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January 25, 2016

Normalize U.S. Interest Rate = Hyperinflation

Sprott Money News

Janet Yellen and the Federal Reserve think that now is finally the time to normalize U.S. interest rates. As was already explained in a recent commentary , this could only be considered a financial “torpedo” deliberately aimed at a crippled economy.
The U.S. retail sector has already been mired in a Greater Depression for several years . Fifty million permanently unemployed Americans have simply given up hope of ever finding work and have left the workforce. Tens of millions more search desperately for jobs that actually pay a livable wage – jobs that don’t exist. The U.S. manufacturing sector had already started to collapse just before Yellen launched her first torpedo.
This has already been discussed. However, Yellen and the Fed-heads are now on a public relations blitz as this corrupt institution endeavours to explain how/why, after seven years of broken promises , it has finally begun raising rates now. And the Fed has a lot of “explaining” to do.
The Federal Reserve is a criminal accomplice of Wall Street and the Big Bank crime syndicate . The central “business” of this crime syndicate is the eight-year bubble-and-crash cycles that it orchestrates in our markets. The cycles are approximately eight years long in order to be synchronized with the U.S. election cycle.
The reason why this timing is necessary is because the political stooges of this Two-Party Dictatorship are also employees of the crime syndicate. The (apparently) rancorous mud slinging that takes place continuously between the two parties is nothing but political theatre for the slack-jawed masses in order to create the illusion that the United States still has a “democracy.”
The crashes are staged, conveniently, just as one party is leaving office and can thus be fingered as the scapegoat. The other half of the dictatorship then (supposedly) rides to the rescue of the economy with the feeble-minded electorate already forgetting that the incoming party is the same cast of buffoons whom they had blamed for the previous crash before that.
The last bubble-and-crash cycle ended with the Crash of ’08. Thus, for the last seven years, the Federal Reserve’s (real) masters have demanded “easy money.” The Fed has obliged with the most extreme/insane monetary fraud in the history of human commerce.

Stock & ETF Trading Signals

The chart above is the last legitimate representation of the U.S. monetary base. Soon after this, the Federal Reserve began stretching out the scale of its chart, even falsifying data, in order to distort the unequivocal mathematical/economic implications of this extreme hyperbolic curve.
It represents the most massive force-feeding of capital into markets ever seen. Along with the fraud of “0% interest” rates and the fraud of “fractional-reserve banking,” it provided the Big Bank crime syndicate with literally infinite quantities of funny-money to use in pumping up these markets.
The result: the Twin Bubbles – U.S. stocks and bonds. Something which is supposed to be mathematically impossible (in legitimate markets), since the stock market and bond market are counter-cyclical. Both markets are simultaneously pumped up to the largest bubbles in history with the Federal Reserve as the primary facilitator. It is with this context in mind that we can view Janet Yellen’s “explanation”:
For the second time in as many days, Federal Reserve Chair Janet Yellen highlighted the risk to the current U.S. recovery if the normalization of interest rates are [sic] delayed.
Yellen’s opening statement in her testimony before the U.S. Congress Joint Economic Committee was similar to her comments made Wednesday at the Economic Club of Washington, in Washington, D.C.
She reiterate [sic] that a delay in a rate hike could lead to abrupt tightening, that could push the economy into a recession. However, she also highlighted a second risk: “Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability,” she said.
Perhaps never in the English language has so much Machiavellian perversity been squeezed into so few sentences.
…risk to the current U.S. recovery
There never was a “U.S. recovery,” and as already noted, this crippled economy is now already descending into a full collapse.
…if the normalization of interest rates is delayed
The Federal Reserve, and all the rest of the West’s corrupt central banks, promised to “normalize interest rates” immediately at the beginning of 2009. Indeed, Yellen could have simply cut-and-pasted her “new” December 2015 testimony out of any December 2008 script.
“Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability,” she said.
Only an experienced liar could utter such remarks without laughing out loud. We have already seen the ultimate in “excessive risk-taking” in U.S. markets:
1) The impossible twin bubbles, U.S. stocks and bonds;
2) Margin debt in U.S. markets soaring more than 25% higher than any previous bubble; and
3) “Long-term investor” Warren Buffett pulling more than $60 billion out of U.S. markets as this 85-year-old waits for the bubbles to burst (and his own feeding-frenzy to begin).
As for Yellen’s fake warning that the central bankers might “undermine financial stability,” these same central banks just created new banking rules which eliminate any vestige of financial stability. They have transformed our previously ultra-leveraged “fractional-reserve” system into a no-reserve system of infinite fraud .
Meanwhile, the banking crime syndicate simultaneously ordered its stooges in our governments to create “bail-in rules” in all of our nations. Thus when the Fed’s torpedoes detonate these bubbles and create massive paper losses – in a system with no reserves – the bankers can, and will, steal every paper asset in sight, right out of our accounts .
This is the scenario that exists, the scenario that the Federal Reserve and the Big Bank crime syndicate created, as the Fed now pledges to (finally) “normalize interest rates.” What will happen as the Federal Reserve launches a series of these mini monetary torpedoes at the U.S. economy in the form of ¼% rate increases?
First, we require a definition of terms. “Normal” interest rates imply something in the vicinity of at least 3%, and in the case of the U.S., significantly more than that, since lenders are supposed to be compensated for the risk of lending to history’s most indebted nation – one that is already hopelessly insolvent .
If the Federal Reserve ever actually reached the 3% level, this would represent an approximate quadrupling of interest payments (as the “yield curve” spreads out) on the U.S.’s gargantuan, $19 trillion national debt with a crippled economy already plunging into an even more extreme depression. With already the largest budget deficits on the planet, this would leave the U.S. government with only one option to delay immediate bankruptcy: print, print, print.
Recall the previous chart (and “hockey stick”) seen earlier. It’s impossible to extrapolate the next wave of money-printing that would be required to forestall U.S. bankruptcy since we could not represent such money-printing on a single page without dramatically squeezing down the scale of that chart.
Can you say “hyperinflation”?
The Federal Reserve is pledging to “normalize” U.S. interest rates. The U.S. dollar would (will) be hyperinflated to absolute worthlessness long before this occurs. This leads us to a question which was answered in the title of this piece.
When will we know that the United States is really close to “normalizing interest rates”? The U.S. dollar will no longer exist, and (hopefully) neither will the Federal Reserve – the entity which promised to “protect” that dollar.
Courtesy of Jeff Nielson for Sprott Money News
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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