After raising rates less than a percent, Fed takes 55-day vacation from its "fight" against inflation
Meanwhile, the Fed sparks a market rally & fails to shrink the balance sheet properly
On July 27th, the Fed announced it was raising rates only 0.75% or 75 basis points (if you want to be a bit snooty). It’s a pathetically weak move after the Fed caused inflation to rage at 40-plus year highs. With real rates still deeply negative, the Fed is actively encouraging inflation to run even hotter. And now the Fed is enjoying a 55-day vacation from its fake “fight” against inflation!
This is the second time in two FOMC meetings that the Fed apparently leaked its 0.75% hike during communications blackout. No surprise the “journalist” of choice for Fed leaks is the Wall Street Journal’s Nick Timiraos. And on July 17, the fantasy romance novelist set off another smoke signal to Wall Street that the Fed “leaned against” a larger 1.0% rate hike. Markets rallied.
But the actual size of this hike is a sideshow. What really matters is the fact that Jay Powell decided to tease a Fed pause/pivot in September. He abandoned forward guidance and had the audacity to spout off this bald-faced lie: "We are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle until now we will be much more data dependent going forward." And that’s when the bear market rally really popped.
Even Larry Summers — whose morals are a bit suspect given a certain friend from Harvard — promptly called Powell out: “Jay Powell said things that, to be blunt, were analytically indefensible.” That’s about the closest you’ll hear someone with Larry’s clout say that the Fed Chair is a straight-up liar. Jay would be wise to pay attention, but his ego would never allow it.
Lisa Abramowicz @lisaabramowicz1“Jay Powell said things that, to be blunt, were analytically indefensible. There is no conceivable way that a 2.5% interest rate, in an economy inflating like this, is anywhere near neutral:” Larry Summers https://t.co/s13UJpGvCh
But again, we can’t make this point enough: the rate hikes truly are a sideshow. What really matters for inflation is the Fed’s monstrous $9 TRILLION balance sheet. And that’s where the Fed’s deception is most treacherous.
If you follow us, you know this one really grinds our gears. Because the inflation crisis will never cool off if the Fed refuses to reduce its balance sheet meaningfully. And the Fed is not even following its own official soft-pedal “plan” for QT.
B.P. Rising @BP_RisingIf you wonder why market is green after 75 bps hike, Fed is still bidding treasuries with 18% real galloping inflation. This is lunacy as inflation IS the balance sheet. They told world QT started. It's an addiction issue and they need help before bringing U.S. to hyperinflation. https://t.co/cDKsjHXoEi
The Fed was supposed to be “merely” reinvesting principal payments on its existing US Treasury and MBS holdings since mid-March and now subject to caps to achieve runoff. But the simple math doesn’t add up. And nobody has provided a satisfactory explanation.
Given the fact that housing inflation is spiraling out of control, and the Fed lacks clear authority for MBS purchases at all, we find the deceit to be most egregious when it comes to MBS purchases.
Occupy The Fed Movement @OccupytheFeds🔍 Look closely: the Fed's balance sheet deceit started well before its “QT” plans. Let's take April 2022, for example. That month, the Fed made *outright* purchases of $35+B MBS, about $9B more than the Fed's own estimates the month prior. Here’s why that makes ZERO sense. /1
In May and June 2022, the first full months after the Fed supposedly ended QE, the Fed bought $35-$37+ Billion MBS each month, which was about $9 and $13+ Billion more MBS than their own estimate. Now Jay Powell (and folks like former Fed trader Joseph Wang who blocked us on Twitter) want you to believe the balance sheet isn’t shrinking yet because the Fed’s MBS purchases are still settling. Well, guess what, those purchases never should have been made in the first place.
But far too few are willing to question the Fed’s propaganda. American mainstream media is bought and controlled by Wall Street. Others are too worried about getting a callback from CNBC or their own stock portfolios. They don’t care enough about their fellow hardworking Americans getting crushed under inflation to do anything against their self-interest. And that’s a shame because Jay Powell and his cronies on Wall Street care even less about their fellow Americans (see e.g. “BANK OF AMERICA MEMO, REVEALED: ‘WE HOPE’ CONDITIONS FOR AMERICAN WORKERS WILL GET WORSE”)
We can attest it hasn’t been all flowers and sunshine “fighting” the Fed. We at #OccupyTheFed have been going flat out to expose Fed corruption for about six months now. Unlike the Fed, we don’t get paid to do this. We don’t have legions of minions doing our bidding. We have real jobs, families and lives that suffer for it. We are sacrificing a lot to do this.
Why are we doing it then?! Because we love America. Because we’re sick and tired of seeing the Fed run a forever war on hardworking Americans. Because we want to give a voice to middle and working class Americans who don’t have the time or means to figure out what the corrupt apparatchiks at the Fed are doing to enrich their cronies on Wall Street (at the cost of Main Street). Because it became crystal clear the Fed is out-of-control corrupt once it continued pumping trillions despite inflation rates that are MULTIPLES of their target.
That said, we need a break too. We’re just a small (albeit growing) group. We plan to step back for a stretch from Twitter and our weekly substack and think over some things. We’d love to send some time developing something like a Declaration of Independence from the Federal Reserve with public input.
We can’t thank our followers enough for all the love and support. Please know that every kind comment, every retweet, every contribution has been truly appreciated. Trying to maintain an anonymous, decentralized activist group can be a little lonely and frustrating. But we think it for the best.
This movement doesn’t belong to any one person, or group of persons. The Occupy The Fed Movement belongs to ALL OF US — even ONE PERCENTERS who don’t want to live in a country torn apart by Fed-Wall Street greed and corruption. And surely the 90+% of other Americans who are getting destroyed by a financial system rigged by Wall Street and its government enablers — from Apes to bitcoin hodlers to goldbugs - we are all in this together! Corruption & Inflation Fighters must unite!
We hope you all feel the call to do more. All of the info we share is public. It’s corruption in plain sight. We just need to wake more people up to it. You can do that at home wearing no pants. Or you can join us standing outside the Fed with true patriots like original #OccupyWallStreet leaders (maybe wear some pants).
Just please, for the love of God, do something! The fate of our country is at stake right now. And many people are far too apathetic about it.
Occupy The Fed Movement
As we said, this is all free and will remain so. If you feel compelled, we’d be happy to accept any gifts and set up a BTC wallet for that purpose with the following address: bc1qcq895jznyg2se0u26yvm8pvq7jk6hvkvqafyxl
*Everything Occupy The Fed writes is for informational purposes only and represents the writers’ opinions based on publicly available information. Nothing we write is ever intended as, nor should it be relied upon as, investment advice. The best investment advice in this Golden Age of Fraud seems to be based on inside information from government officials, and we would never try to compete with that.
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