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Krugman To Savers: Drop Dead—–I’m Bullying The Fed Into Another Year Of ZIRP

by Contributor • December 15, 2014
Alaa Shahine at Bloomberg News

Paul Krugman, challenging the consensus of economists and the Federal Reserve’s forecasts, said policy makers are unlikely to raise interest rates in 2015 as they struggle to spur inflation amid sluggish global economic growth.

“When push comes to shove they’re going to look and say: ‘It’s a pretty weak world economy out there, we don’t see any inflation, and the risk if we raise rates and it turns out we were mistaken is just so huge’,” the 2008 Nobel laureate said in Dubai. “It’s certainly a real possibility that they’ll go ahead and do it, but probably not, and for what it’s worth I and others are trying to bully them into not doing it.”

Krugman, author of “End This Depression Now!”, has criticized the U.S. government and central bank for not doing more to revive the economy after the financial crisis, and his position now pits him against most Fed officials.

Krugman said financial markets are signaling that policy makers will delay raising borrowing costs. His remarks build on arguments he’s made in his New York Times column. On Dec. 10 he wrote that the Fed risked “letting itself being bullied into doing the wrong thing” by raising interest rates prematurely.

Yields on 10-year U.S. Treasuries (USGG10YR) are at the lowest level since mid-2013, and inflation expectations have dropped with the slump in oil prices. The Federal Open Market Committee, which next meets to set rates on Dec. 16-17, will take energy costs into account in its assessment of inflation and the economy.

http://davidstockmanscontracorner.com/krugman-to-savers-drop-dead-im-bullying-the-fed-into-another-year-of-zirp/

The more they stay the same. When a seemingly exogenous event occurs, or something like COMEX caps, I say to myself, “oh, this will shake things up. But no, the same old games persist.

Oil Price Plunge Trigger for Next Global Crisis-Harry Dent

By Greg Hunter On December 14, 2014

By Greg Hunter’s USAWatchdog.com (Early Sunday Release)

Economist Harry Dent says falling oil prices will be a trigger for another economic calamity. Dent explains, “Normally, oil prices falling in a good economy like the 80’s and 90’s, where we have falling inflation and booming productivity and good demographic trends, this would be a good thing. It is a good thing for consumers and businesses, but it is a bad thing for financial markets and our whole debt structure. We have the greatest debt bubble in history. It’s the greatest asset bubble in history, including stocks, commodities, real estate and everything. The last time this bubble burst was in 2008 because of the subprime crises. A small tranche of loans went bad, and it triggered a whole debt crisis . . . that’s what I see. I see a fracking bubble here. What’s happened is because of demographic trends, which we predicted years ago, trends in developed countries are set to slow. It will be aging baby boomers spending less money, very simple to see. In addition to that, you get this fracking revolution with all the low cost money from the Fed stimulus and zero interest rates, and what you have now is we created two million extra barrels of oil a day just out of Texas and North Dakota.”

Dent, who has a new book out called “The Demographic Cliff,” goes on to say, “Now, the only way to counter this is if OPEC and Saudi Arabia said we’re going to cut production. Well, Saudi Arabia said no, we’re not going to do that because we don’t like these frackers. They are competing with us long term, and they are seeing this as an opportunity to squeeze out their competition. The more the price of oil falls, the more of these frackers and other marginal countries like Venezuela go out of business when they can’t compete. It’s a good long term move for the Saudis, but I think they are miscalculating that they could help trigger the next global crisis. We have more debt than we had in 2008. The demographics only get worse in more and more countries. . . . So, I think this is the trigger for the global crisis. There’s $500 billion in leveraged loans with the fracking industry. I think this thing is going to blow up.”

Who is to blame for the shaky economy we are in? Look no further than the government, and Dent contends, “What’s happened is the government has created a bubble with all this low short- term interest rates and all this stimulus, and their only defense is to keep this bubble going. . . . We got the greatest bubble in debt in modern history by far. We have the greatest asset bubble across the world in real estate, commodities, stocks; everything is in a bubble. When these bubbles burst, the whole system comes down. They are doing everything to prevent it, but everything they do to prevent it from blowing up is making it worse. This is a game they cannot win–mark my words, cannot win, and we are going to see a major crisis . . . especially over the next two years. These falling oil prices trigger these fracking firms. They have 20% of the junk bond high-yield debt in the United States, and that’s all it takes to trigger another financial crisis, just like the subprime crisis back in 2008. All it takes is a trigger and the whole debt thing comes down.”

On the stocks, look out below. Dent says, “The next crash is going to take us to a new low around 5,500 on the Dow. . . . That’s going to be a 65% to 75% crash.”

On the U.S. dollar, Dent says, “I have debated all these experts, including Peter Schiff, and they are just wrong. They are right about an economic crisis, and they are right about the unsustainability of this bubble and debt. They are dead wrong about what happens when debt deleverages. History proves this 100% of the time. When a debt bubble deleverages . . . money is destroyed. When there is less money chasing the same goods, you get deflation–not inflation.”

On gold, Dent says, “We’ve been predicting gold will go down for many years now, and the next target is $700 per ounce. I think we will see that in the next two years at a minimum.”

Join Greg Hunter as he interviews financial guru and best-selling author Harry Dent.

One foot on a banana peel …the other in a grave!

Never before have I seen so many pieces of information to be put together in the span of just one week. This past week we were bombarded with connectable dot after connectable dot, nearly each and every one of them on their own would have caused a panic 30 years ago. I say “30 years ago” because this was before the 1987 crash, this was before anything and everything, nailed down or not …was levered many times over in what eventually became an inflation orgy. 30 years ago, black was not white, wrong was not right and “debt” was still in its infancy of being money. Fast forward to present day and we now have a monetary system with one foot on a banana peel and the other in a grave!

Let me list what I saw this past week as some very ugly dots to be connected, by no means is this list complete but I think you’ll get the point by the time you are done reading. Early in the week, China announced changes to their collateral rules for the credit quality necessary for corporate bonds to be accepted as collateral (now only AAA and AA bonds can now be used). This caused a 5.6% drop the following day in their stock market which did ripple around the world to other stock markets. This is significant because without a doubt it was an act of tightening credit and will directly decrease the liquidity available for the Chinese exchange. This is not a one day event as CNBC would lead you to believe.

Next, oil has outright crashed in price and finished the week under the recently unthinkable number of $60… and the repercussions have just started to be felt. The 130 year old firm Phibro announced they will be closing up shop while oil exporting currencies (including the ruble) were destroyed. There had been discussion over the last several weeks regarding the future of the shale industry, this discussion is now ended in that no one can say “this will blow over” any longer. $100’s of billions of extended credit is now impaired and this credit market has crashed to yields now over 10%. The crash in oil all by itself is enough to ruin the financial system but by no means was alone this past week.

The next dot to connect was the spending package passed by Congress. As Zerohedge reportedPresenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For , the U.S. public was sold down the river. Just a month after the Republicans won both houses of Congress, they have now allowed the banks to stuff their derivatives portfolios under the FDIC umbrella. Over $300 trillion worth! Prior to this, the FDIC insured over $6 trillion worth of bank deposits with a whopping $54 billion reserve… How could any “true American” have voted for this? Even a calculator with no batteries can understand this will unequivocally bankrupt the country, yet this law is passed little over one month after an election by the American public put trust in the Republicans as their “last hope”? Was this passed by mistake or do you think they knew what they were doing? Was Obamacare passed by mistake? Comically, the architect of Obamacare testified to Congress after calling the American public stupid …a traitor testifying to traitors, they should all be strung up for TREASON! Whether you know it or not, Congress just called the American public stupid also by passing this traitorous law.

I asked in the above paragraph if you thought they “knew what they were doing”? The Treasury Dept. this past week put out to a bid request to supply “survival packs” for their 3,800 bank examiners. For what possible reason could bank examiners need a survival “fanny pack”? Does the Treasury know something they are not telling us? I would also like to ask why the Chicago Fed is “bricking up” their ground floor windows? Are they expecting something? Rioting maybe?

If all of the above wasn’t enough for you, don’t worry, there is more …and even bigger news! Early in the week, Russia announced they are moving up the testing for their newly proposed currency clearing system. It had been planned for a May, 2015 testing phase followed by going live, this is now moved up to Dec. 15th, yes, this Monday! Why? Why are they moving up the start date? Presumably they also know something or see the immediate need to be able to clear funds for trade outside of SWIFT. If you think this one through, Russia will have the ability to facilitate ANY trade between ANY two or more parties while excluding the use of dollars …and the prying eyes of America! This will mean whatever sanctions on Russia will be lessened, it also means SWIFT is no longer the only game in town. Maybe the BRICS et al will no longer care, or need to use SWIFT? No, not “maybe”, definitely.

So far I haven’t even mentioned gold but don’t worry, we got two huge pieces of news. In case you had not noticed, gold/silver were the best performing asset class for a truly dismal financial week. First, Austria is now considering repatriating all of her gold. I mentioned last Monday in “The Mother of all Bank Runs” that Austria could be next in line, and if so, the stage would then be set for a “northern euro” leaving the southern basket cases to fend for themselves. I plan to write about this tomorrow so I will leave this for a separate piece. While the ramifications are very wide, the “intent” seems to be very narrow, I will explain this tomorrow.

The other big gold news and one that can be categorized in the “do you think they know something” category came from CME/COMEX. They will begin with “collars” http://www.cmegroup.com/tools-information/lookups/advisories/ser/files/SER-7258.pdf for nine different metals, including silver and gold. The collars will begin to kick in and trading will cease if gold moves $100 or silver $3 with ultimate daily collars of $400 and $12. I won’t bore you with the specifics, more importantly you must wonder “why?” and “why now?”. How often have we seen $100 moves in gold, much less $400? I believe it has been only one time that gold moved over $100 in a day. We have seen $3 moves (almost all down) in silver but these were almost exclusively during evening trade sessions and almost always on Sunday nights. Does CME really see $12 moves in silver coming? Again, “are they expecting something?” we don’t know about …or maybe they are afraid silver could go to zero in less than two days trading and don’t want to see that happen (I believe if it was possible, this would have already been facilitated)? Or, more likely, are they expecting huge volatility and upside moves they would like to retard and slow down? Add this one to the category “they know something and are readying for it”!

So there you have it, we had a disastrous week for financial assets and huge news, most of which points to sides being chosen and “official readying” for upcoming events. I might add that a 6th Hindenburg omen was spotted on Thursday which most probably bodes very poorly for the stock market(s). With all of these events lining up, one might think the U.S. public is in a somber mood. But no, consumer sentiment numbers reported Friday saw a huge upswing …either the public is not very bright or the reported numbers are bogus …or both?

Let me finish by saying this, the market action is clearly showing we have entered a credit contraction. Any credit contraction is a death sentence to a system which is overleveraged and already standing on a banana peel. The markets are trying to say this at the same time “official” moves are portraying something very big is afoot. Central banks are now collectively “running the bank”. If one had no prior knowledge of anything financial prior to this week, what was learned this week alone is enough to know something is very wrong, something very bad is going to happen and it is going to happen very soon. I would suggest if your plans are not already finalized, do not wait until the new year to do so! Regards, Bill Holter, Miles Franklin Associate writer

Could be some action in the Ukraine very soon. What’s Putin have to lose? (excepting nuclear war of course) Quite a poker game!

regarding Russia and the West……it’s from May 2014.

The big barrier called Putin
… and the suspension of the global economic oligarchy’s plans for Russia

failedevolution.blogspot.gr/2014/05/the-big-barrier-called-putin.html

Actionable Advice for Tuesday
$ GDXJ – Junior Gold Miner ETF (Last:22.06)

December 15, 2014 9:13 p.m. ESTTax selling in this vehicle could produce a climactic bottom in the weeks ahead, but the range of possible targeted lows is quite wide, depending on how fierce the washout is. There are at least two logical hidden supports where we might look for an important turn: at 20.83 (daily chart, A=54.56 on 8/24/13); or at 17.30 (see inset). Bottom-fishing the higher Hidden Pivot poses relatively little risk, since we can use a very tight stop-loss, and because a bounce from that price that is at least tradable, if not sustainable, looks quite likely.
I’m going to back up the truck myself — buying at either number or both, tightly stopped — and would do so not as a long-term play, but as a high-odds trade. Please note that although the 20.83 pivot has the potential to produce an important low, I’ve selected a chart that shows the alternative target at 17.30 so that you can judge for yourself how compelling it looks. One further note: Because yesterday’s plunge exceeded the previous bear-market low at 22.34 recorded on 11/5, it should have stopped out enough bulls to produce a spirited rally over the next day or two. Under the circumstances, if such a rally fails to materialize, it would portend yet another wave of selling ahead.

re Ruble rate hike

I see both Citi and JPM have said “not ‘enuf” within minutes and the Ruble is down 8 % since.

Which tells me for certain the Scum have got their Algo’s onto the Ruble and that they have gone mad.

As Vlad has been in the forefront of dumping the dollar, this looks like payback time for that as well as his other sins, like buying Gold…….. It’s one thing beating up bugs like us, or 3rd world countries, but a proud nation, with multiple chips on their shoulders with huge armed forces and Nukes in the 10’s of thousands, run by an ex KGB enforcer, is another game altogether……I agree this will not end well.

Assuming Russia has lots of Gold, priced in US Dopey/Dollars, their Gold hoards are going thru the roof. In the past 60 days Russian gold owners are up 56%. (US down 4%) They can get 56% more dollars for the gold. Then convert it back to Rubles if they want.

In the past 6 mos, their gold is up 78%. (American gold owners are down 6%) But we can buy a lot more Rubles if we want. Or a lot more Russian exports. Europe Germany etc what ever they buy from Russia, Nat gas etc will get a lot cheaper.

None of this is a coincidence what is happening. TPTB or central planners are doing a “juggling act” trying to help the weak countries. I would not be surprised if Putin is cooperating, to help Europe with cheaper energy. A pay raise for Europeans.

Remember when Obama was over heard telling a Putin Rep “I can be more cooperative after I get elected”? Or something like that? They are all friends, and sometimes make believe they are rivals.

http://www.kitco.com/gold_currency/index.html?currency=rub&timePeriod=6m&flag=gold&otherChart=no

http://youtu.be/xzORu1dqEE0

Thought Putie might stand up to the NWO crowd but it looks like he’s decided to play the CB’s currency game, a game in which he loses big time. He might as well raise rate to 30%. He’s likely to get to 30-50% as it is.

Really hoped the boy would back the Ruble with gold. Not to be.

Skinheads chased us out of the Nottingham Bridge Pub (Trent Bridge Inn)   …….  Man those were the days ……

Winedoc

https://www.youtube.com/watch?v=M02572lQTJg

Winedoc

https://www.youtube.com/watch?v=Md7lfg181HI

Winedoc

Would the REAL  price of Oil please STAND UP !!

Bought more Silver car parts today.

Might try my luck at a nice buyback on  a fully loaded pick up truck …….  if oil goes any lower the Fort Mac Hot Money Boys will be coming home and   we’ll  see what gnashing of teeth feels like……

The markets can crush in your skull ……..  favourite quote from “Soee”

Best to my true friends here

Winedoc

I tried to hack your account with no success. 🙂

Putin is a NWO hack, unfortunately for us bugs there are no “real money” players left in the world. The horror, the banksters have won yet again.

Say, ya didn’t hack into my NSA account didya?

Russia Shocks With Emergency Rate Hike, Boosts Interest Rate From 10.5% To 17%

just go one way or the other with some decisiveness please. Bomb us or stop toying please cabal bankers

The Ruble was down another 13% today. You just have to wonder how long Vlad is going to let his currency go into the toilet before he takes action. He’s either doing the rope-a-dope with Wall Street and ready to start swinging or worse he’s just another NWO tool job. Neither would surprise me.

One thing for sure, there’s some seriously nasty stuff on the horizon, whether it is economic collapse or war.

These pm shares are an absolute disaster. Someone will get rich buying down here but I doubt it will be anyone at Oasis.

which seems to be if you take down the SM, we will crash everything….especially PM’s.

The message is…. you can only invest in the SM or Treasuries, anything else we will destroy.

There is no such thing as a moderate Muslim ,whats so moderate about denial of Freedom from Religion or Freedom of Religion ? Where is that moderation.If my religion advocates and tolerates any denial of my Freedom to Choose  I’ll find another Religion .! I am Sovereign, I choose my religion it dosent choose me,coarse me or intimidate me .It can persuade me or reason with me ,but it better not force me !

They all start off with Great TEACHERS  like Jesus,Mohammed,Moses,and the Rest ,but when they are gone the Power Hungry Social-paths muscle there way to Power just like they do in Politics….What Great Religious Teachers did whats being done  today in Gods Name ?  Everybody wants to be the Next Caesar they even adopt his Name Caesar Augustus  Caesar this and Caesar that and Caesar wannabes .How many Mohammeds are there ?

None measure up to the First ,there are no Jesus or Moses that measure up to the First Teacher  .Everyone of the Followers has a slight twist to interpretation that suits his needs and a little here and a little there and after a while there is no resemblance to the original teachings.

None of the original Teachers wrote everything down ,sometimes it was hundreds of years later !

If you talk to God that’s Prayer ,If God talks to you that’s a sign you need mental help !

Religion can be the Opium of the Mind and some are addicted !  Some people have the addition Gene  .Would you follow them ? an addict ?

The addicts of cigarettes ,alcohol,drugs are captive  and not free to choose why put an addict in charge of your life ? They will make you an addict too !

God gave you a free will for a reason ! God gave you the Freedom to Choose !

Just like the woman that asked Franklin after the Constitutional Convention “Sir what kind of Government do we have?”

He replied “a REPUBLIC if you can keep it”   BOY ! Was he ever right !
!