U.S. Fed Leaves Rates Unchanged, Morons


Should anyone take the Federal Reserve seriously anymore? The Fed left short term U.S. rates at 2% yesterday, though in real terms, interest rates are below the rate of inflation and therefore negative. Not exactly hawkish. The Aussie dollar moved toward 96.

Does the hubris of a central banker know any bounds? The Fed had the audacity to puff out its chest and talk all tough about inflation. “Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.”

That’s right you clowns. Inflation expectations are higher because you stepped in and bailed out Bear Stearns cut interest rates 325 basis points. And you act surprised that it set off a wildfire in commodities?

Speaking of morons, what about the U.S. Congress? But in the U.S., we have investors noticing that the Fed is torching the currency. Not wanting to see their savings inflated away, investors race for assets which protect their wealth and purchasing power, namely commodities. What does Congress do? It wants to make it illegal for pension funds to invest in commodity indexes!

Are these people really serious? Are they asinine or just equine? How degenerate has the American political establishment become?

The Roman historian Suetonius reports that the Emperor Caligula made his prized horse Incitatus a first citizen of Rome and later a Senator. The story-we don’t know whether it’s true or not-is often used a cautionary tale for how debauched and dysfunctional Rome had become as an Empire.

Frankly, we think a few horses in the U.S. Senate might improve the place. You have to think horses would be natural small government conservatives. They say “neigh” all the time.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.


  1. haha worst punchline ever!!

  2. Good call Dan – morons, clowns, horses’ arses. It’s all about Wall St for the US Fed. Stuff the rest of the US and stuff the rest of the world. It seems that for the Fed, with its 2% cash rate, raging inflated commodity prices is the price the rest of the world has to pay to prop up Wall St.

  3. “They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box.”

  4. If you run your own website and have developed credibility like the Daily Reckoning you deserve your place on the soapbox and we benefit from the polemic. You have however also provided a window here for your readers and I am going to take advantage …

    The fed’s reaction only reflects the US cultural malaise and a lack of world citizenship that has been growing through the 20th century. A lack of rigour in instilling the US’s foundation values has corrupted the elite fraternities that spawn both republican and democrat. And yet it could easily get far worse under a “new deal” protectionist & blamer like Obama.

    At least recently that idiot Stiglitz was sent home with the tail between his legs after doing his whistlestop trying to sell the concept of exported US inflation as globally acceptable. Maybe the US elite will take it on notice that they stink root and branch from Wall St, to Washington, to Halliburton/KBR & the US defence industries, and to the rapacious broad acre farming barons in the west opportunistically taking the prices and subsidies set by Bob Dylan supported “heartland” inefficient small block farmers in the mid west and through to the Ozarks.

    The US is now the pariah of fiscal mismanagement, and it stands convicted of the abuse of its role as custodian of the global reserve currency as Rome falls.

    With the holders of any paper that backs USD assets now desperate to dump them (latest BIS quarterly report) there is nothing rational left to do short term with a USD than to buy USD priced energy or food commodities.

    Hence the dollar needs to be “refloated” and the most likely method is by the repricing commodities to a currency allocated on a trade weighted index basis. Producers certainly can’t be expected to sell commodities forward to bring USD denominated price stability because they will be overwhelmed by the rational USD holder buyers on the other side of the derivatives table. Anyone selling energy and food commodities forward is being wiped out, and the buyers are desperate to keep or gain value in their USD holdings (those popularised as “speculators”). Any attempt to hobble the “speculators” without the US having already been forced to dramatically lift interest rates will find all sorts of shenanigans emerging with physical inventories and off market deals.

    All we have left on the global scene to protect us from a global version of a Weimar era calamity is for the ECB to force the US, UK, and ultimately AU’s hand on interest rates.

    On the geopolitical side the EU and Australia stand equally alongside the US in a threat to global stability. This is born of invigorated contempt for the foundation mandates of the League of Nations and UN. Unless this hegemony changes course mass conflict is inevitable and an internet educated generation’s resistance to the fight will see the west ultimately lose.

    The EU/US/AU hegemony now act with virtual impunity to sanction and destabilise nation states that are non aligned and have strategic significance. There is the continuation of the 20th century EU/US suppression of the emerging world by sponsorship of ethnic conflict to achieve regime change & securing puppet strongmen (that can do whatever they please as long as they protect narrow export resource supply lines or strategic interests); there is the now pattern behaviour of sponsoring ethnic conflict to geopolitically threaten Russian and China borders, outlying provinces, and near neighbours; there is the coralling of free market capital in the EU and US by the perpetuation of subsidies & trade barriers that prevent the development of emerging world countries that have natural advantage in food production.

    At least in the area of law the US there has been a force restraining the implementation of the EU and AU push for a world “star chamber” judicial system run by EU elitist left leaning inquisitors. But amoral US resistance comes only on the basis that it threatens the US’s own extraterritorial legal hegemony, and because rendition threatens to call its own criminality to account. There is also not much difference to the perversion of habeus corpus between the Milosevic show trial and Guantanomo Bay where guilt in both cases is assumed, never proved under excruciating inquisitorial process, and the defendants are either dead or insane so many years later.

    We have seen the EU/US striking out into eastern europe putting a finger into Russia’s nose to secure resources and pipelines. The difference between what has recently occurred and what happened in the tug of war between Stalin and Hitler could only be held as new found Russian restraint or pragmatism, but nothing much else.

    The EU and US have now mastered the process of manipulating the left to prosecute geopolitical ends. They have been manipulating a “Hollywood left” and “rockstar with a conscience” to enlist as attack dogs to support a right wing geostrategic agenda. It has been prosecuted with increasing effectiveness since the sponsorship of the mujahaddin in Afghanistan but it inevitably comes home to bite. In Darfur, Tibet, Zimbabwe and Myanmar we see the campaigns getting louder and slicker and the hegemony is being left friendless after a little righteousness is layered over a geopolitical wrong.

    Hypocracy ultimately bites when we have examples like David Hicks who was at one time a heroic KLA freedom fighter in Kosovo (while securing the US a KBR built NATO base, a pipeline pathway, and access to precious metals, and also securing the EU against the Russians retaining any slav-Serb regional influence) and then we have evil Hicks becoming a terrorist in Afghanistan while fighting for the Taliban government against a Northern Alliance with nothing but the worst credentials except to have served the US purpose. The Taliban who same had shut down opium production and ousted a regime generally recognised as murderous & corrupt.

    Australia pulls the same stunt using the IFAW and Sea Shepherd groups who are the 21st century’s most likely successors in the “mujahaddin come Al Qaeda” phenomenon. No matter that Australia backflips on its whale species conservation scientific argument of the best part of a century to take up the thin end of the wedge of of a cause for “relatively human animal rights”.

    But what can you expect from the antidemocratic swill of Australia’s foreign affairs elite with tyrannical patriarchs like Dick Woolcott and our eternal F111 man Gareth Evans. And with groupies like Rudd and Downer going on to reach high political office the swill has found protection for the weeds to emasculate the flowers.

  5. All this Fed bagging has taken the flak off Bush. The RBA’s decision to hold rates is prudence. I see it as a moral victory (the horse voted to hike rates).

    GM is rationalizing its product range and Ford may bring back the all-black Model T. It’s a good thing economies of scale is back on the agenda because quality was never their cup of tea.

    Investment banks like Lehman Bros are right-sizing their human resources. Probably a good sign considering the past decade has been nothing short of a fully fledged Roman orgy for them.

    A host of other corporate entities are reviewing their financing arrangements to enable a more flexible and responsive capital structure.

    There are multifarious honey-coated ways of saying “I screwed up” none of which involves saying “I’m sorry you’re retiring in a caravan instead of a romantic villa under the Tuscan sun all because I gambled your savings on uncovered derivatives”.

    This is why I like Bush, G.W. He doesn’t cower at international resentment towards him for being an a$$hole. He never apologizes because he ‘ain’t done nuttin’ wrong’. On the Iraqi war alone, countless figures have fallen from dizzy heights (Karl Rove, Donald Rumsfeld, Paul Wolfowitz Colin Ka-Pow etc) and yet Bush is still sitting pretty in office. Even Chaney was soiled with the marks of Halliburton. When the heat is on he literally gets out of the kitchen and takes a 4-month ‘R&R’ vacation on his Texas ranch playing golf and taking Putin for a tour of his home grounds in a Mack truck. After bankrupting two companies and a baseball team, bestowed by Bush Snr, running them to the ground he still manages with a spring in his step.

    Electoral controversy, draconian legislative reforms, gross mismanagement of public welfare infrastructure, bad jokes at press conferences, broad-based negligence and all within the timeframe of a two-term presidency. In my next life, I wanna be born a Bush.

    Irresponsible…unaccountable…untouchable. Oh, and swimming in oil.


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