Janet Yellen Says The Economy Is Fine And Price Increases Are Just Noise

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If the economy is hunky dory, then why is the money supply going parabolic?

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The adjusted monetary base is all currency either in circulation with the public or held in bank reserve accounts at the Fed.  This chart reflects all of the money the Fed has printed since QE started.  As we know, most of this money has ended up in the  Fed’s “Excess Reserve” accounts of the Too Big Too Fail banks.  This is more than just “noise,” to borrow Yellen’s term.  There is a very specific reason for this and my co-producer and I are working on a multi-part video series explaining what we are pretty certain is going on and why most of the money printed up by the Fed – and most of the money the Fed continues to print in a parabolic fashion (see the graph above) – remains on the big bank balance sheets.

Hint:  there is a massive derivatives melt-down brewing, the likes of which will probably trigger the collapse of the dollar.

Other than that minor occurrence,  the graph above raised some interesting questions that no one in the media or Congress seems capable of asking Fed Chairman Yellen.  So I will ask them.  Please feel free to email them to the Fed.

If the economy is recovering, why is the money supply still expanding at a parabolic rate?  If the recent numbers which show accelerating inflation are just “noise” – in your words, Janet – how come my monthly grocery and gasoline and housing expenditures are roughly 25% higher than they were this time last year?   Janet, when is the last time you spent money at the grocery store or at a restaurant?  When are you going to drain the excess reserves of the big banks, which are just sitting there collecting more interest than a 30-day T-Bill?

For everyone else reading this, why are you still holding money in bond mutual funds and money market funds?   You are watching a speeding freight train with no brakes come straight at your car stuck on the tracks and yet, you seem incapable of getting out of your car and running to safety?

Get your money out of bond and money market funds and buy every dip in gold, silver and mining stocks.  For some great junior mining stock ideas, see this:  Junior Mining Stock Research Reports.

7 thoughts on “Janet Yellen Says The Economy Is Fine And Price Increases Are Just Noise

  1. anyone have the symbol for the puerto rico bond, or an ETF of it or something?
    i know bloomberg has a paid high tier service where u can get quotes on nearly anything.

    i just found out a tree fell in the bond forest, but it’s being unreported.
    dunno if it’s all of them, nor duration range, but Commonwealth of PR bonds past 2 weeks have collapsed into the 30’s bid!?

    i can’t find anything using a search, except old articles from late 2013 including ZH, & a few up to feb/2014 like forbes, & they all were forewarning, & in the articles clearly stated the bonds were trading in the 80’s price.

    1. You will probably be interested in PRs bond downgrade by Moodys. There are also ticker symbols within the article dated July-01-2014. I use to work in PR. I took a lateral transfer to another part of the country once I saw the writing on the wall. The entire island economy is based on government cronyism. Once the island goes broke the whole island heads into the toilet.

      http://online.barrons.com/news/articles/SB50001424053111904248904580003610191234810

  2. Also note that the velocity of money is not indicating economic growth. Employment is a coincident indicator, but has been weak along with real wages for some time now. Housing is a leading indicator, and is now turning down again after the “echo bubble”. The Fed has done nothing but temporarily postpone the inevitable.

    “Sooner or later everyone sits down to a banquet of consequences.”- Robert Louis Stevenson

    “Permit me to issue and control the money of a nation, and I care not who makes its laws.” – Mayer Amschel Rothschild, International Banker

    “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” – Kenneth Boulding, economist 🙂

    “There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

    1. You are absolutely right, Bruce- ‘Also note that the velocity of money is not indicating economic growth. ‘

      The world should have learned the lesson from Wiemar or Zimbabwe or most nations in south america, where there was a tremendous deal of monetary velocity but economic growth was declining if not outright non-existent.

  3. Dawn Bennett Interviewed Michael Belkin, An Institutional and Hedge Fund Consultant and Publisher of the Belkin Report

    A: It’s pretty crazy, isn’t it? I think that number is kind of a generalization, nobody knows for sure. It’s a report that came out that the FT got a hold of. It’s kind of ironic that some of these guys are my clients. I have wealth funds around the world, and I’m telling them to sell. They are undeniably a factor beneath the surface, and they have been for a while. The Norwegian Wealth Fund owns 1 or 2 percent of all the stocks in the world, and the Chinese Wealth Fund is gigantic.

    It’s an example of the greater fool theory. At every top of every bubble somebody comes along. The Japanese bought Pebble Beach Golf Course at the top of their bubble. It turned out to be a disaster and a bad investment. In this week’s Thursday’s FT cover story, corporations are borrowing money and buying back their own shares to the tune of $200 to $300 billion. That’s a huge number. I haven’t quantified this yet, but I think it’s equivalent to all the earnings that the S&P 500 companies made in the first quarter, so basically they’re pouring all their money into buying their own shares to prop up their stock at the top of a bubble so that CEOs can reward themselves with stock options and keep the price up. It’s a pretty strange, warped world we live in, where the stock market has become like a lever in a cage that a rat can push to feed itself. Enough sugar water or cocaine or something, and they’ll just keep pushing the lever until their bodies blow up.

    Read more: http://www.digitaljournal.com/pr/2028477#ixzz36oZdI9Ze

  4. Tom, very interesting. I Googled puerto rico bond and puerto rico bond news. Many articles there.
    http://www.bidnessetc.com/22456-us-bond-funds-worried-by-puerto-ricos-new-debt-restructuring-law/

    http://www.bondbuyer.com/news/markets-news/market-post-puerto-rico-turmoil-may-shake-up-munis-1064116-1.html
    Market Post: Puerto Rico Turmoil May Shake Up Munis
    by Hillary Flynn and Maria Bonello
    JUL 7, 2014 8:11am ET

    The Puerto Rico sell-off may inject volatility into the market this week, market participants said…”

    Dave, good thing the money supply bubble is growing by leaps and bounds, lest it be overun and trampled by insatiable, self-reinforcing HF trading algorhythms before it can be tethered to Earth.
    Those bubbles in developed countries that mimic and support the Fed’s dollar, like Japans markets, defying gravity, not yet sinking in ocean of yen, help our economy to be “hunky dory” too.
    Like “forward guidance”, managing perceptions and self-audited bank balance sheets, novo-ECON101 is also competetive currency devaluation/hyperdebasement, interest rate derivatives on steroids and CB currency swaps.
    But elements of the mainstream media are beginning to break free from the rotting paradigm:

    http://www.usatoday.com/story/money/business/2014/07/06/inflation-is-our-friend/12176461/
    AdviceIQ: Is inflation really our friend?
    Brenda P. Wenning, Advice IQ 6:32 a.m. EDT July 6, 2014

    EXCERPTS:
    “Since when was increasing the inflation rate a goal? Not long ago, inflation was an enemy. Rising prices erode your purchasing power. Now, policymakers greet it as salvation. They think it is an antidote to slow growth. It really isn’t.
    Curing what ails the European economy will take more than higher prices. But Wall Street reacted to the European Central Bank’s inflation-boosting efforts by setting new records…

    You may recall that the Fed has also been trying to increase inflation, which is a huge shift from the days when the Fed’s greatest task was to reduce and control inflation.
    Back during the Ford Administration, Americans wore “WIN” buttons, because we wanted to “Whip Inflation Now.” In more recent years, one of the Federal Reserve’s rationalizations for continuing its quantitative easing program was that it wanted to push inflation up to 2%.

    The U.S. annual inflation rate finally met the goal of 2% for the period ended in April, so President Barack Obama won’t need to consider a “SIN” campaign, for “Start Inflation Now.” The Consumer Price Index jumped another 0.4% in May; since the same time in 2013 overall prices increased 2.1%, spearheaded by shelter, electricity, food, airline fares and gasoline.

    So now that inflation has met the Fed’s inflation rate goal, why is the economy growing at a negative rate?”

  5. BRICS Development Bank Funding Infighting Delays–1 more week

    (u may not see the article at the link, since u need to register for 5 more free article views after the first free 3)
    JULY 7
    http://www.scmp.com/news/china-insider/article/1548613/indian-pm-praised-rebuffing-chinas-power-play-brics-development

    Indian Prime Minister Narendra Modi was praised by leading Indian newspapers for standing up to China amid negotiations over the establishment of a new multinational development bank, which could turn into the “next India-China flashpoint”.

    The world’s two most populous nations along with Brazil, Russia and South Africa – dubbed the “Brics” countries – are in their last week of negotiations prior to a widely expected announcement of a new development bank.

    Indian media reported that the negotiation process had thwarted an alleged attempt by China to “dominate” the new lending institution by infusing more cash in it than suggested by India.

    The “Brics” bank is being set up to counter perceived excessive American influence on existing international and regional lending institutions such a

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