- Why Ben Bernanke's Market Manipulation is So Brilliant Nothing lasts forever. On Wednesday, Ben Bernanke threatened to take away the punch bowl. Shah Gilani explains the real story behind the move. Read more... Read More...
7 Reasons Not to Trust the Bernanke Testimony to Congress
As usual, the markets were hanging on every word of the Bernanke testimony to Congress today (Wednesday).
By now, everyone should know better.
In the years that U.S. Federal Reserve Chairman Ben Bernanke has been a member of the Fed - both as a member of the Board of Governors from 2002 to 2005, and in his two terms as chairman beginning in 2006 - he has been stupendously wrong time and time again.
Bernanke gave the markets what they wanted by hinting that his monetary easing policies won't change any time soon, pushing both the Dow Jones Industrial Average and the Standard & Poor's 500 Index up more than 0.5% in midday trading.Read More...
- What You Absolutely Need to Know About Money (Part 8) Shah Gilani explains how the "extend and pretend" game became an institutionalized national treasure... Read more... Read More...
- What You Absolutely Need to Know About Money (Part 7) By the start of the 1960s, banking in America was in a state of flux. And as Shah Gilani explains it got ugly fast. Read more... Read More...
The New Crisis Warning Just Issued to the Federal Reserve
Before the housing market crash, economists warned that record low-interest and mortgage rates were fueling a housing bubble.
Unfortunately, those fears were both overlooked and underestimated.
Now, an advisory council to the U.S. Federal Reserve is warning the Fed that its record $85 billon-a-month stimulus and ultra-low interest rates are fueling new bubbles in student loans and farmland.
"Recent growth in student-loan debt, to nearly $1 trillion, now exceeds credit-card outstandings and has parallels to the housing crisis," according to minutes of the council's Feb. 8 meeting.Read More...
In addition, "agricultural land prices are veering further from what makes sense," the council said. "Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates."
- What You Absolutely Need to Know About Money (Part 6) How did stodgy traditional banking morph into “casino banking” on a global scale? Shah Gilani explains the crooked path to where we are today… Read more... Read More...
5 Things the Federal Reserve Hopes You'll Never Find Out
Most Americans assume the U.S. Federal Reserve is a powerful government institution that seeks only to safeguard the dollar, boost the economy and drive employment higher.
That's what the Fed wants you to think.
The illusion of the Fed as a stabilizing, positive government entity has more or less existed since its creation under dubious circumstances in 1913.
"It not only avoided the word bank, it cleverly implied federal, or government, control over the establishment of a pool of reserves that would backstop the new banking 'system,'" said Money Morning Capital Wave Strategist Shah Gilani.Read More...
FOMC Meeting Message: Don't Blame Us for Sluggish Economy
The Federal Open Market Committee (FOMC) meeting concluded today (Wednesday) with one clear message to Washington: Thanks for the lousy economy.
Central bank members cited only "moderate" expansion in economic activity and a slow improvement in the stubbornly high unemployment level.
Acknowledging the economy is moving at an unhurried pace, the FOMC members pointed an accusing finger at Capitol Hill.
"Fiscal policy is restraining economic growth," the statement read. That remark was in direct reference to a deadlocked Congress, sequestration and its far-reaching impact.
A spate of fresh economic reports back that sentiment:Read More...
David Stockman: Thanks to the Fed, We're in "Monetary Fantasyland"
David Stockman, who served as budget director under President Ronald Reagan, is taking aim at a favorite target: the U.S. Federal Reserve.
Stockman minced no words in a Monday interview on FOX Business' "Varney & Co."
Speaking of the Fed, he told host Stuart Varney, "They have violated every rule of sound money that's ever existed. They've got the money market rates at zero. They have managed and rigged the entire yield curve so nothing is real out there. It's all trading against the Fed."
He said speculators will continue to invest as long as the Fed can hold the bond price up and the yield down "and keep shoveling out free overnight money."
"We're in a monetary fantasyland," Stockman said.Read More...
- Why Crime Pays for "Too-Big-To-Fail" Banks U.S. banks will pay more than $100 billion in fines due to acts that caused the financial crisis. Think that bothers them? Shah Gilani explains why it's just business as usual… Read More...
Why We Can't Avoid Ben Bernanke's "Monetary Cliff"
When it comes to the Federal Reserve, an accurate “reading of the tea leaves” means paying attention to all of the fine print. And while the markets cheered last week's FOMC meeting with yet another rally, a deeper look at Ben Bernanke's press conference left me with a slightly different taste in my mouth.
If you sift through the "Fedspeak," it becomes obvious that the Fed is now lining up a “monetary cliff" that’s bigger than the fiscal one we spent the last half of 2012 worrying about.
Here’s what the Fed has in store for us now... Read More...
- What You Absolutely Need to Know About Money (Part 5) Ever wonder where the Federal Reserve came from? Shah Gilani explains the little-known history behind the “The Creature from Jekyll Island." Take a look. Read More...
Do We Really Need the Federal Reserve?
Last week I spent two days speaking to senior government officials and business leaders in Bermuda, which is one of the world’s leading international insurance and reinsurance hubs. The men and women in the room are responsible for hundreds of millions in assets worldwide.
As I was finishing up, I received one of the most provocative questions I’ve gotten in a long time:
"Does any nation really need a 'Fed'?"
Here is my unequivocal answer... Read More...
- What You Absolutely Need to Know About Money (Part 4) Ever wonder why they call the Federal Reserve “The Creature From Jekyll Island?" Shah Gilani explains… Read More...
There's More Than One Way for the Fed to End QE
The market has been looking ahead to the inevitable end of the U.S. Federal Reserve's quantitative easing (QE) program with considerable apprehension.
Most market observers expect the end of the Fed's QE asset-purchasing program to immediately result in a sharp sell-off in bonds and higher interest rates.
This is expected to hit the mortgage-backed securities (MBS) market, where the Fed has been very active, quite hard.
As part of a policy to communicate more openly with the markets, Chairman Ben Bernanke and the Fed have been regularly launching QE exit strategy trial balloons into the market to see how quickly they get shot down.
The latest exit strategy that has been gaining traction is the idea of "tapering" QE asset purchases so that there isn't a sudden halt to supply of money flowing from the Fed into the Treasury and MBS markets. The markets seem to be pretty sanguine about the tapering idea, although there has been no specific suggestion on timing.
Instead, the markets have been concentrating on how the Fed will get rid of all of the assets it has accumulated on its balance sheet during the QE program.Read More...