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America's Economy Is Dead | Fed will suck out remaining wealth out for largest American banks

OWoN: Just what heavily indebted Americans do not need is unfolding fast . The reality is it will be the last opportunity to suck out what wealth is left for the banks at the expense of the gullible public, who will then find themselves more and more unable to afford the 'good life'. Couple that with the steep shock coming over the California drought in December and a brutal winter beckons.

The Fed Has A Big Surprise Waiting For You

Zero Hedge
By Tyler Durden
13 September 2014

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

The topic of potential interest rate hikes by central banks is no longer ever far from any serious mind interested in finance. Still, the consensus remains that it will take a while longer, it will take place in a very gradual fashion, and it will all be telegraphed through forward guidance to anyone who feels they have a need or a right to know. Sounds like complacency, doesn’t it?

Now, it seems obvious that the Bank of Japan and the ECB are not about to hike rates tomorrow morning. In Europe, dozens of national politicians wouldn’t accept it, and in Japan, it would mean an early end to many things including Shinzo Abe.

But the Bank of England and the Fed are another story. Though if the Yes side wins in Scotland next week, the narrative may change a lot of Mark Carney and the City. That leaves the Fed. And it’s important to realize and remember that, certainly after Greenspan entered the scene, speaking in tongues, the Fed has become a piece of theater. The Fed is about perception. About trying to make people believe something, and make them act a certain way that they choose for them.

That’s why after the Oracle left they pushed first a bearded gnome and then a grandma forward as the public face. The kind of people nobody would perceive as a threat. Putting a guy who looks like second hand car salesman in charge of the Fed wouldn’t work.

Not when a big financial crisis looms, and then continues on for a decade and counting. That makes keeping up appearances the no. 1 priority. That’s when you want a grandma, or you’d lose your credibility real fast. You need grandma for your theater, for the next play you’re going to stage.

That market volatility today is at record lows is part of a big play, or a big scene in a play if you will. And the goal is not to make markets look good, as many people think. Making markets look good, making the economy look good, is just an intermediate step designed to lure everyone in.

You make people believe you got their back. All the big investors. Because they make tons of money, while they thought maybe the crisis could have really hurt them. Even the public at large feels you got their back. Because they don’t understand what the sleight of hand is.

The big investors understand, but you got them believing you will play that hand forever, or let them know well ahead of time when you intend to fold. The big investors think you will skim the public, but not them. They think you’re all on the same side. And the public thinks you’re healing the economy, and saving their jobs and homes and pensions.

When rate hikes are discussed, like I did two weeks ago in This Is Why The Fed Will Raise Interest Rates, most people have similar initial reactions. ‘They can’t do that, it would kill the economy, or at least the recovery’.

But the truth is, there is no recovery. It’s just a scene in a play. And the economy is completely shot, it only appears to be left standing because the Fed poured oodles of money into it. Or rather, into a part of the economy that it can control, that it can get the money out of again easily: Wall Street banks. And Wall Street equals the Fed.

Charles Hugh Smith, in What If the Easy Money Is Now on the Bear Side?, notices that there are hardly any bears left in the market, and that shorts are disappearing as a source of revenue for bulls. Interesting, but he doesn’t yet connect all the dots. CHS thinks big money managers can make ‘the play’, that they can fool the rest of the market and unleash a tsunami that will bury the bulls.

I don’t think so. I think what goes on is that the Wall Street banks, many times bigger than the biggest money managers, see their revenues plunge. As they knew they would, because free money and ultra low rates are not some infinite source of income, since other market participants adapt their tactics to those things as well.

Which is what Charles Hugh Smith points to, but doesn’t fully exploit. And it’s not as Wolf Richter presumes either:

After years of using its scorched-earth monetary policies to engineer the greatest wealth transfer of all times, the Fed seems to be fretting about getting blamed for yet another implosion of the very asset bubbles these policies have purposefully created.

The Fed doesn’t fret. The Fed has known for years that the US economy is dead on arrival. They’ve spent trillions of dollars backed, in the end, by American taxpayers, knowing full well that it would have no effect other than to fool people into believing something else than what reality says loud and clear.

Philip Van Doorn, who I quoted two weeks ago, got quite a bit closer in Big US Banks Prepare To Make Even More Money

For most banks, the extended period of low interest rates has become quite a drag on earnings. Net interest margins – the spread between the average yield on loans and investments and the average cost for deposits and borrowings – are still being squeezed, since banks realized the bulk of the benefit of very low interest rates years ago …

That is the essence, and that is why grandma will announce higher rates, against a backdrop of 4% GDP growth numbers and a plethora of other ‘great’ economic data and military chest thumping abroad.

The US economy is dead. The Fed has known this for a long time, but pumped it up to where it is now to draw in all the greater fools, the so-called big investors who have made money like honey from QE and ZIRP. They are the greater fools. The American real economy ceased being a consideration long ago.

We’re in for big surprises, and they won’t be pretty, they’ll be pretty nasty. There are far too many people who think of themselves as smart who don’t see the difference between a theater play and a reality show. And I don’t mean CHS or Wolf, they’re much more clever than your average investment advisor.

The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it.



  1. They think they can go underground with all those trillions and then re-emerge when all of the chaos is over...richer than before because they believe that the system that they rigged will be there for them to revive and then rig again. They are creating the living hell that they have planned from the beginning...and they will be left here to live in that hell for eternity...while we leave them to their own devices...sure we will leave but to a new planet that has been set aside for our Creators children..."we go gladly!" Because being in this abyss, as they have lied to us; has been the hell that they have taught us to dread in their books that they have written about as a place to go when one dies...NO...we are there now, and will leave when our Creator opens the gate.

    Well, I don't want to be the bringer of bad news for them, but it's over and the fat lady is singing. With pensions funds being raided, personal bank accounts not yielding any interest, job market crunch, stock market manipulation, extortion, robbery, influx of illegal aliens, hyperinflation, monetary contraction, welfare, Social Security diminished healthcare, chemtrails, radiation poisoning, smart meters, GMO, murder, pedophilia, satanic rituals, clones, etc bank loans to public, maybe higher interest rates where housing and other needs will be outside of the public's reach,'s all manufactured and all manipulated to corner the wealth of the world..especially where central banks are located.

    Now with the targeting of Syria, Iran through Iraq, Russia through Ukraine, Africa through Lybia, get the picture; they have their eyes focused on that which will destroy them completely.

    Where we are going we won't need money, and we will be without them to live the "high" life that they think they will be living. (Stay focused, don't get sidelined by their lies and deceptions).

    Hell bent, they are!
    "The Lie NASA Told" The Imminent Demise of the NWO

  2. Correct and a very tricky year ahead. If they demonetize the Dinar, a lot of wake up calls will come down.


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