The Federal Reserve, QE Taper and Unemployment Scam

If you want to know what is coming and have an idea of when, you have to follow the money. I decided today would be a good day to write a really uncomplicated explanation of what is going on.

After the economic crash of 07-08, banks could not get enough liquid cash to make substantial loans. As a consequence, central banks (like the Federal Reserve) started printing more and more money and loaning it to banks at near 0%. The stated idea was that these banks that got the loans would then begin lending it out; but, they did not. Instead, the banks invested the money in high risk and high yield items and then kept the investment for themselves and did not pass these profits onto paying a higher interest rate on your savings. They didn't need your deposits because they were getting free money from the government.

After trying two different types of "quantitative easing", the Federal Reserve began what is known as QE3 which basically involved the Federal Reserve printing money (reducing the value of our currency so that it buys less for the same amount) and buying treasury bonds. When you really think about it, the Federal Reserve is buying real assets with phoney money. Just so you understand, your taxes have to pay off those treasury bonds that were bought with phoney money.

Well, when QE3 began, the Federal Reserve stated that it would continue buying the bonds until the unemployment rate dropped to 6.5%, at the time it was 8%. The stated belief was that as money freed up, the banks would lend it out and business would expand and create more jobs. None of this happened. Banks tightened up on lending and businesses kept their prophets in banks or paid them out in dividends. It should be apparent that more jobs have not been created. In fact, more jobs have been lost than created since these games began.

Here is where the real non-sense comes in. Once you stop receiving unemployment benefits, you stop showing as unemployed. The government does not judge unemployment based on how many people are working or on how many people are looking for jobs. The figure is based on people working and people receiving unemployment benefits. The number of people working is the lowest that it has been in decades and the number of people on unemployment was higher than it has been in decades.

People have been wondering when the Federal Reserve will stop buying these bonds. In fact when the Federal Reserve said they might start to buy fewer bonds, the stock market dropped. Wall Street loves cheap money and through a taper tantrum (not my term; but, one I like a lot). People like Peter Schiff, Gerald Celente and even Max Kaiser all said that the Fed would not begin to taper; but, they all missed the trick. You see, they thought the Federal Reserve was lying about tapering and never considered that unemployment would drop to 6.5% because they didn't see anyone creating jobs. Well, about one million people stopped receiving unemployment benefits this month with another few million to go off unemployment over the next months. That is the trick, Bernanke didn't think there would be more jobs and didn't say there needed to be, he said unemployment figures needed to drop and they have without any jobs really being added. This month unemployment dropped to 6.7%, the same month that a million people lost unemployment benefits without getting a job. It is a scam.

A couple of days ago the jobs information came out and Wall Street wasn't worried because very few jobs were created and we continued to lose others. They have concluded that the tapering will not begin. Nope, they missed it. Unemployment could fall to 6.5% as early as next month and then the taper will have to begin. The media is absolutely complicit in feeding everyone the lies. Why hasn't the financial reporting media pointed out that the Fed promised to stop QE3 when unemployment goes to 6.5% and that could happen any day. Instead the financial news talks about how the tapering could be a long time away and that the Federal Reserve is worried about how the stock market will respond. Now it gets even scarier.

Christmas time is the busiest time of year for retailers. They used to say that a retail store made 60% of all it's money for the year at Christmas time. They also hire more people beginning somewhere in October and lay them off in January. There is a very good chance that the January numbers will be released in February and show that hundreds of thousands of people were laid off in January and that will distort the unemployment figures again.

If I were really energetic I would make a spreadsheet showing how many people lost their jobs, how many people got new jobs and how many people received unemployment benefits for each month since QE3 began. I would then look at the increase as a percentage of total jobs were created and lost between October of each year and February of each year, this would give us a pretty good indication of how many jobs were related to Christmas time sales and were only really temporary in nature. This is absolutely the type of information that the government collects, I know, they used to collect it from me once a month. The Federal Bureau of Labor collects this information and used to contact me and who knows how many others once a month for it. What this information would tell you is when the unemployment figure will show as 6.5%. It will be in the next couple of months if not next month. Maybe this has something to do with why Congress did not extend the unemployment benefits?

Consider this scenario, if you see the following, know we have been cheated and lied to again. Next month, February or even March, the unemployment figure drops to 6.5%, the Federal Reserve immediately stops buying treasury bonds. Wall Street goes nuts and drops. The Republicans decide to go along and continue unemployment benefits for people that went without for the prior two months and the market recovers. The very special Darwinian aspect of this is that anyone who stopped getting unemployment benefits and isn't hitting the pavement immediately will be considered deserving of getting nothing in six months.

For those who have listened to Mr. Schiff and the like, that claimed that the taper will never happen. They did not understand what the promise was, 6.5% unemployment. Once unemployment hits 6.5%, the Federal Reserve will have no excuse for QE3, none.

Here is the real scam, the bottom line to what we have been seeing. The reality is that the United States will have fewer jobs and a smaller percentage of it's population employed in the future. Actually we are there now. This is on top of the fact that we have fewer kids than in the past. The number of adults over 18 that have jobs has dropped and will continue to drop, the real numbers, the numbers that reflect people able to be employed. We will decrease the number of people on unemployment and increase the number of people on welfare and food stamps.

Here is how this all began and ends. After World War II, America was the worlds superpower economically. Europe was devastated, Russia was devastated, Asia was devastated and America had a great big industrial force. For the next 40 plus years, we owned the world. A couple of things happened. Firstly, we got greedy and then we got lazy. The final step was cannibalism, an everyman for himself attitude from those who had inside information. That is where we are now, the rats are leaving the ship and stealing everything they can. Why would the richest people amongst us rig markets and risk their future? The last thing an attorney or doctor will do is risk their license because that means they can never make another dollar in their field. The insiders are betting on a big bust.

There is a theory in Political Science, I have mentioned it once or twice before. The belief is that revolutions do not occur when things are horrible, the occur when things were getting better for a long time and then suddenly dropped. People don't like having their dreams dashed, they don't knowing that the odds of their succeeding have just dropped after they have invested so much in their choices. Broken promises are worse than no promises. The only solution is to get people to gradually accept that they will have a lower standard of living. That is what has been going on since at least 1999 and we are there. Your kids do not think they will all have a house in the suburbs and the affluence that you I thought was possible. They already believe there are only rich and poor, that is why we have so much publicity about the rich. Same thing happened during the depression, the most popular films were about the well to do.

The greatest investor in history, Mr. Warren Buffet, predicted exactly what I have described. You can read his letters to the investor's online. Mr. Buffet stated that he saw the way we were running our businesses leading to exactly what we are seeing. He specifically stated that he saw the future of America as a decline. He was also a financial adviser to both Bush and Obama. He advised Bush during the 2007-2008 financial crisis and Obama during his candidacy.

Here is the bottom line. What if Presidents listened to Warren Buffet and believed what he said was coming? What if you were President, knew something bad was coming and couldn't stop it from coming, what would you do? The general theory is that you mitigate or reduce the harm when you cannot obtain the good. What do you do when you only have choices that mean things will be worse, you seek to reduce the damage. The housing boom was intentional, that should be obvious. The consequences were expected and planned for. When Warren Buffet speaks, Wall Street listens and so does the government. When Warren Buffet makes statements that he expects the United States to cease being the number one economy in the world and to see a decline, the intelligence agencies listen and prepare contingency plans. That is how the game goes.

Here are some articles giving the stats and information that I used for the above.

CNN Money - Federal Reserve launches QE3

Slate - Time for QE3

CNBC - Fed Keeps Interest Rates Low, Continues Bond Buying Program.

CNBC - Fed officials could ignore ugly jobs report—for now. Read the article and see how what I am saying is true. The reporter points out that the unemployment figure is horrible and how the Fed might ignore it? Huh? At the same time that the writer is pointing out how there are no jobs they also point out that the unemployment figure is only 6.7 and dropped. Read the first paragraph, it says that December job creation was the worst in years and then says that unemployment dropped. Does that make any sense? Odds are you are going to see the January numbers show 300,000 plus people laid off and 50,000 jobs created while unemployment will spike as all the seasonal workers ask for it. These numbers will be offset by the number of people losing their unemployment benefits, it is just math.

In late January of this year, Bernanke will leave and a new head of the Federal Reserve will come in. That is the perfect time to change policies and blame the last guy for all the problems. Keep a watch on the markets and baloney news.