federalreserve.gov/releases/h6/

            US banks have never in the history of US banking been SO VASTLY OVER RESERVED as they are now with around 33% in total cash reserves inside the Federal Reserve against customer deposits in their primary and excess reserves accounts which total around $3.6 trillion.

            As to the rest of your bogus assertions they are pure ignorance personified.

          • samurai sword

            You are an absolute laugh riot.

            The simple fact of the matter is that banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called
            credit “creation”–credit is created literally out of thin air (or with the stroke of a keyboard). The loan is not created out
            of reserves. And the loan is not created out of deposits: Loans create deposits, not the other way around. Then the
            deposits need a certain amount of reserves to be held against them, and the central bank supplies them.

            Banks NEVER “collect” deposits
            and then “lend them out.” In a closed economy (or the world as a whole),
            fundamentally (1) deposits come from only two places: new bank lending and government deficits; and (2) banks create
            deposits when they create loans, as explained above. Governments also create deposits when they run budget deficits
            because they are putting more money into the public’s bank accounts than they are taking out. This net flow creates
            new deposits in the banking system, which has its counterpart on the bank’s balance sheet as an increase in reserves.

            So, banks don’t lend out of deposits; nor do they lend out of reserves. They lend by creating deposits. And deposits are
            also created by government deficits.

            This is banking 101, which you obviously failed.

            Go back to your sandbox and your teddy bear, you pretentious putz.

          • socalbeachdude

            Your total MISCOMPREHENSION as to how the banking system works is beyond mind boggling.

            Central banks NEVER SUPPLY RESERVES TO BANKS nor do they supply any funds to banks to lend out to anyone and RESERVE REQUIREMENTS are based on the percentage of CUSTOMER DEPOSITS THAT MUST BE WITHHELD AS LIQUID CASH DEPOSITS (typically at central banks such as the Federal Reserve).

            Those reserves held by banks in their reserves accounts at the Federal Reserve now include about $1 trillion held in their primary reserves acounts there and around $2.5 trillion held in their excess reserves accounts inside the Federal Reserve.

            All loans made by banks are BASED ON AND COME FROM CUSTOMER DEPOSITS and no bank in the US can ever lend out more than an amount equal to around 90% of customer deposits can easily be verified by each and every bank balance sheet in the US. Presently, the outstanding loans to customer deposits ratio is at a record low 67% due to the low demand for borrowing by qualified borrowers.

          • samurai sword

            Totally false and preposterously laughable???

            You inhabit an alternate universe.

            From the IMF’s monograph, The Truth About Banks, March 2016, Vol.53, No.1:

            “Most leading U.S. macroeconomists at the time supported 100 percent reserve banking. This includes Irving Fisher of Yale and the founders of the so-called Chicago School of Economics. One of the main reasons they supported 100 percent reserve banking was that macroeconomists had, just before the Great Depression, come around to accepting some fundamental truths about the nature of banking that had previously eluded the profession, specifically the fact that banks fund new loans by creating new deposit money (Schumpeter, 1954). In other words, whenever a new loan is made to a customer, the loan is disbursed by creating a new deposit of the same amount as the loan, and in the name of the same customer.

            “If banks are free to create new money when they make loans, this can—if banks misjudge the ability of their borrowers to repay—magnify the ability of banks to create financial boom-bust cycles. And second, it permanently ties the creation of money to debt creation, which can become problematic because excessive debt levels can trigger financial crises,

            “The proposals for 100 percent reserve banking were therefore aimed at taking away the ability of banks to fund loans through money creation, while allowing separate depository and credit institutions to continue to fulfill all other traditional roles of banks.”

          • socalbeachdude

            What utter nonsense. It is YOU who inhabits an “alternative universe” that is apparently totally devoid of common sense.

            WITHOUT CUSTOMER DEPOSITS THE BANKING BUSINESS MODEL WOULDN’T EVEN EXIST.

            Banks take in customer deposits and then lend them out to borrowers in order to earn a return on those deposits. That is the ONLY WAY THE BANKING SYSTEM IN THE US AND GLOBALLY WORKS and that has always been the case.

            With “100% reserve banking” there would be NO MONEY WHATSOEVER TO LEND THROUGH THE BANKING SYSTEM which means there would be no auto loans, no consumer loans, no mortgage loans and NO MONEY AVAILABLE TO ANYONE TO BORROW through the banking system.

        • Lennie Pike

          What we have here….. is failure to communicate.

          • Lennie Pike

            I lied.

          • socalbeachdude

            What we have is a failure to comprehend the actual facts related to banking. What I have stated is 100% true and correct.

          • Spectrum

            Correct only in your own mind.

    • Gay Veteran

      “Stock markets ALWAYS CRASH FROM THE TOP….”

      pure genius, not like they crash from the bottom!

  • socalbeachdude

    The Federal Reserve has NOTHING WHATSOEVER to do with US stock markets. Not a single penny of QE funds or their balance sheet EVER LEFT THE FEDERAL RESERVE and the Federal Reserve is SPECIFICALLY PROHIBITED by the Federal Reserve Act from purchasing equities (stocks).

    NYSE “CIRCUIT BREAKER” RULES WILL HELP CUSHION MARKET PLUNGES

    The NYSE circuit breakers won’t kick in until a 1050 point decline on the Dow (DJIA) 30. It should be noted that effective April 8, 2013, the NYSE Circuit breaker rules were amended:

    Rule 80B

    Effective April 8, 2013, amended Rule 80B will be in effect. Amended Rule 80B replaces:

    • the DJIA with the S&P 500 as the benchmark index for measuring a market decline;

    • the quarterly calendar recalculation of Rule 80B triggers with daily recalculations; and

    • the 10%, 20%, and 30% market decline percentages with 7%, 13%, and 20% market decline percentages.

    http://usequities.nyx.com/markets/nyse-equities/circuit-breakers

    • LIZ THE SHIZ

      thank you Art Cashin ,now go back to your fake trading desk at CNBC

    • samurai sword

      A couple of points need to be raised in response to this copy-and -paste whack job.

      First, it is trivially true to assert that the fed is prohibited from purchasing equities outright, although they are allowed to buy government securities (as well as other assets) in open market operations. This is spelled out in detail in Section 14 of the Federal Reserve Act.

      Second, fed officials make no secret of their desire to stimulate markets through monetary policy. Former Dallas fed head Richard Fisher admitted publicly that the fed “front-loaded” a stock market rally beginning in 2009 through MBS purchases and other easing measures. Janet Yellen testified before the House Financial Services Committee that the Federal Reserve would consider openly purchasing equities as an “accommodation” to its current policy. Not a big deal, actually, in light of the fact that the BOJ, the SNB, and other central banks officially intervene to the tune of trillions of dollars to stabilize and support their stock markets. In fact, the BOJ is now officially a top-10 shareholder of 90% of Japanese companies.

      Third, while the fed is prohibited from buying equities, in 2010 a loophole (Section 13(3)) was enacted which permitted the fed to purchase AIG’s insolvent Maiden Lane assets. This amendment to the Federal Reserve Act also allows the fed “to lend money to entities that can use the funds to buy stocks,” according to Paul Craig Roberts. He argues that the fed covertly supplies funds to proxy institutions for the express purpose of purchasing shares on U.S. exchanges.

      Finally, anyone who watches markets for a living is well aware of the difference between legitimate trading and manipulation. The “V” rallies that occur in response to sell-offs is manipulation, pure and simple.

      I am acquainted with a guy who at one time worked for one of the fed’s Primary dealers. He insists that, while the fed never buys individual stocks, they do intervene by covertly purchasing indexed futures and options on equity indexes. You gonna tell me he’s lying?

      You insist that the federal reserve has “nothing whatsoever to do with U.S. stock markets.” I can say, with complete confidence, that you are full of crap and are incapable of reading between the lines.

      Sometimes the most obvious truths are hiding in plain sight.

      • HoneyBucketTrap

        In plain sight, yes. Most people don’t understand what they are seeing, they don’t have an understanding of the things work, or why they work.
        Most have no clue of just how corrupt our system has become; or that the complexity level stems from politicians, federal agencies, powerful people and organizations battling to limit competition and delay discovery of greed and incompetence.

        • samurai sword

          Very true. The number of people who think the fed is handicapped by its bloated balance sheet or hamstrung by legal prohibitions never ceases to amaze me.

          The truth is quite simple. The fed will do whatever it wants.

          There are two Federal Reserves. One publicly follows its official mandate to control inflation, be a lender of “last resort,” and ensure full employment. The other privately enriches itself and those connected with it.

          When you have the authority to create infinite amounts of currency ex nihilo via credit, you have amassed for yourself godlike powers. The same people who don’t question the morality of allowing a select group of bankers privileged access to something the rest of us must work for will then turn around and insist that these same counterfeiters would never violate the law by meddling in the stock market. It’s just unbelievable.

          • socalbeachdude

            Laughably false and very clueless and bogus assertions. The Federal Reserve and what it can do are strictly controlled by the FEDERAL RESERVE ACT.

            The FEDERAL RESERVE SIMPLY MATCHES THE FEDERAL FUNDS RATE TO THE YIELD ON THE 3 MONTH US TREASURY RATE and that has been the case for the entire 100 years of operation of the Federal Reserve.

            Obviously, the Federal Reserve will continue to TIGHTEN as it has been doing for the past year and will raise the only 3 interest rates that they set – not that it matters a hoot – on December 16, 2015.

            The Federal Reserve these days has nothing left that it can do except to push on limp noodles and there’s not much result with that.

            The Federal Reserve DOES NOT SET ANY INTEREST RATES THAT MATTER IN THE US ECONOMY NOR DOES IT EVEN INFLUENCE INTEREST RATES IN THE US ECONOMY TO ANY SIGNIFICANT EXTENT AT ALL.

            Changes in the Federal Funds Rate ALWAYS MATCH THE YIELD ON 3 YEAR US TREASURIES WHICH ARE THE KEY INTEREST RATE THAT ALWAYS LEADS WHERE THE FEDERAL RESERVE SETS THE FEDERAL FUNDS RATE and as Sandy Greenlyn stated recently over on MarketWatch, “It’s interesting how few people understand that the Fed funds rate chases the market-driven 3M T-Bill exactly and they have never deviated at all.”

            Open market operations are TOMO (Temporary) and POMO (Permanent) and were ESSENTIALLY RENDERED IRRELEVANT AND USELESS WITH THE FEDERAL RESERVE VERSIONS OF QE which were POMO ON STEROIDS.

            The BANKS ARE NOW SO AWASH IN VAST EXCESS RESERVES as a result of selling securities to the Federal Reserve with QE that the banks in the US now have MORE THAN $3.5 TRILLION IN EXCESS RESERVES compared to the historical norm of around $25 billion in excess reserves in their accounts at the Federal Reserve.

            The Federal Discount Rate only applies to member banks BORROWING DIRECTLY FROM THE FEDERAL RESERVE AT THE FEDERAL DISCOUNT RATE which is presently 1.00% which is 200% of the top 0.50% range of the Federal Funds Rate at which banks can borrow from each other.

            Banks can only borrow with the Federal Discount Rate on a fully collateralized basis for very short terms (typically overnight) STRICTLY FOR LIQUIDITY PURPOSES and THEY LITERALLY NEVER BORROW FROM THE FEDERAL RESERVE DIRECTLY as that has always carried a stigma and is now 300% of the cost for them to borrow from each other at the Federal Funds Rate. The Federal Reserve Discount Window has always been a LAST RESORT BORROWING MECHANISM for banks with sudden severe liquidity problem and has rarely ever been utilized hardly at all.

            RESERVE REQUIREMENTS are also TOTALLY IRRELEVANT THESE DAYS as banks are AWASH WITH VAST HUMONGOUS EXCESS RESERVES FAR IN EXCESS OF WHAT THEY ARE REQUIRED TO MAINTAIN AS RESERVES AGAINST DEMAND DEPOSITS. There are NO RESERVE REQUIREMENTS APPLICABLE TO TIME DEPOSITS.

            The current loans outstanding utilization rate against customer deposits at banks is a RECORD LOW 67% and the maximum amount banks could lend if there were demand assuming a 3% reserve requirement would be 97%.

            Banks presently have MORE THAN $3.5 TRILLION IN EXCESS RESERVES in their excess reserves accounts at the Federal Reserve, so the “reserves requirement tool is also TOTALLY IRRELEVANT.

            Essentially, the FEDERAL RESERVE HAS NO TOOLS WHATSOEVER IN THEIR “TOOL BOX” AT ALL ANYMORE.

          • samurai sword

            Strictly controlled, eh? You mean the way Congress was strictly controlled by the Constitution when it passed the Federal Reserve Act?

            Did it anyway, didn’t they?

            The Fed arrogates to itself the right to purchase treasuries, GSE securities, gold, bankers’ acceptances, bills of exchange, discount notes, municipal bonds, obligations of federal agencies, and (indirectly) foreign currencies.

            But they have nothing whatsoever to do with the stock markets. Nooooo…

            And anyone who says differently is a big, fat liar…even if he/she once worked at the Treasury department or for one of the security brokerages that coordinates directly with the fed during their open market operations.

            Whatever, dude.

          • socalbeachdude

            The Federal Reserve Act is fully Constitutional and your notions that somehow it isn’t are dead wrong and not backed by any court in the United States.

            The Federal Reserve does absolutely nothing that is not fully permitted in the Federal Reserve Act.

          • samurai sword

            The Constitution is silent on central banking.

            Article I Section 8 delegates to Congress the “power to coin money and regulate the value thereof”; Article I Section 10 avers that state governments may not “coin money, emit bills of credit, or make any thing but gold and silver coin a legal tender in the payment of debt.”

            Richard Timberlake, professor emeritus of law at the University of Georgia, has argued forcefully in his “Constitutional Money” that the Supreme Court’s decisions regarding the legal tender status of “greenbacks” were wholly at odds with the plain meaning of the Constitution. The fed, he wrote, “was NOT created as the centralized manager of the monetary system” and has become a money-creation engine that has vaporized the purchasing power of the dollar.

            Much more could be said, but why bother.

          • socalbeachdude

            In the absence of the US Constitution saying something about a specific issue, then there is nothing at all unconstitutional about that issue, which includes the topic of central banking.

            Obviously no court agreed with that nutty professor in Georgia as to his absurd notions regarding the Federal Reserve.

            As to the value of the US dollar it is soaring on the DXY and is now over 100 and poised to go well over 120 and perhaps as high as 164 where it was in 1985. The US dollar is by far the most important currency in the world and is used in 83% of all global transactions and represents 63% of all reserves.

          • samurai sword

            The Constitution is silent about abortion, yet the practice is unquestionably a violation of the right to life, in spite of convoluted attempts to provide legal justification for it.

            The power of the purse was given specifically to Congress, not a cabal of unelected moneychangers. In plain English it clearly and specifically prohibits states from using anything other than gold and silver as a medium of exchange.

            Interesting that the Mint Act of 1792, which specified the value and content of the coinage, prescribed the death penalty for cases of monetary debasement.

            And you would argue that a central bank which issues an unbacked debt-instrument is constitutional? Friggin hilarious.

            A distinguished professor of law points out the ways in which the Federal Reserve has departed from its original mandate, and you call him a nut. I would suggest you look in the mirror.

            The “value” of the dollar is completely a function of its reserve status and of the flight of capital from negative rates in Europe and elsewhere. So what if it is the predominant currency for use in trade and other global transactions? It will eventually fail, as have all fiat currencies before it.

          • socalbeachdude

            The Federal Reserve is fully constitutional and is an excellent and very conservative central bank which rebates more than 94% of its annual profits to the US Treasury which now amounts to around $100 billion a year and it does not cost US taxpayers a single penny to operate.

          • samurai sword

            Allow me to make a few suggestions. I think other posters here would agree with them.

            First, turn off the bold and especially your cap lock. We can read your drivel without them, and their constant use makes it seem as if you’re shouting all the time.

            Also, stay on topic. Much of what you post, while factually correct, is just unnecessary. Does anybody really care about the types of rates the fed is involved with or about NYSE “circuit breaker” rules or the difference between TOMO and POMO? This stuff is irrelevant and the fact that you continually include off-topic jargon in your posts makes you look like a show-off and a blowhard.

            And stop with the cut-and-pastes. If you can’t condense in a few well thought-out sentences what the author’s point is, then go back to school and learn to summarize. Or just include a link to the article.

          • socalbeachdude

            What I stated is 100% true, accurate, and correct, and I would suggest you reread and attempt to comprehend the actual facts related to the Federal Reserve.

          • samurai sword

            Please read my post again, slower this time.

            I said, quite plainly, that “much of what you post [is] factually correct.” It’s also irrelevant.

            In other words, you have no clue how to respond logically to a previous claim or claims with which you disagree. So you babble on endlessly about tangentially related subjects in a childish attempt to impress readers with your “knowledge.”

            I would be far more impressed with a brief, cogent response that isn’t in bold lettering.

            Oh, and stop up-voting everything you post. It’s really lame.

          • socalbeachdude

            What I stated is HIGHLY RELEVANT and is what sorts out the ACTUAL FACTS from the misconceptions regarding the Federal Reserve which you appear to be wallowing in with your speculative nonsense not based on fact at all.

          • samurai sword

            When it comes to making a thoughtful, intelligent reply, you have no concept of what is relevant and what is not. That’s why you yammer on in paragraph after paragraph. If you knew how to make your point succinctly, you’d do so. You don’t.

            You also assume, falsely, that to contradict someone is to refute them. Take a course in logic and learn the difference.

          • socalbeachdude

            You are lost in a sea of confusion in your own mind regarding the facts which you either are not capable of understanding or simply refuse to comprehend when it comes to the very straightforward concepts of money and banking.

          • Spectrum

            I thought you were talking about yourself….

          • LIZ THE SHIZ

            enough already Alan Greenspan or Snodtblossom or which ever paid troll you are , just go back to the rest home and have a romantic moment with your scarey communist wife Andrea Mitchell , take the blue pill

          • SnodtBlossom

            I’m not socal.. I’m SunnyFlaSnotress
            Cold out baby? LOL….
            Too bad your wife won’t let you visit me
            😀

          • Lennie Pike

            Beautiful!

      • socalbeachdude

        The Federal Reserve never buys futures at all contrary to your bogus assertions, and the Federal Reserve has NOTHING WHATSOEVER to do with the stock markets.

        • samurai sword

          Uh huh. And pigs fly.

          No doubt when someone tells you the check’s in the mail, you believe them.

          Lol…

          • socalbeachdude

            Please start comprehending the facts.

          • Spectrum

            Not only that, but he’s incredibly vain. Notice that he upvotes HIS OWN posts ! How pathetically inadequate must this guy be ?

  • socalbeachdude

    Opinion: When will Trump voters realize they’ve been had?

    By Brett Arends – Dow Jones

    President-elect’s pledge to ‘drain the swamp’ is all wet

    Hey, Trumpkins — have you worked it out yet? Is the truth dawning on you, or are you still in the dark?

    See if you can put it all together from the resumes of those in President-elect Donald Trump’s closest political circle so far:

    Treasury secretary nominee Steven Mnuchin: Goldman Sachs.

    Chief strategist Steve Bannon: Goldman Sachs.

    Transition adviser Anthony Scaramucci: Goldman Sachs.

    Commerce secretary nominee Wilbur Ross: Rothschild & Co.

    Possible budget director Gary Cohn: Goldman Sachs.

    Potential secretary of state Mitt Romney: Bain Capital.

    Trump is just getting started. Check out that “swamp draining.” The whole thing is just draining before our eyes! Take that, Wall Street! Take that, “international financial cabal!”

    Trumpkins, you’ve been scammed. There’s a sucker in this game — and it’s you.

    And by the way, what’s the best-performing stock in the Dow Jones Industrial Average DJIA, +0.33% since the election?

    Goldman Sachs.

    http://www.marketwatch.com/story/when-will-trump-voters-realize-theyve-been-had-2016-12-02

    • Darwin

      Give up already! These donkeys are at the bottom of the cesspool. =)

    • Thomas D Guastavino

      Someone needs a “safe space”

      • Spectrum

        Yes, because no-one is supporting him. He’s outnumbered and failing. Custer’s Last Stand all over again.

    • Horiboyable .

      Looks like the swamp is being populated with crocodiles :-)
      Seriously mate you are MISSING the point. Trump was Mr Right Place at the Right Time, it could have been Mickey Mouse had Disney backed it.
      Folks have had enough of the status quo because its NOT working. Hillary is clearly a crook but she also represented more of the same sh!t. This is world wide too. You know 2007/08 was a long time ago and with the trillions they have borrowed and spent and they are hardly hitting 2% growth. Here in the UK they decided to add prostitution and drug dealing to the GDP figures, how do you put a value on that.
      The collapse is in the advanced stages in Europe and things here are like a tinder box, we have had BREXIT, Donald Trump and Matteo Renzi, next Netherlands, France and a few more murders and rapes should swing it. The west is collapsing through excess debt and too much government regulations and their out of control entitlements programs. The west is over, we have lived of lies and cheating for too long. The west will default on their bonds and then its all over because we will not be able to borrow anymore. Bye bye NHS, bye bye pensions.
      An honest man does not consume more than he produces.

      • GoldenGirl

        Spot on!

        • SnodtBlossom

          Impeach President PigBastard T.Rump!!!

      • SnodtBlossom

        The markets are always looking for an excuse.
        The only thing that could cause a market crash now is if Hillary gets the presidency.
        And we all know that won’t happen… don’t we?

        • Tom kauser

          Market of ideas , certainly!

      • Tom kauser

        Too many people with the bad half of the narrative too polished?
        The fed adds the true and the nefarious when calculating how much debt the planet can consume and how much it cost?
        300 million guns in private hands tells me that we will double the debt and still be crying about what could have been?

    • LIZ THE SHIZ

      some swamps are drainable, i.e. lobbyist’s ,lifelong politicians, and certain special interests such as union’s but never ever think Wall St. or the Global financial elite will be touched for they are immune for life , meet the new boss same as the old boss

    • Mike Smithy

      So much for “Draining the Swamp”.

    • brew_it

      As if Hillary would not have appointed a mirror image of the same team. Your the sucker or the willing accomplice.

    • PoorBoy2

      Just thinking out loud, but is this the set up for ending the Dollar and bringing the Amero into existence? With our unsustainable debt of $20 trillion do we go ‘bankrupt’ and start over with a new currency?

      • socalbeachdude

        There is no currency that could ever even slightly compete with the US dollar which is used in more than 83% of all global transactions and which accounts for 63% of all reserves. The US dollar has been SOARING UPWARDS in value for the past several years and is now over 100 on the DXY and poised to continue increasing in value and importance globally.

  • FireHope

    On 20th January 2016, the following was posted by this site: “For years, I have been warning that the global financial system is an incredibly shaky house of cards, and now we have finally reached the endgame.” Well you were wrong and we did not reach the end game. Between then and now, the Dow Jones put on 25% – so any smart investor could have made some good money if they did not follow the direction of this site. The crash will eventually come – maybe even tomorrow (AlwaysTomorrow where are thou?) in the mean time, invest wisely, prepare to a certain extent but don’t allow a site like this to cause you to perpetually live in fear (which is what I allowed for too long) – which IMO is primarily how they make income.

    • Paul Patriot

      I advise you look at the bigger picture, and the global agenda to bring a one world system, exactly as Bible has prophesized. Look at the forest , not the trees and you will see that the comments Michael made are based on the big picture, and the geo political, geo economical convergence that has, is, and will continue to occur until those who are orchestrating the endgame fulfill their agenda.

      Most wise to invest in your relationship with the Lord Jesus Christ while there is time, and read the books of Daniel, Ezekiel, Revelation, and see how end game predictions are made all through scriptures.

      • FireHope

        I have accepted Jesus Christ as my Lord and Saviour. My point was that the site has made wrong calls – and they keep on doing it. I also had a comment removed yesterday – not because I made a hateful, racist, untrue or rude comment -(thats apparently allowed on this site ad nauseam). The reason it was removed is because I insinuated that many of their articles are driven to promote business for their advertisers from which they most likely make plenty of money.

      • Spectrum

        Well said.

    • I Think I’ll Eat Some Almonds

      Who is this “ALWAYSTOMORROW” you speak of?

      I’ll bet he was banned again.

      As persistent as he is, I’ll bet he will be back again under a different name.

  • Thomas D Guastavino

    Have lived through at least five “crashes”. Lost job twice. Cardinal rule: Always keep at least six months expenses in cash and another six months to pick up stocks afterward when they are dirt cheap. Got ahead every time. If the final crash is so bad that it destroys everything then a crashed stock market will be the least of our worries so do a little “prepping”

  • Horiboyable .

    It is not helpful to compare one set of metrics against another and then draw comparisons because it is unlikely that two economic events are the same.

    I think the DOW and S&P could double. Please do not be delusional and think this has anything to do with investing. Investing finished when CB’s started directing the markets. The smart money are only looking at capital preservation.

    If you look at the bond market it has clearly topped out. Then a lot of this debt will go into default. Anyone who thinks that the Greeks, Italians, Japan and many other European nations are going to honour their bonds you had better think again. Western governments have too much debt and the boomers have too many entitlements and they are retiring at about a rate of 10’000 a day in the USA.

    So the big smart money is staying away from the bond market and parking it in the stock market and when the trickle becomes a flood the DOW and S&P will go to the sky, if you jump into gold you must take physical deliver because if is not in your possession, its not yours and you will get Jon Corzine’d.
    The Plebs know something is up and you can see that in the BREXIT vote, Donald Trump and now Matteo Renzi. In the Netherlands the Freedom Party is in the lead and who knows what will happen in France.
    I hope you are all ready because this is going to be a wild ride and who knows what will be on the other side. When extreme economic events happen governments will use it as an excuse to take away our freedom and liberty. This will be like 1932 so you will need to be vigilant, expect civil unrest and the possibility of war.
    As Gerald Celente says, make sure you have the 3 G’s
    Gold
    Guns
    Getaway plan
    Good luck to you all

    • GoldenGirl

      Again, I think you’ve nailed it.

    • socalbeachdude

      FUNDAMENTALS ALWAYS MATTER and the core fundamentals are P/E valuations and interest rates which are set by US Treasuries which have soared upwards.

      As to gold, that stuff is PLUMMETING LIKE A ROCK and plunged again today to $1,160 per ounce and is on a path towards reverting to its mean of $456 per ounce and then heading lower.

      • jaxon64

        Yes–and that “Federal Reserve, which has nothing to do with the stock market” is the single largest bond holder currently with 64% of the United States bonds–dwarfing the commonly held errant belief that China is holding the majority of US debt/promissory notes/bonds.

        • socalbeachdude

          Laughably and absolutely false. The Federal Reserve only owns less than 13% of the total outstanding US Treasuries amounting to about $2.5 trillion of the total amount of more than $19.5 trillion in US Treasuries.

          Nearly 88% of all outstanding US Treasuries are OWNED BY PARTIES OTHER THAN THE FEDERAL RESERVE and only 8% of the around $7 trillion of US Treasuries issued each year by the US Treasury are purchased by the Federal Reserve.

  • Phil from Germany

    The DAX went to over 11,000 here in Germany yesterday. MSM was full of it. Happy days are here again…..lambs to the slaughter

  • XSANDIEGOCA

    It’s the Most Wonderful Time in 8 Years! Let us savor the moment!! Yes, there will be Hades to pay but… the Fever has broken. True, we have been living beyond our means for years and years and years. Bush doubled the Debt and Obama doubled it again. Trump will have to raise a couple of trillion to get this country moving again and rearm. What is the alternative? We are all going to have to tighten our belts a couple of notches. That is obvious. For those in the markets, I would say sell. You are going to need the money.

    • GSOB

      James 1:12
      Blessed is the man who perseveres under trial, because when he has stood the test, he will receive the crown of life that God has promised to those who love Him

      • XSANDIEGOCA

        Very appropriate. Merry Xmas.

  • sister soldier

    #imWithChuckJones

  • FireHope

    You can post as many hateful things on this site as you want, as long as you don’t insinuate that it is their business to make profit from fear – because thats when your comments get removed.

    • Joe Trevors

      The word HATE in our culture is a killer, isn’t it? That words ends communication. I think my real concern about the Stock Market is more about Good & Evil (or Right & Wrong) rather than love or hate. Speaking of “hate” I can quote a verse from Psalm 97, verse 10: “The Lord loves those who hate evil….” We are supposed to hate evil & to love good?

      • GSOB

        Luke 14:26

        • Joe Trevors

          Thank you for sharing these passages. I will try to read some of them. Wow!

  • D. Smith

    I advise reading the book The Crash of 2016 by Thom Hartman for the historical view …you will see why a crash is gonna happen, folks. Too much imaginary money out there. Wonder what the truly big investers are doing with their money. Now would sure be the time to get your money out of the big banks. Maybe I’m a gloom and doom kinda person but I say it’s time to get out the garden catalogs and pull in your belts.

  • Rhino Horns

    Why YES… yes we are being set up, and according to God’s timing, it may happen in February, depending if He is using the same template He used in 2007 and 2008 :) Get ready!

    • Spectrum

      Why February in particular ?

      • Rhino Horns

        It’s a long story, so I will just give you the basics. On July 27, 2007 there was an attempt going on in Israel to divide God’s Land. At the same time, overnight interbank interest rates started to nudge up, and 14 months later was the day of reckoning. On December 16, 2015 the Fed nudged up interest rates for the first time in 7 years, and the same meeting was taking place in Israel. Go forward 14 months and you arrive in February of 2017. The question is whether God is using the same pattern. There is a 25 year history of God showing His “displeasure” with American leadership regarding their attempts to “part My land”, usually involving historically bad weather, but sometimes other events, like the financial crisis of 2007/2008. He is in control, whenever this next day of reckoning comes.

        • Spectrum

          Thanks for explaining. I wouldn’t however place too much significance on a possible repetition of one event, which likely was a one off.

          We should be far more concerned with the POSSIBLE attempt by Obama to force a resolution to the “Palestinian problem” at the U.N. There is pressure on him to do so before he leaves office in the next six weeks. As you may be aware, he only has to instruct the U.S. representative there to not veto a proposal ( said to be from the French ) to pass plans which would effectively divide Jerusalem, and more. ( If this were to succeed as it most likely would, there would be no way to reverse the vote ). God warns of severe consequences should this occur.

          • Rhino Horns

            And just today, Obama did not veto the U.N. resolution condemning Israel building on their God Given Land. It won’t be long before the wrath of God is unleashed on this world.

          • Spectrum

            Yes, I’m just catching up with that now. Not sure if this is the same as dividing the land, which will be the big catalyst that starts the Tribulation events in play. It does reveal however, how advanced on the prophetic calendar we are !

  • LIZ THE SHIZ

    looks like Michael is trying to pull a Carl Ichan Steve Gartman move, panic everybody and buy cheap when the sheeple sell

  • Dec 8, 2016 – Everyone Is Going To Experience The Mother Of All Events

    Trump chooses a global warming denier as head of EPA. The Washington Post says the story about fake sites is fake. China is going after fake news and will block them and fine those who publish them. Iraqi planes hit a market place and killed civilians. Russia and Syria are halting operations in Syria to evacuate the civilians. Lavrov warns that the Obama administration purposely derails talks. Turkey is sending 300 more troops into Syria. The US is sending 1700 troops to Iraq for a ground operation. The US also has 3 warships off the coast prepared and ready for a ground operation.

    https://youtu.be/sZiLhv4rbUc

    • socalbeachdude

      And what does any of that have to do with asset prices?

  • piccadillybabe

    I will be very surprised if they (media) come out and say that Xmas sales hit an all time high. Usually at this time of year, one has a hard time even getting near the mall. This year, you would never know that a holiday is upon us if you look at the very little traffic and the empty parking lots. Sure wish I had the stomach to ride the rally in the markets but it will not last and people know it. Staying out of debt and living frugally is the only safe bet these days. If you listen to the financial gurus, you could run the risk of being homeless.

    On the other hand, the price of new vehicles could become ridiculously cheap. There is such a glut in the market of new cars, trucks and RVs. If you have cash, you could end up with a brand new vehicle for half the MRSP or even less down the road with good negotiating skills. Elon Musk is making major head way in electric technology in terms of more mileage on a charge along with solar. It’s a lot further along than many think so those gas powered engines will be dinosaurs soon. People driving big V8 and V10 pickups and SUVs will feel foolish instead of proud. Dealers will be giving unbelievable deals. They already are, i.e. $10K off a new truck is what I heard today. What a markup!

  • max gon

    This time I agree with Michael, there is going to be a huge market crash next year, that’s for sure.

  • jj

    Total nonsense! It is all about international capital flows flooding into dollar based assets especially equities and the dollar. These flows are coming from Europe and Japan where rates are negative and economies are in trouble along with banks. The S&P P/E ratio in 87 was 50/1, dot com bust 46.5/1 and in the 2008/9 crisis 122/1. Today we are at 24/1. Not even close to a bubble or over valued.
    Martin Armstrong’s computer models at Armstrong Economics forecast years ago that equity markets including the Dow would hit 20,000 first and then to 23,000 and that is exactly what is happening. They also forecast the collapse of the euro and the EU and that is also happening and this is one place where capital is coming from. Entities who control large amounts of capital need markets that have large pools of liquidity and that is the US. The models have also forecast the sovereign debt crisis and the current rotation out of bonds into equities which is helping drive the equity markets. If you don’t understand capital flows you simply cannot predict market price movement.

    • socalbeachdude

      The P/E numbers you stated are not correct.

      The stock market’s oldest indicator just flashed red

      By Brett Arends – Dow Jones

      I hate to rain on this parade. But the latest lurch upwards in stock prices has just taken market valuations up into the skybox levels, according to the market timing measure with the longest pedigree on Wall Street. It’s just gone from flashing amber to flashing red — meaning, if it’s right, that there is now a significant and rising risk of a crash, and a bigger risk of simply very poor returns.

      This has little to do with President-elect Donald Trump, by the way — and much more to do with President Ulysses S. Grant and all his successors.

      Wall Street’s jump this week has taken the S&P 500 SPX, +0.22% to an eye-watering 27.9 times the corporate earnings of the past 10 years. That’s according to data compiled by Yale finance professor Robert Shiller and some simple math.

      This is about the same level that the market hit just before the crash of 1929, and is far higher than was seen in 2007, for example, or during the ill-fated boom of the late 1960s. The last time we saw the stock market this expensive on this measure was early in 2002 — just before stocks plummeted.

      http://www.marketwatch.com/story/the-stock-markets-oldest-indicator-just-flashed-red-2016-12-08

    • GoldenGirl

      I agree with you. Taking the time to understand the ECM has really opened my eyes and turned just about everything I learned about the “fundamentals” upside down. And as you mentioned, Armstrong’s computer has been correct time and time again. For whatever reason, people just don’t want to change their way of thinking and won’t until it is too late.

    • orsobubu

      jj, have you access to Armstrong’s Socrates? And had you the access to his old forecasting system?
      About EU, writing from Italy, I can assure you that there is absolutely nothing like a collapse of the Euro; the path to the new european empire, with its impressive integrated markets and next military powerhouse, able to compete with US, China, etc, is carved in the marble and absolutely unstoppable. I think UK soon will prey to re-join onto their knees, but at Bruxelles-dictated, worsening conditions tough. Only external, unpredictable disastrous events kicking in could avert the plans of european bourgeoise, but at the price of a big, big war, at least with the same (destructive) potential of the 10 european (constructive) wars happened after the fall of Soviet Union.

  • socalbeachdude

    Fed to hike interest rates next week while ignoring the elephant in the room

    The Federal Reserve is going to raise interest rates next week, but shy away from the bigger question looming for financial markets: How does the shock outcome of the presidential election change the economic landscape?

    The Fed is widely expected to announce an increase in the target range for its federal funds rate to 0.5%-0.75% when its two-day meeting wraps next Wednesday, analysts agree. It will be the first increase of 2016, a year once expected to produce at least a couple of rate adjustments. The stock SPX, +0.58% and bond markets TMUBMUSD10Y, +2.51% have a quarter-point move baked in the cake.

    http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09

  • socalbeachdude

    The market crashes in 2016-2017 will be vastly bigger and more permanent crashes in bonds, stocks, real estate, and commodities than in 2008-2009. The tiny little period of downside in 2008-2009 was all due to FASB Rule 157 (“mark to market” ) which was rescinded on March 9, 2009 at which time most stocks quickly moved to recover all of their losses and more. this time around the crash will be based on:

    1) plunging earnings
    2) soaring US dollar
    3) skyrocketing interest rates
    4) massive bubbles in stocks, bonds, real estate
    5) evaporation of hopium and false perceptions
    6) massive debt in the US of more than $64 trillion
    7) Asia and Europe banking insolvencies

    Simply rescinding an accounting rule can’t be done now.

    The US and global bond markets have already experienced over $2 TRILLION IN LOSSES in market value in the month of November 2016 as the US dollar has soared in value on the DXY to over 100 and as interest rates have skyrocketed around 40% in the US on US Treasures – and that’s just the start of the current massive global crash dead ahead.

  • socalbeachdude

    Get Out – Karl Denninger

    This is arithmetic, not politics or “market structure” or anything else of the sort.

    The last 30+ years have driven the S&P 500 from approximately 100 in 1980 to 1900 today. This is commonly reported as being due to increasing sales and earnings, that is, a “larger economy” and “better efficiency.”

    But that is, for the most part, a lie.

    Oh sure, there is a kernel of truth in it, and that truth is responsible for some of the growth. Maybe a doubling, tripling or even quadrupling between all of if — after all, population has gone up in the United States by a cumulative 1% annually, for example, and there has been a very material expansion in overseas trade and economic improvement.

    But the rest of the nineteen-fold expansion didn’t come from there

    Even if rates do not normalize the increased borrowing is what drove appreciation. That increase has now come to an end, and the bursting of the housing bubble occurred because when rate decreases stopped happening at a rate that was sufficient to maintain the “rollover” behavior banks and others substituted ignoring credit quality. This is a guaranteed way to lose money because an unqualified borrower obviously won’t pay, but if you can manage to avoid going to prison, and lots of political arm-twisting accomplished that, you can steal “the last meal” from the “peasants” (that’s you and I, by the way.)

    Unfortunately that truly was the last meal. The amount of time it will take for markets to recognize this will vary from place to place; China, for example, is still playing the “hide the rotting fish” game as is Europe and, to some degree, the United States, but again that’s a timing matter rather than an outcome issue.

    The outcome is not in doubt because arithmetic just is.

    The stress this time is showing up first in natural resources (e.g. oil and shipping) companies but at its core the problem is in the financial system because essentially all of these projects are (or rather “were”) financed at or near 100% “coverage” assuming the price of oil and/or shipping would not fall and thus the operating cash flow would be sufficient.

    But the price didn’t just fall, it collapsed.

    None of these debts are covered, and we’re now arguing over how long it takes before the cash flow insufficiency starts to create losses that cannot be hidden and bankrupt not only the borrowers but those holding the paper who have used it to lever up other bets by using it as collateral.

    This isn’t 2007 — it is in fact much worse because it’s global rather than being concentrated in subprime housing in the United States.

    https://market-ticker.org/akcs-www?post=231082

  • socalbeachdude

    Remember One Thing – Karl Denninger

    The Fed has never, in its history, managed to actually prevent a market collapse.

    It did not do so in 1929.

    It did not do so in 1987, despite it being evident that the market was going to blow up.

    It did not do so in 2000, despite it being evident that the market was grossly overheated.

    It did not do so in 2008, despite having more than a year worth of warning (the two Bear Stearns hedge funds) and in fact Bernanke testified under oath that “subprime was contained.”

    It will not do so this time either.

    https://market-ticker.org/akcs-www?post=230456

  • ali

    For as long as i can remember(3 years) you have been warning people of imminent Stock market collapse. Meanwhile those who didnt pay much heed to your warnings have made good returns on their investment in stock exchange.

    • socalbeachdude

      Disregard the fundamentals at your own risk.

      • GSOB

        1 Corinthians 15:46

  • Dan Jones

    You bet we are and trump is nothing like you thought he would be… drain the swamp? please… at least be honest trumpsters… he is filling it up

    Always be a light that is shininginthedark

    • socalbeachdude

      Trumponomics Will Collapse Under a Mountain of Debt

      Financial markets are heading straight into a perfect storm of central bank failure, bond market carnage, a worldwide recession and a spectacular fiscal bloodbath in Washington. Investors should be heading for the hills with all deliberate speed.

      What is going to stop Trumponomics cold is debt — roughly $64 trillion of it. That’s what is crushing the American economy, and until the mechanics of its relentless growth are stopped and reversed, the odds of achieving and sustaining the 3–4% real economic growth that Trump’s economics team is yapping about is somewhere between slim and none.

      Here’s the newsflash. The nation’s monumental debt problem wasn’t newly created by the Obama Administration or the fact that Nancy Pelosi never met a spending program she couldn’t embrace. The last eight years have surely made the problem far worse and the Democrats are culpable without question.

      But quite frankly the debt problem is a thoroughly bipartisan creation that is completely immune to the fact that the White House and both sides of Capitol Hill are now under GOP control. In fact, the nation’s debt affliction actually goes back to August 1971 when Nixon closed the gold window and launched the world on the current destructive experiment with massive central bank driven credit expansion.

      However, it was after 1980 that the wraps really started coming off the debt monster that was spawned by the world’s unshackled central banks. In that context, Paul Volcker was the last honest central banker, and with Ronald Reagan’s acquiescence he did break the back of the virulent commodity and consumer goods inflation that had been unleashed by his immediate predecessors during the 1970s.

      Total U.S. public and private debt outstanding in Q4 1980 amounted to just $4.8 trillion or slightly more than 150% of the $3.0 trillion level of GDP.

      Since then, total debt has exploded to nearly $64 trillion or 13X. It now stands at 350% of GDP, meaning that these two extra turns of debt (3.5X vs. 1.5X) amount to $35 trillion and constitute a giant economic millstone on the American economy.

      Accordingly, there is not a snowballs chance in the hot place that policies designed to pile still more debt on top of the mountains we already have can rejuvenate the U.S. economy. The key to recovery is firing the debt addicted money printers at the Fed, not passing the baton to fiscal stimulators on Capitol Hill.

      https://dailyreckoning.com/trumponomics-will-collapse-mountain-debt/

      • DB200

        Good article. And remember that The Don knows how to handle a bankruptcy when debts become too high to handle.

  • Dec 9, 2016 Central Bankers Tested, Bail-Outs, Bail-Ins, Banning Cash, Next Gold Confiscation

    Consumer confidence surges to new heights, we have seen this prior to the crash of 2008. Fed releases report and says the peoples wealth has increased, but other reports show a different story. Wholesale inventories decline the most in 8 months. The central bankers are very close in completing their tests, bail-outs,bail-in, cash ban, and now confiscation of gold.

    https://youtu.be/AU34wJlPV9s

    • socalbeachdude

      That speculative little commodity known as gold is but a speck of dust in the commodity markets and central banks couldn’t give the slightest bit of a hoot about that stuff which is plunging like a rock towards its mean of $456 per ounce.

      • Gay Veteran

        not like the Big Banks haven’t been rigging the gold and silver markets……….so wait, Deutsche Bank admitted they and other Big Banks DID rig the markets

  • rentslave

    The bond market has already crashed in November.However,the yield still looks good.

  • Tom kauser

    Its the cycle and it don’t care where you are in yours!

  • socalbeachdude

    Market Insanity Reaches Record Highs As Investors Flock Into The Biggest Bubble In History

    Investors have forsaken all reason, logic and wisdom by rushing into the biggest stock and financial bubble in history. Even some precious metals investors are selling their gold and jumping into the markets hoping to make big profits as President Trump takes over the White house in six weeks.

    Unfortunately, the worst time to jump into a market is when everyone else is doing the same thing. Of course, this doesn’t mean the Dow Jones Index won’t continue higher for some time, but the fundamentals of the economy continue to rot from the inside out.

    No one really notices this as automobile dealers are now selling cars with zero interest rates, nothing down and no payment for 6 months. If this is the sort of business model the automobile industry has to resort to in order to continue sales, we are in big trouble.

    Then we have these few headlines pointing to a worsening U.S. economy:

    Restaurant Industry, Leading Indicator of US Economy Sours, Bankruptcies Pile up

    ESPN Loses A Record 621,000 Subscribers In One Month

    Greenspan: Western World Headed for a State of Disaster

    The Housing Market Is Waving A Red Flag

    These are just some of the many headlines pointing to an economy and stock market that is not heading towards better times.

    https://srsroccoreport.com/market-insanity-reaches-record-highs-as-investors-flock-into-the-biggest-bubble-in-history/

  • socalbeachdude

    Stocks close at all-time highs, post best week since election

    Market indicator hits extreme levels last seen before plunges in 1929, 2000 and 2008

    While the S&P 500 is reaching all-time highs on optimism over Donald Trump’s economic agenda, some Wall Street strategists are increasingly worried about a widely followed valuation measure that’s reached levels that preceded most of the major market crashes of the last 100 years.

    “The cyclically adjusted P/E (CAPE), a valuation measure created by economist Robert Shiller now stands over 27 and has been exceeded only in the 1929 mania, the 2000 tech mania and the 2007 housing and stock bubble,” Alan Newman wrote in his Stock Market Crosscurrents letter at the end of November.

    Newman said even if the market’s earnings increase by 10 percent under Trump’s policies “we’re still dealing with the same picture, overvaluation on a very grand scale.”

    http://www.cnbc.com/2016/12/08/market-indicator-hits-levels-last-seen-before-plunges.html

  • socalbeachdude

    2016 marked the end of the biggest bull market of our lifetime

    In 2016, the nearly 40-year bond bull market ended. Date of death: July 11.

    And this was the biggest economic event of the year.

    “The biggest of 2016, in a weird way, was not Trump, was not Brexit, was not the end of the OPEC war back in February, it was July 11,” Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, said at a panel on Wednesday.

    “On July 11, 2016, a couple weeks after Brexit, the 30-year Treasury yield fell to 2.088%. On that day, the Swiss government could borrow money for 50 years — out to 2076, a year most of us won’t be around to see — at a negative interest rate.

    “And that day was the day that the greatest bull market ever, in the bond market, ended. Since then, yields have been rising. And that without a doubt is the biggest event of 2016.”

    For many investment professionals, a secular decline in interest rates is the only reality they’ve ever known. Since the Paul Volcker-led Federal Reserve cranked interest rates up sharply in the early 1980s to end US inflation once and for all, bond yields have been on a steady decline. Bond prices rise when yields fall.

    Through the decades, however, there have been episodes of yields rising. And this is not the first time strategists have called for the end of the bond bull market. But since the early 1980s — nearly 40 years ago — interest rates in the US, and most major developed markets, have been in decline.

    A move towards interest rates rising, not falling, has implications not just for financial markets but the real economy, too. Rising interest rates will pressure mortgages. Rising interest rates also make it more expensive for governments, and businesses, to borrow money.

    And while interest rates still remain historically low despite recent moves higher — the US 10-year Treasury yield was sitting near 2.4% on Thursday, up from around 1.8% just before the election and its record-low of 1.366% hit back in July; the 30-year Treasury yield was around 3.08% on Thursday — the increase in rates has, in part, been in anticipation of more government spending.

    http://finance.yahoo.com/news/2016-marked-the-end-of-the-biggest-bull-market-of-our-lifetimes-154353053.html

    • DB200

      Many thanks for sharing this info. I did not see it in the newspapers nor in the news on tv.

  • socalbeachdude

    Stocks finish at records, notching best week since the election

    U.S. stocks closed at a record on Friday with the S&P 500 notching its best winning streak since June 2014 and the Dow Jones Industrial Average extending gains for a fifth week.

    The S&P 500 SPX, +0.59% index added 13.34 points, or 0.6%, to end at a historic high of 2,259.53. Investors focused on sectors that have lagged behind the broader market rally, driving health-care stocks higher.

    “The S&P 500 is up more than 5% since election day [as the] outlook for lower regulatory hurdles, lower taxes, and higher infrastructure investments all paint the picture of a resurgence in growth prospects,” said Karen Hiatt, a portfolio manager at Allianz Global Investors. “The euphoria surrounding higher cyclical growth after years of stagnation has driven investors to reposition portfolios for 2017 earlier than typical.”

    The Dow Jones Industrial Average DJIA, +0.72% advanced 142.04 points, or 0.7%, to close at record 19,756.85 while the Nasdaq Composite Index COMP, +0.50% rose 27.14 points, or 0.5, to close at a high of 5,444.50.

    All three major indexes touched intraday highs during the session with the S&P 500 and the Dow up 3.1% and the Nasdaq rallying 3.6% on the week.

    http://www.marketwatch.com/story/dow-set-to-stretch-out-record-run-with-5th-day-of-gains-2016-12-09

  • GSOB

    Set up for a crash?
    ……………….
    Although God overlooked the ignorance of earlier times, He now commands all men everywhere to repent.
    For He has set a day when He will judge the world with justice by the Man He has appointed.
    He has given proof of this to all men by raising Him from the dead.

  • GSOB

    Even if we accept human testimony, the testimony of God is greater.
    For this is the testimony that God has given about His Son.
    Whoever believes in the Son of God has this testimony within him; whoever does not believe God has made Him out to be a liar, because he has not believed in the testimony God has given about His Son.…

    • socalbeachdude

      What does any of that have to do with the stock markets in the US and / or globally?

      • GSOB

        That these numbers are just temporary, like your life and this world….

        1 Corinthians 15:50

        • socalbeachdude

          Those numbers are what reflect valuations in the world we live in whether you like it or not and are of immense importance in economies. In the long run we are all dead, but that is rather irrelevant at any given moment.

          • GSOB

            Think in categories

          • socalbeachdude

            Proper and sound analysis is based on look at the correct actual facts specific to each particular category. Otherwise you are just lost in a sea of words with little to no meaning or relation to the category you are attempting to discuss.

          • GSOB

            Behold, the greater than Solomon is here.

          • samurai sword

            Wouldn’t go that far.

            A copy-and-paste expert with delusions of grandeur. Much apparent factual knowledge but no real forensic skills. A naive faith in central banking.

            In short, a gadfly.

          • socalbeachdude

            Your total lack of comprehension regarding the facts related to the Federal Reserve and money and banking is just beyond mind boggling.

          • Spectrum

            You really should stop talking to yourself….

  • socalbeachdude

    President-Elect Trump ‘will name Exxon CEO with close links to Putin as his secretary of state’, snubbing Mitt Romney

    U.S. President-elect Donald Trump is expected to name the chief executive of Exxon Mobil as the country’s top diplomat, NBC News reported Saturday. Exxon chief Rex Tillerson emerged on Friday as Trump’s leading candidate for U.S. secretary of state and is expected to meet with him later on Saturday, a transition official told Reuters. NBC News cited two sources close to the transition team in reporting that Tillerson will be named as secretary of state.

    http://www.dailymail.co.uk/news/article-4020634/President-Elect-Trump-Exxon-CEO-secretary-state-NBC-NEWS.html

  • socalbeachdude

    The FEDERAL RESERVE SIMPLY MATCHES THE FEDERAL FUNDS RATE TO THE YIELD ON THE 3 MONTH US TREASURY RATE and that has been the case for the entire 100 years of operation of the Federal Reserve.

    Obviously, the Federal Reserve will continue to TIGHTEN as it has been doing for the past year and will raise the only 3 interest rates that they set – not that it matters a hoot – on December 14, 2016.

    The Federal Reserve these days has nothing left that it can do except to push on limp noodles and there’s not much result with that.

    The Federal Reserve DOES NOT SET ANY INTEREST RATES THAT MATTER IN THE US ECONOMY NOR DOES IT EVEN INFLUENCE INTEREST RATES IN THE US ECONOMY TO ANY SIGNIFICANT EXTENT AT ALL.

    Changes in the Federal Funds Rate ALWAYS MATCH THE YIELD ON 3 YEAR US TREASURIES WHICH ARE THE KEY INTEREST RATE THAT ALWAYS LEADS WHERE THE FEDERAL RESERVE SETS THE FEDERAL FUNDS RATE and as Sandy Greenlyn stated recently over on MarketWatch, “It’s interesting how few people understand that the Fed funds rate chases the market-driven 3M T-Bill exactly and they have never deviated at all.”

    Open market operations are TOMO (Temporary) and POMO (Permanent) and were ESSENTIALLY RENDERED IRRELEVANT AND USELESS WITH THE FEDERAL RESERVE VERSIONS OF QE which were POMO ON STEROIDS.

    The BANKS ARE NOW SO AWASH IN VAST EXCESS RESERVES as a result of selling securities to the Federal Reserve with QE that the banks in the US now have MORE THAN $3.5 TRILLION IN EXCESS RESERVES compared to the historical norm of around $25 billion in excess reserves in their accounts at the Federal Reserve.

    The Federal Discount Rate only applies to member banks BORROWING DIRECTLY FROM THE FEDERAL RESERVE AT THE FEDERAL DISCOUNT RATE which is presently 1.00% which is 200% of the top 0.50% range of the Federal Funds Rate at which banks can borrow from each other.

    Banks can only borrow with the Federal Discount Rate on a fully collateralized basis for very short terms (typically overnight) STRICTLY FOR LIQUIDITY PURPOSES and THEY LITERALLY NEVER BORROW FROM THE FEDERAL RESERVE DIRECTLY as that has always carried a stigma and is now 300% of the cost for them to borrow from each other at the Federal Funds Rate. The Federal Reserve Discount Window has always been a LAST RESORT BORROWING MECHANISM for banks with sudden severe liquidity problem and has rarely ever been utilized hardly at all.

    RESERVE REQUIREMENTS are also TOTALLY IRRELEVANT THESE DAYS as banks are AWASH WITH VAST HUMONGOUS EXCESS RESERVES FAR IN EXCESS OF WHAT THEY ARE REQUIRED TO MAINTAIN AS RESERVES AGAINST BANK CUSTOMER DEPOSITS.

    The current loans outstanding utilization rate against customer deposits at banks is a RECORD LOW 67% and the maximum amount banks could lend if there were demand assuming a 3% reserve requirement would be 97%.

    Banks presently have MORE THAN $3.5 TRILLION IN EXCESS RESERVES in their excess reserves accounts at the Federal Reserve, so the “reserves requirement tool is also TOTALLY IRRELEVANT.

    Essentially, the FEDERAL RESERVE HAS NO TOOLS WHATSOEVER IN THEIR “TOOL BOX” AT ALL ANYMORE.

  • GSOB

    The ‘base line’ shared by all here is the drive to be prepared.

    The servers were down recently.

    Prepping today transcends it’s traditional meaning.

    A desire to be prepared is what all of us bloggers here have in common.
    Man was made in Gods image.

    ….For He chose us in Him before the foundation of the world to be holy and blameless in His presence. In love He predestined us for adoption as His sons through Jesus Christ, according to the good pleasure of His will,…

    But as it has been written: “What no eye has seen, and no ear has heard, and has not entered into heart of man, what God has prepared for those loving Him.”

  • socalbeachdude
  • GSOB

    Therefore, since we have now been justified by His blood, how much more shall we be saved from wrath through Him!

  • David

    why does something tell me that everything the Democrats & the MSM threw at Donald Trump during his campaign was just an opening salvo for what is to come his way after he is inaugarated?

    • socalbeachdude

      They didn’t “throw” anyone of any significance at all.

  • DJohn1

    What I am seeing is it is likely that when stocks go too high, they then crash and the people betting on a falling market make a lot of money.
    Then the cycle starts all over again. The stocks begin to rise and these same people that bet on the crash become richer still as they bet on the rising market.
    The trick to all of this is timing. Get it wrong, you lose. Get it right, you win.
    Getting it right is complicated.
    So the next cycle will start with a crash but no one really knows when the crash will begin.
    It is way overdue.
    A lot of it depends on top business people making poor decisions that are then reflected in their bottom line.
    Ford sends its manufacturing to Mexico. A lot of Ford Business is Americans buying Ford because it is American. Ford is hoping it will not effect the bottom line when it moves. I think they are wrong. It will bankrupt the company.
    Then they have to plead they are too big to fail and hope the government will bail them out.
    Personally I am sick and tired of bailing anyone out. If they go under it is because of their own stupidity.
    The people with the most to lose are the rich. So I find it only just that they try to fix things before they lose everything. What I am more concerned with is the currency collapsing. That might happen under Trump’s leadership.
    The democrats have been in charge for the last 8 years. If it collapses it is their fault that it is happening.
    Even now they plan to overthrow the legitimate winner of the election. Somehow that impresses me as treason.
    The only thing Trump is likely to accomplish is putting people in charge with a good record of financial success in hopes of fixing what is really a very bad situation right now.
    If the jerks that do not honor their word in either party have their way, Trump will never see the Presidency anyway. I am hoping that they fail. Goldman Sachs is obviously backing Trump at this point in time.
    Might be time to give up trying to keep him from being President.

  • John Amway Ibo

    Let there be sudden unexpected stock market crashes
    next week .

    Let the Dow Jones fall down ,
    like the wall of Jericho in Joshua time .

    Let the SPX dive deep instantly .

    If they should crash ,
    No need to delay it ,
    Let them crash immediately ,
    The faster the better .

    May God expedite the crashes now

    Let there be sudden unexpected ” Black Monday

    • socalbeachdude

      We are very likely to see the equities (stock) markets continue to go up next week and through the end of the year despite the bond markets continuing to crash.

      • John Amway Ibo

        Trump should speak boldly now that the market is in Big Big Bubble .
        He mentioned that Bubble b

        Everyone has to remind Trump to speak about the Bubble again in the media.
        He has to say it again , so the Market can start falling now
        And
        Trump should tell the Fed to raise rates at least 0.50 .

        Trump should trigger the market sell off now
        Before Obama left office .

        Come on Trump , speak boldly about the Bubble again !
        Let the Crash happen now !

        • socalbeachdude

          The Federal Reserve makes fully independent decisions which are made by consensus of the 12 member FOMC which is comprised of the 7 members of the Federal Reserve Board of Governors and 5 of the 12 regional Federal Reserve bank presidents.

          The Federal Reserve FOMC is extremely TRANSPARENT and has clearly stated that the only 3 interest rates they set will be raised between 2 to 4 times this year in 2016. The schedule for the FOMC meetings at which such policy is decided are listed very clearly above. The next increase is likely to be as early as the July 26-27, 2016 meeting.

          The only 3 rates that the Federal Reserve is involved with setting are:

          1) Federal Discount Rate – currently 1.00%

          2) Federal Funds Rate (which it influences) – currently in the range of 0.25% to 0.50%

          3) Federal Reserve IOER (Interest On Excess Reserves) – currently 0.50%

          The IOER (Interest On Excess Reserves) interest rate does have an immediate beneficial impact for banks as it is the interest paid to banks on their excess reserves accounts inside the Federal Reserve and those accounts now have more than $2.5+ trillion sitting in them, and banks were very fortunate to see the interest they received on those DOUBLE on December 16, 2015 from 0.25% to 0.50% and are urging the Federal Reserve to get that increased again by at least 0.25% to 0.50% without any further dawdling or delay as banks need increased income to help profitability this year.

  • mtntrek3

    A day’s wages for a loaf of bread, and don’t damage the oil and wine. …….. Come now, you rich…. weep and howl for your miseries are coming upon you. ……… Look, the pay of your laborers who mowed your fields, which has been withheld by you, cries out against you; and the outcry of those who did the harvesting has reached the ears of the Lord. ……. Hyperinflation, more famine along with increasing greed/injustices are in the forecast for the near future according to the Bible. Faith in God first.

    • socalbeachdude

      We are in an increasingly DEFLATIONARY environment and that trend will continue to intensify.

      • mtntrek3

        For a while. One day the wads of phony money the Fed prints will be the demise of what’s left of our economy.

        • socalbeachdude

          The Federal Reserve does not print “phony money” at all let alone “wads” of it.

          MONEY is not a static thing but rather a DYNAMIC THING THAT CIRCULATES in every economy and cash itself is used in only a small amount of transactions in the US and global economies these days.

          The size of the global economy is now around $72 trillion a year and the the US economy is around $18 trillion a year.

          The total M1 money supply in the US is only $3 trillion and only $1.3 trillion of that is printed currency. This is confirmed by the Federal Reserve H.3 report:

          http://www.federalreserve.gov/releases/h3/current/

          M2 which includes M1 plus savings balances is only around $13. None of the QE funds increased the money supply at all but only served to increase the MONETARY BASE with 100% of those funds remaining inside the Federal Reserve.

          That LITTLE BIT OF MONEY supports the largest economy in the world which is now an $18 trillion a year economy.

          Not a penny of the debt in the US was run up by the Federal Reserve at all.

          No debt is “created out of thin air” at all and is in fact BORROWED DEPOSITS from customers at commercial retail banks in the US banking system plus the funds from the huge $25 trillion SHADOW BANKING SYSTEM in the US outside of the scope of the regulated banking system which includes funds at money market funds, hedge funds, pension funds, insurance companies, etc. which is not taken into account in the form figures of the US money supply.

          MOST MONEY TODAY IS ELECTRONIC MONEY which is the BEST AND MOST DYNAMIC AND FLUID FORM OF MONEY EVER DEVISED.

          • mtntrek3

            The debt isn’t created out of thin air…. of course not. The money to cover the debt is. I’ve heard our total debt is somewhere around 70-120 trillion (public and private). World debt is somewhere around 200 + trillion. How is any of this sustainable? Over-leveraging by several banks(housing mainly) is what caused the last crash/downturn. We’re headed back the same way again from what I see and understand (we’re over-extended/leveraged financially… i.e.-auto bubble). We never seem to learn lessons in some ways. All the extra money out here will will eventually lead to the collapse of the dollar(among other things) , along with other countries eventually dumping it as the go to currency. You speak of E money. Yes, that’s where all transactions are headed and will one day be one of the ways the antichrist will rule the world (the mark of the beast). ………. Hyper-inflation will one day take off and be one of the players in the collapse of the economy ( what’s left of it).

  • Ed

    We Are Always Being Set Up For A Crash

    • socalbeachdude

      By foolish MANIC SPECULATORS who have driven the stock markets up to preposterously unsupportable levels. The bond markets are already in a full fledged crash as yields (interest rates) soar and that has been the case in the bond markets since July 2016.

  • GSOB

    The Lord gave the Law to make things worse in order make things better.

    Isaiah 55:8
    Romans 5:7

  • GSOB

    Bless the Trinity
    You need only remember the number 3.

    3 squared equals 9,
    39 books in the OT.

    3 x 9 = 27 books in the NT.
    39 +27 = 66, books in the Bible!

    by the way…

    The number of man is 666

    Isaiah 53:6

    For the Messiah is the culmination of the Law as far as righteousness is concerned for everyone who believes.

  • GSOB

    But the Scripture pronounces all things confined by sin, so that by faith in Jesus Christ, the promise might be given to those who believe.

  • DB200

    “Hopefully Donald Trump’s business experience will translate well to his
    new position.” Yup, he knows when to declare bankruptcy and when to start a new venture. This will create upheaval amongst the bureaucrats in Washington.

  • DB200

    One other thing to remember: Donald Trump sold all his stock in June this year. During the election campaign he said the Wall Street was in a bubble. This means that he has no personal interest in propping the market up or intervening when a crash happens. He has dealt with bankruptcies, this means he his hardened enough to let banks fail when a crash happens. I still would like to know what he bought instead of shares. Could it be gold or silver?

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