{"id":30600,"date":"2016-02-07T09:16:10","date_gmt":"2016-02-07T13:16:10","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=30600"},"modified":"2016-02-07T09:16:10","modified_gmt":"2016-02-07T13:16:10","slug":"the-federal-reserve-the-deep-states-central-bank","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=30600","title":{"rendered":"The Federal Reserve &#8211; The Deep State&#8217;s Central Bank"},"content":{"rendered":"<p><!--more-->by Bill Bonner of Bonner &amp; Partners<br \/>\nAnnotated by Acting-Man.com&#8217;s Pater Tenebrarum<\/p>\n<h3><strong>Fighting to Lose<\/strong><\/h3>\n<p>An election has been described as two wolves and one lamb voting on what to have for dinner.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-43007 size-full\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/Sheep-On-Voting-For-a-Lion-Or-a-Wolf-On-Election-Day.jpg\" alt=\"Sheep-On-Voting-For-a-Lion-Or-a-Wolf-On-Election-Day\" \/><\/p>\n<p data-mediaconductor-processed=\"true\">We\u2019re going to make a difference on election day! Or maybe not\u2026<\/p>\n<p>Actually, there was never any doubt about what was on the menu.<strong> An election is really when the wolves scrap over who gets the choicest pieces.<\/strong> To bring new readers fully into the picture\u2026 It doesn\u2019t matter who won in Iowa. Major policies are not determined by the voters but by the more or less permanent elite who run the government, aka the \u201cDeep State.\u201d<\/p>\n<p><strong>The Fed is an instrument of the Deep State, not of the people. <\/strong>This sounds conspiratorial. But it doesn\u2019t require any hidden agenda or secret handshakes. Most people want power, money, and status. If you can get control over the government \u2013 the only institution that can steal and kill, legally \u2013 you\u2019ve got it made. That\u2019s why so much money is spent trying to get elected or to influence public policy.<\/p>\n<p>The U.S. presidential campaign has seen surprisingly strong showings from two \u201coutsiders\u201d: Donald Trump and Bernie Sanders. Why? As former Congressional staffer turned Deep State whistleblower Mike Lofgren recently told\u00a0Bonner &amp; Partners Investor Network\u00a0editor Chris Lowe, it\u2019s because each in his own way warns voters about the wolves. <strong>The insiders, according to Trump and Sanders, are predatory and incompetent.<\/strong><\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-43001\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/2016-Presidential-Election11.jpg\" alt=\"2016-Presidential-Election11\" \/><\/p>\n<p>Bernie and the Donald \u2013 voters like them because they are seen as the anti-establishment choices. The press decries them as \u201cpopulists\u201d and \u201cnutcases\u201d, which means they must be doing something right. As an aside, the European press is completely apoplectic over Trump, to our unending amusement.<\/p>\n<p><strong>But the Deep State is more predatory and less incompetent than it appears.<\/strong> It fights wars, for example, not to win them\u2026 but to lose them. The War on Poverty has been going on for more than 50 years. Still no sign of victory. But it has financed countless careers and retirements of government operatives.<\/p>\n<p><a href=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/BG-war-on-poverty-50-years-chart-1-825.jpg\" target=\"_blank\"><img decoding=\"async\" class=\"aligncenter wp-image-43002\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/BG-war-on-poverty-50-years-chart-1-825.jpg\" alt=\"BG-war-on-poverty-50-years-chart-1-825\" \/><\/a><\/p>\n<p>The resounding \u201csuccess\u201d of the so-called \u201cwar on poverty\u201d \u2013 click to enlarge.<\/p>\n<p><strong>The War on Drugs has raised profit margins for the drug dealers\u2026 and for the drug fighters too. <\/strong>But the public has suffered higher levels of violence and billions of dollars in prisons and crime-fighting costs.<\/p>\n<p>Likewise, there are more terrorists now than when<strong> the War on Terror was announced \u2013 after trillions of dollars were spent and millions of people were killed.<\/strong> The more the U.S. bombs, drones, and bullies\u2026 the more people join the fight against it.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-43005\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/orwell.jpg\" alt=\"orwell\" \/><\/p>\n<p>George Orwell recognized the principle in 1949 already \u2013 these wars were never meant to be won. This is also why we already know that the \u201cwar on terror\u201d will never end \u2013 and it is one of the greatest threats to individual liberty yet.<\/p>\n<h3><u><strong>The Long Emergency<\/strong><\/u><\/h3>\n<p><strong>Why fight wars you intend to lose?<\/strong> Because it suits the Deep State. The wars are just a way of marshaling support for a transfer of wealth and power from fly-over states to the suburbs of Washington, D.C. and New York. That is to say from the public\u2026 to the elite. Which brings us back to our beat: money.<\/p>\n<p>When the 2008 financial meltdown came along, the Fed announced what was effectively another war: the War on the Credit Cycle. <strong>In a fiat money world, consenting adults are no longer able to set the price of credit. So, the Fed does it for them.<\/strong><\/p>\n<p>And after 2008, the Fed decided to take the \u201cemergency\u201d measure of dropping short-term interest rates to zero to try to stimulate the economy.<strong> But like so many other government programs, it was an intentional failure.<\/strong><\/p>\n<p><a href=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/Labor-Force-Participation-vs.-FF-rate.png\" target=\"_blank\"><img decoding=\"async\" class=\"aligncenter wp-image-43003\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/Labor-Force-Participation-vs.-FF-rate-1024x693.png\" alt=\"Labor Force Participation vs. FF rate\" \/><\/a><\/p>\n<p>Labor force participation rate vs. federal funds rate \u2013 yet another boondoggle in a long list of intentional failures \u2013 click to enlarge.<\/p>\n<p>With the labor participation rate now at its lowest level ever, the typical American man is more likely to be unemployed today than at any time in history. <strong>The rich have gotten richer; the poor have gotten poorer.<\/strong> (No wonder Trump and Sanders are doing so well!)<\/p>\n<p>And after eight years of the most extravagant stimulus efforts in history, in the last quarter, the U.S. economy grew by just 0.7% \u2013 \u201cstall speed\u201d in other words.<strong> That too looks like incompetence. But it was really another predatory measure.<\/strong><\/p>\n<p>By evaporating interest rates, the Fed transferred trillions of dollars from savers on Main Street to the speculators on Wall Street. The bankers got their bonuses. Mission accomplished!<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-43000\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/26.11.09-Martin-Rowson-on-005.jpg\" alt=\"26.11.09-Martin-Rowson-on-005\" \/><\/p>\n<p>Not <em>another<\/em> bonus\u2026 then again \u2026<\/p>\n<h3><u><strong>A Miracle-Gro Economy<\/strong><\/u><\/h3>\n<p><strong>But now, the Fed has put its \u201ccredibility on the line,\u201d <\/strong>reported the\u00a0Financial Times.<\/p>\n<p>That was a shocker; we didn\u2019t think the Fed had any credibility left. But there it was, sitting on the line between higher rates and lower ones.<\/p>\n<p>The PhDs running the Fed are no fools. They know they have not entirely defeated the credit cycle. They only hope to manage it. They know, too, that there are contractions as well as expansions\u2026 bear markets as well as bull markets\u2026 winter as well as summer.<\/p>\n<p><strong>The idea of raising rates was to get in position before the weather turned cold again. <\/strong>They would need to cut rates again to fight the next downturn. So, last December, the Fed put its credibility on the line. It announced a program of gradual increases that was supposed to bring the short-term interest rates back into their normal range by 2019.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-43006\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/rate_hike_cartoon_11.05.2015_large.png\" alt=\"rate_hike_cartoon_11.05.2015_large\" \/><\/p>\n<p>What could possibly happen?<\/p>\n<p>Last year, we argued that this was not going to come to pass as planned. <strong>The weird and wonderful plants of the Bubble Epoch had been raised in a hothouse with Miracle-Gro sprinklers on 24\/7. Now, the Fed was proposing to shut off the spigots!<\/strong><\/p>\n<p>Surely this would trigger the very crisis the Fed hoped to avoid. That was always the problem with the \u201cdata dependent\u201d path Ms. Yellen announced. If your course depends on numbers rather than principles, you are bound to see some numbers you don\u2019t like. Then you have to react.<\/p>\n<p><strong>And the only possible reaction for the Fed is to reverse course. <\/strong>Besides, its main mission is to protect the Deep State\u2019s finances \u2013 the flow of real wealth from you to it. And now we find the world\u2019s elite \u2013 the Deep State financiers and economists \u2013 planning, explaining, and preparing the world for a U-turn.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-43004\" src=\"http:\/\/www.acting-man.com\/blog\/media\/2016\/02\/No_rate_hike_cartoon_09.17.205-1024x585.png\" alt=\"No_rate_hike_cartoon_09.17.205\" \/><\/p>\n<p>An uncanny sense of timing\u2026<\/p>\n<p>Last week, for instance, the\u00a0Wall Street Journal\u00a0reported that the Fed was \u201chaving second thoughts about hiking rates three or four times this year.\u201d<\/p>\n<p>And yesterday, the\u00a0Financial Times\u00a0called Ms. Yellen\u2019s plan to return to normal a \u201crate rush.\u201d<\/p>\n<p>\u201cFew believe [the Fed] will stick to its plan for more increases this year,\u201d it continued.<\/p>\n<p><u><strong>Count us among the non-believers.<\/strong><\/u><\/p>\n<p>___<br \/>\n<a href=\"http:\/\/www.zerohedge.com\/news\/2016-02-06\/federal-reserve-deep-states-central-bank\">http:\/\/www.zerohedge.com\/news\/2016-02-06\/federal-reserve-deep-states-central-bank<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-30600","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/30600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30600"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=\/wp\/v2\/posts\/30600\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation2012.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}