Feds Stance on rate hikes equates to Nonsense and Masses are Turning Bullish on Stocks

Beware of all enterprises that require a new set of clothes.
Henry David Thoreau
Remember over a year ago when they first raised hikes-they huffed and puffed warning everyone that they would raise rates several times in 2016 and viola nothing happened until now. Now they are repeating the same thing all over again. To illustrate how bad this economy take into consideration that the Fed has raised rates only twice in the last decade; the economy was a lot stronger in 2006 and 2007 than it is today. Yellen’s statement below illustrates how the Fed is positioning itself so that it can pull another ‘oops we were wrong once again’ moment.
“All the (Federal Open Market Committee) participants recognize that there is considerable uncertainty about how economic policies may change and what effect they may have on the economy,” Yellen said
Has anything changed since the last hike; is the economy stronger? The only thing that is getting stronger is the illusion that this economy is on the mend. If the economy was improving, then a rising rate environment could be seen through a bullish lens. In this instance, this economic recovery is a joke; it is all an illusion that is funded by debt. If the supply of hot money is cut, the markets will tank. The real estate sector is not stable yet, and most people already can’t afford a house, so raising rates is a recipe for disaster. Our take is that the Fed has raised rates to give them more room to manoeuvre while making it appear that they are loath to embrace negative rates. The Fed has to play a delicate balancing game; the US dollar has to look attractive to the world, as that is what gives the Fed the power to create unlimited money. The US dollar is the World’s reserve currency. If it were not, then the US would have followed Greece’s path long ago. It is our ability to rob the world by creating money out of thin air at other nation’s expense that gives the US capacity to hold onto the top dog position precariously. It is precarious because it is just a matter of time before China displaces the US. On a purchasing power parity basis, China has already replaced the US as the World’s largest economy. One day the world will realise that the emperor is naked, fat, old and ugly as sin. However, as there is still some time before this comes into play, we are not going to address this issue.

This post was published at GoldSeek on Friday, 23 December 2016.