Federal Reserve

You can Figure out When the Fed Might Start Tapering

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Although you might think the markets simply respond any time Ben Bernanke sneezes, his "cold cycle" is not one of the indicators that will spell the slowing

and eventual cessation of the printing press at the Fed.

There actually is a mathematical formula used by the Federal Reserve to determine when to stop the presses.

I could give you the formula and it would look like this:

POP2 = [1-(%POP) m*m] *POP1.

Or, I could share the link to the Federal Reserve's Jobs Calculator in Atlanta.

This is the same calculator used by the Fed to determine when the jobs market and the unemployment rate will align properly. And when they do, it will signal to the Federal Reserve that it might be a good time to start tapering its $85 billion a month bond buying program.

This is what needs to happen: The economy will have to show new job growth.

The Fed is looking for the creation of 150,000 to 200,000 new jobs each month for 6 months. This is how we look now:

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Top 5 Choices for the Next Fed Chief Leave Much to Be Desired

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After President Barack Obama all but fired U.S. Federal Reserve Chairman Ben Bernanke in a recent television interview, everyone's been trying to figure out who the president will name as the next Fed chief next year.

Of course, Money Morning has long been critical of the Bernanke-led Fed, and in particular its easy money policies of recent years -- namely its zero interest rates and waves of quantitative easing (QE) that have added trillions to the Fed's balance sheet.

That debt, the asset bubbles it has created and the Fed's too-cozy relationship with the Big Banks, has prompted the experts at Money Morning to question whether the Federal Reserve should exist at all.

"I believe the Fed is outmoded and should be disbanded," said Money Morning Chief Investment Strategist Keith Fitz-Gerald, who recently wrote about whether the Fed is necessary. "It's a financial body that has outlived its usefulness and is merely causing us to lurch from crisis to crisis. Barring any change in the notion of what it's there to do, get rid of it."

Still, for the time being, we're stuck with the Federal Reserve. And the next Fed chief - whoever President Obama appoints in January -- will be setting monetary policy for at least the next four years.

One thing's for sure: Anyone who dislikes how Bernanke has run the central bank probably won't be happy with the next Fed chairman either.

As confounding as it seems now, it was not the liberal Democrat President Obama, but Republican President George W. Bush who first appointed Bernanke to head the Federal Reserve in 2006.

That Obama re-appointed Bernanke in 2010 made sense, as they share a similar Keynesian economic philosophy. That is, they both think the best way to help a weak economy is through massive government spending no matter how much debt piles up.

So while Bernanke may be on his way out the door, you can bet that whoever President Obama chooses as the next Fed chief will be just as much of a Keynesian as Bernanke has been - and maybe more so.

Heaven help us.

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The Fed Or the Fundamentals? What's Behind Stock Market Moves?

Bull toy Q

What's driving the stock market - the Fed or company fundamentals?

The answer, of course, depends whom you ask.

Has most or all of the growth in the market over the past few years been due to the Fed's massive QE easy money stimulus?

Or is it fundamentals like earnings per share and the price/earnings ratio?

We asked three experts to weigh in: Money Morning Chief Investment Strategist Keith Fitz-Gerald, Money Morning Capital Wave Strategist Shah Gilani and Brian Wesbury, the chief economist at First Trust Advisors.

Here's their take.

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Federal Reserve FOMC Meeting Schedule 2013-2014

As a service to Money Morning readers, we are providing the Federal Reserve FOMC meeting schedule.

The U.S. Federal Reserve's Federal Open Market Committee (FOMC) is a 12-member board within the Federal Reserve system that meets eight times a year to set policy.

In addition to the regularly scheduled meetings, the FOMC can call other meetings as needed. The minutes of a regularly scheduled FOMC meeting are released three weeks after the date of the policy decision.

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What's So "Open" About the Federal Open Market Committee?

Don't you just love how some things are named?

Like the Federal Reserve System, for instance. It's a central bank that was conceived in the private study of a private hunting lodge on a private island by a bunch of private bankers who didn't want to use the word "bank" in its name to fool taxpayers who thought it was a "system" to safeguard the public... from the very bankers who conceived it.

I don't know about you, but the feeling of safety I have is just overwhelming... NOT.

Then there's the Federal Open Market Committee (FOMC). That's a committee of top plotters that meets in private to discuss what's going on in "free" markets so they can figure out how to manipulate them.

The Open Market Committee, or the Old Boys Club (they have a woman on the committee, but she's just a token "dove" who plays "Follow the Beard"), meets today and Wednesday to check on how their manipulations have stopped unruly free markets from sinking the banks that secretly run the Fed (you know it's not a secret, but there are a whole lot of taxpayers who don't).

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8 Reasons Your Dollar Doesn't Go As Far As it Did 10 Years Ago

Currency USD black eye Patients' hospital expenses have nearly doubled in the past decade. So, too, has the price of college textbooks. And gas prices have more than doubled, while prices of fuel oil and other fuels for home use have climbed a whopping 145%.

It's been a tough decade on the wallet, thanks to inflation.

The figures are based on a Yahoo! Finance analysis of items and services tracked by the Bureau of Labor Statistics' Consumer Price Index.

And the CPI, of course, is based on government stats which, as Money Morning has reported, routinely understate inflation.

Here are 8 reasons why inflation is pinching you, no matter what the Fed says about low inflation:

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Bill Gross: Why QE Will End Before the Fed Wants It To

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Legendary bond guru Bill Gross doesn't think too highly of the Federal Reserve and Ben Bernanke's monetary policies.

"There comes a point when no matter how much blood is being pumped through the system as it is now, with zero-based policy rates and global quantitative easing programs, that the blood itself may become anemic, oxygen-starved, or even leukemic, with white blood cells destroying more productive red cell counterparts," Gross writes in his June investment outlook titled Wounded Heart.

Gross believes that QE, which he describes akin to a bad dose of chemotherapy, will end later this year but not because of a suddenly strengthening economy.

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Do We Really Need the Federal Reserve System?

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Abolishing the Federal Reserve System might seem like a drastic idea, but not when you get the full story...

You see, Congress created the U.S. Federal Reserve System to restore public confidence, provide the banking system a source of liquidity that would prevent its collapse and protect the public against inflation.

A century later, the banking system is so big its risks dwarf the Fed's liquidity capacity, and what cost a buck back then now will set you back $21.

That's why we asked Money Morning Chief Investment Strategist Keith Fitz-Gerald to explain how the Federal Reserve System actually helps a country's economy.

Most importantly, we wanted to know if the United States - or any country - even needs the Fed anymore.

Just listen to Fitz-Gerald's answer in the following interview.

7 Reasons Not to Trust the Bernanke Testimony to Congress

Lie. Pinocchio with a long nose.

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.

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The New Crisis Warning Just Issued to the Federal Reserve

Bubble

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.
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."

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