Yellen Folds Her Cards – Admits It Was A Bluff

“In the summer of 2011 is when things went insane.”  – Remember this quote

In the process, Yellen is making herself out to be a complete fool or a liar:

“I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.”  Bloomberg News

The economy has been “performing well?”  Seriously?   Let’s have a look.  Here’s year over year percentage change in retail sales:

Graph1 As you can see, there’s been a steady decline in the year over year growth in real retail sales since August 2010. Is this 70% of the economy the part to which Yellen is referencing as “performing well?”

But here’s the kicker:

graph2 THIS graph shows the actual dollar change in retail sales LESS auto sales since August 2010. We know that auto sales have been pumped up by the largest expansion in automobile subprime (junk) debt issuance in history. If you strip away that artificially pumped up area of the economy – pumped up by Yellen and Bernanke – look at the stunning decline in retail sales.

Retail sales represents 70% of the economy.  How can the economy possibly be doing well when the only segment of retail sales showing signs of life is the automobile segment, which has been pumped up by what will be the eventual catastrophic availability of junk loans.   Contacts of mine in the local auto business are in outright shock at the number of 2013-2014 cars hitting the repo market.  I have seen with my own eyes leased land lots along busy commercial boulevards which are overflowing with repo’d vehicles.

Perhaps Yellen was referencing the “low” unemployment rate.  The magical 5.1% rate of unemployment that is conjured up with Government fabrication.  Ya that number may be the unemployment rate if you use the Census Bureau guesstimate of employment based on flimsy population samples and if you ignore the fact that nearly 100 million people in the working age population are not part of or have left the labor force – or if you just make up the numbers (birth-death model):

graph3 We’ve all seen this graph several times but it’s worth seeing again in the context of Janet Yellen making the statement that “the economy is performing well.”

In the famous phrase from Macbeth, the employment situation in the United States is “a tale told by an idiot, full of sound and fury, signifying nothing.”

Now here’s another kicker.  Many of you have already seen the outstanding Fed video written and produced by my good friend and colleague, John Titus:   Best Evidence –  Fed Audit Shocker:  They Come From Planet Klepto.    I get previews of his work along the way and he shares a lot of information with me about everything he discovers reading the Fed transcripts, which are released 5 years ex post facto.

The particular transcript John was pouring over for the above video was from the Fed meeting right before QE was introduced.  The information is there for anyone to look at but John actually does the work.

Recall from yesterday that Janet Yellen referenced the unemployment rate as evidence that QE had worked.  I received a text from John last night that said:  “Janet Yellen is such a fucking liar.”   To which I replied: “based on what, this time?”  To which he cited:  “Did you see that shit about the Fed not boosting inequality?  She says QE put people back to work.  Based on what?  Because in the June 2009 Fed transcript she said the unemployment rate b.s.”  As you can see, John is extremely pissed off at Yellen’s blatant dishonesty.

So there you have it.  Yellen is on record stating to her Fed cohorts that the unemployment rates is nonsense.  This was when she was Bernanke’s co-pilot of the FOMC.  From this we can conclude that Yellen is a serial liar.  But we can also conclude that she is an idiot because she has a left a definitive trail of evidence proving that she’s a liar.

This brings me to the “in the summer of 2011 is when things went insane” comment. The very same John Titus attended a conference yesterday put on by Eric Hunsader, of HFT’s Nanex fame.  Titus asked Hunsader when he first noticed that there was no longer Rule of Law in the markets.   Hunsader replied that “I guess it’s always been there but it got worse” [he pondered searching for a reflective answer and compared it the frog in boiling water adage].

But then John said one of Hunsader’s underlings spoke out – the first and only time during the show – and said “the summer of 2011 is when things went insane.”

I would like to tie this back to the two graphs above which show that retail sales began a definitive decline in growth rate in early 2011 AND an outright decline ex-autos in “the summer of 2011.”

By that time the U.S. system had been bombarded with QE for two years and interest rates had been at zero for a bit longer than two years.  Additionally, the Fed and the Government began an undeniably aggressive attempt to reflate all asset markets and pump up housing and auto sales.

graph4 A lot of bad occurrences developed in the summer of 2011. As you can see from this graph to the left, the stock market went on the longest uninterrupted rise in its history without any real correction. 2011 is when it became obvious to most observers willing to admit it that the Fed was controlling the asset markets with QE.  AND, I might add, figured out how to take advantage of HFT trading and the shadow banking system to help serve its objectives.

If we learned one thing yesterday, it’s that the Fed can not and will not raise interest rates. It’s backed into a corner from which it will be impossible to emerge without a full-scale systemic reset or crash. The problem is that, when this cesspool of lies, fraud and corruption starts to really implode, we will all wish we were watching the show from another planet.



It’s also why have stated in the past, and have increasing confidence in my conviction, that this is leading to world war three and, ultimately, “The Road.” Interestingly, I’ve received emails from some well-known personas in finance that have expressed a similar belief…

17 thoughts on “Yellen Folds Her Cards – Admits It Was A Bluff

  1. Hi Dave,

    I always appreciate your blog and the time and energy you put in to get the truth out.

    Question: If you were to invest your next ~$3600 into physical precious metals, which would you recommend:
    1] 3 oz Gold
    2] Silver Eagles or Maples
    3] $250 face value junk silver

    Thanks again.

  2. Dave,

    I saw John’s video posted at Turd’s site the other day and was wondering when I would hear from you. That video by John was amazing. I’ve been telling everybody that would listen ( most don’t listen ) that the FED and the Banks have been looting America and the World for years. I remember when the O’Golfer and Chief was running in the first election and the platform was ” Hope and Change “. I was telling people then that Americans had better hope there is some change left in the Treasury when he was through in office. It appears I was right. There’s no hope and there is no change left in the Treasury.

    Brilliant work by both you and John.

  3. an addendum is data from Experian when it reported that car loans are for 130-150% of car value and the 150 is the lower rated FICO score borrowers.
    Hence, there is an added incentive for the riskiest borrowers–buy a car for 20k, borrow 30k, then walk away pocketing the the 10k. Actually smart on their part.

    I guess part of the over 100% loan is also the tax and other fees the dealer gets such as repair warranty, paint finishes, the old rust proofing et al. to make sure the customer is able to pay for all that crap.

    The other part of equation is auto leases. Leases are great if you have a business and can deduct. Leases not so great if you are short on cash and have to have a new car.

    I have a friend in the subprime loan lending business. Very profitable even with repos at least up till now. He told me last year they were tightening up to prevent the coming problems.

    One of the best businesses now is auto auctions. Clean. They charge to detail and clean up a car to be sold and then charge a fee to sell it. I think most if not all the auto auctioneers are privately held and doing some sort of mezzanine financing which is 12-13% now, rather than their own capital. OPM works.

  4. Last chance to hike rates and remain somehow credible for the FED is this year. If the FED does not hike rate s by even a meek 0.25% it will be obvious for the whole world that the FED is a complete clusterfuck and fubar. Interesting times!

    Great post, BTW!!!

  5. Summer of 2011 is when Netdania started reporting monthly Silver volumes in excess of 75 Billion ounces per month.

    Summer of 2011 is when the paper gold and silver markets became a complete joke and farce.

    Summer of 2011 is when .gov claimed to capture Bin Laden, but could not come up with one single morsel of verifiable evidence (i.e. a picture) to prove it up, thus making the US Govt a complete joke and farce.

    I agree, Summer of 2011 was the tipping point!

  6. Dave, if you could remove the moderation feature, then I think you would get a lot more posts, and have a more dynamic blog. Sometimes I post here, but my comment doesn’t get released for a day or so. So it makes it hard for people to respond or chime in.

    On a related note, are you one of the Tyler’s at Zerohedge?

    1. I’m not one of the Tyler’s LOL. I had to put the moderation on when I started the Golden Truth in 2009 because of a very malicious commentor from Boulder. Some vinegar vinagina’d woman who was pissed her husband was following me. lol.

      If I got paid for this blog and could do it full-time, I’d probably sponsor and open chat-forum like TFMetalsReport. But I don’t and I can’t.

      I moderate comments as quickly as possible and, believe it or not, it’s rare when I have to nuke one. BUT, I get a lot of comment-attempts that go away because of the moderator and I think that weeds a lot of the douchebags and trolls.

  7. Well, they are getting desperate at The Bank of England………

    From the telegraph …..

    “One of the Bank’s nine interest rate setters, made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.”

    As you say Dave, we will wish we were watching from another planet. As Enstien said……….. “I don’t know with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.”

  8. Summer of 2011 – US credit rating was downgraded

    Summer of 2011 – MF Global started to meltdown and ultimately failed in Fall of 2011

    Summer of 2011 – European Debt crisis kicks into high gear

  9. I too was baffled at the blatant lies Yellen was throwing out about the Fed not causing inequality. What a steaming pile of horse shit! Of course they Fed is a direct contributor to inequality in the U.S. population. When you funnel all of that liquidity through corrupt, accounting control frauds (pick your bank) run by corrupt pigs on Wall Street and then pretend the money will somehow trickle-down to the general population and the broader economy, you would have to be an idiot not to see the inevitable result….(growing inequality). I suspect the reality is that Yellen is perfectly aware of the damage the Feds’ policies are causing, but at this point the lies have been piled so high, there is no way she’s going to backtrack and admit the truth.

  10. I don’t think there is a security chart out there with as many black candles as the slv etf. Just goes to show what a threat metal is to their house of cards.

  11. Dave,

    Thank you for the work you and John Titus have done. Just watched the
    video and it just brings continued confirmation of the charade of the
    Fed. This post and previous posts like SoT Market Update: Wall Street
    Wants To Trap Your Money post (and others from around the web) shows
    we are screwed.

    Full Disclosure: Have ordered your AmazonDotCon report which was eye
    opening to the blatant dishonestly of Jeff Berzerkos’ organization. Is
    it a requirement to be a narcissistic sociopath to run Fortune 500

    In the last 12 months have made some pretty drastic changes in my
    investing which means I’m taking charge of doing it myself. Just
    starting to learn about investing directly in stocks and using
    ThinkOrSwim (ToS) paper trading but TD tutorials seem to assume you
    know what you’re looking for in their software. For those of us new to
    investing do you have some recommendations to teach us the ‘language’
    and then apply that to using something like ToS? Your report covered a
    couple of options on taking advantage of the drop in Amazon but for
    someone new trying to bridge the gap between the report and opening up
    the ToS software which is ‘feature rich’. Not asking you to hold our
    hands, just give us an initial boost. Have watched hours of YT videos
    and learning a lot but anything you could contribute would be

    1. The best way to learn is jump in and get your feet wet. I don’t think I can say anything about the mechanics beyond what you learned by watching videos. There’s no better way to learn how to trade than to lose money, so keep your positions small enough that you don’t mind losing a little.

      Other than that it’s more art than science. I’ll turning out a lot of new research this fall and I’ll have sections in the companies with options that trade with my thoughts on how to play the options.

  12. If they didn’t send the reserves back to the Fed to earn interest and instead kept lending out like before 2088, then inflation would have gone insane and revealed in clear terms the result of printing up trillions of dollars and giving them to your banker friends. That had to be prevented so they killed 2 birds with one stone and didn’t lend it out.

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