Fed Study: How We Made The Top 10% Richer Than Ever

Every three years, the Federal Reserve releases a study on consumer finances that is a stockpile of data on everything from household net worth to incomes. The 2019 Fed survey confirms statements I have made previously regarding how the Fed’s monetary interventions made the top 10% more prosperous than ever. They just left the vast majority of Americans behind.

While we will address the statistical data, there is also the anecdotal evidence that supports this thesis. Since 2008 there have been rising calls for socialistic policies such as universal basic incomes, increased social welfare, and even a two-time candidate for President who was an admitted socialist. Such things would not occur if “prosperity” was flourishing within the economy. 

Fed Or Growth

“The disparity between the Fed’s interventions, the stock market, and the real economy has become abundantly clear. For 90% of Americans, there has not been, nor will there be, any economic recovery.”

Stocks Are Not The Economy

Take a close look at the chart above.

Companies derive their revenue from the consumption of goods, products, and services they produce. It is logical that stock price appreciation, over the long-term, has roughly equated to economic growth. However, that relationship has become unhinged since the financial crisis due to the Fed’s interventions and suppressed interest rates.

From Jan 1st, 2009 through the end of July, the stock market has risen by an astounding 203% or roughly 18% annualized. With such a large gain in the financial markets, there should be a commensurate growth rate in the economy. 

After 4-massive Federal Reserve driven “Quantitative Easing” programs, a maturity extension program, bailouts of TARP, TGLP, TGLF, etc., HAMP, HARP, direct bailouts of Bear Stearns, AIG, GM, bank supports, etc., all of which totaled more than $36 Trillion, cumulative real economic growth was just 21.35% (We have assumed a 32% increase in GDP for Q3-2020)

While monetary interventions are supposed to be supporting economic growth through increases in consumer confidence, the outcome has been quite different.

Top 10% Or Bust

Not really. As noted by the WSJ previously:

“As of December 2019—before the shutdownshouseholds in the bottom 20% of incomes had seen their financial assets, such as money in the bank, stock and bond investments or retirement funds, fall by 34% since the end of the 2007-09 recession, according to Fed data adjusted for inflation. Those in the middle of the income distribution have seen just 4% growth.” – WSJ

Continue Reading at ZeroHedge…

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John McAfee Arrested In Spain And Charged With Tax Evasion And Promoting Initial Coin Offerings

A little over a year after former tech guru (and one-time presidential candidate) John McAfee was arrested in the Dominican Republican (aboard a yacht carrying high-caliber weapons, ammunition and military-style gear), and two months after a “fake arrest” for wearing a thong mask

… on Monday the eccentric millionaire was arrested – this time for real – in Spain, where he is awaiting extradition to the US after he was charged with tax evasion by federal prosecutors who allege McAfee hid cryptocurrency, a yacht, and real estate as part of a conspiracy to evade taxes, which he forgot to pay from 2014 to 2018.

At the same time the SEC also charged the former programmer for promoting investments in initial coin offerings (ICOs) to his Twitter followers without disclosing that he was paid to do so. McAfee’s bodyguard, Jimmy Watson, Jr., was also charged for his role in the alleged scheme.

McAfee’s last tweet is from September 12, in which he explained why he is not voting for anyone: “Why would I choose one person over another to control me? Slave masters are the same. We are numbers rather than people, irrespective of the master.”

Some more details as disclosed by the DOJ late on Monday:

An indictment was unsealed today charging John David McAfee with tax evasion and willful failure to file tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney D. Michael Dunavant for the Western District of Tennessee.

The June 15, 2020 indictment was unsealed following McAfee’s arrest in Spain where he is pending extradition.

Continue Reading at ZeroHedge…

BIS Quarterly Review Warns Of Disaster Re $17 Trillion Negative-Yield Debt

Claudio Borio, Head of the Monetary and Economic Department at the BIS, published the BIS Quarterly Review, September 2019on Sunday, revealing how the increasing acceptance of negative interest rates has reached “vaguely troubling” levels.

The statement comes after the Federal Reserve and European Central Bank (ECB) cut interest rates to flight a global manufacturing slowdown — Borio said that the effectiveness of monetary policy is severely waning and might not be able to counter the global downturn, in other words, JPMorgan Global Composite PMI might print sub 50 for a considerable period of time.

“The room for monetary policy maneuver has narrowed further. Should a downturn materialize, monetary policy will need a helping hand, not least from a wise use of fiscal policy in those countries where there is still room for maneuver.”

The BIS, known as the ‘central bankers’ bank,’ said the recent easing by the Fed, ECB, and PBOC, has pushed yields lower across the world, contributing to the more than $17 trillion in negative-yielding tradeable bonds.

From Germany to Japan, 10-year government debt rates have plunged into negative territory, in recent times.

“Against this backdrop, sovereign bond yields naturally declined further, at times driven by the prospect of slower economic activity and heightened risks, at others by central banks’ reassuring easing measures. At one point, before the recent uptick in yields, the amount of sovereign and even corporate bonds trading at negative rates hit a new record, over USD 17 trillion according to certain estimates, equivalent to roughly 20% of world GDP. Indeed, some households, too, could borrow at negative rates. A growing number of investors are paying for the privilege of parting with their money. Even at the height of the Great Financial Crisis (GFC) of 2007-09, this would have been unthinkable. There is something vaguely troubling when the unthinkable becomes routine,” Borio warned.

Central bankers have already acknowledged that the flurry of recent rate cuts had continued to deplete their already-limited firepower – which would make their ability to fight a prolonged downturn less effective than ever before.

ECB President Mario Draghi said earlier this month that “it’s high time for the fiscal policy to take charge,” an indirect admittance that monetary policy has run its course.

“Almost all the things that you see in Europe, the creation of more than 11 million jobs in a short period of time, the recovery, the sustained growth for several quarters, were by and large produced by our monetary policy. There was very little else… Now it’s high time for the fiscal policy to take charge.”

Borio said global markets were alarmed this summer by the inversion of the US and other major countries’ bond yield curves.

He also warned about the corporate debt market, specifically major imbalances in leveraged loans known as collateralized loan obligations (CLOs) which “represent a clear vulnerability” to the global financial system.

And perhaps gold is ‘fearing’ the same “unthinkable” status quo that Borio warns of as it rises alongside negative rates…

Source: https://www.zerohedge.com/economics/vaguely-troubling-bis-warns-financial-disaster-amid-17-trillion-negative-yield-debt

CIA Whistleblower Warns The Fed “Is Out To Get President Trump”

Former CIA Officer and whistleblower Kevin Shipp thinks the Fed rate-hikes throughout Trump’s two and a half years in office are a way to “get the President.”

Trump has been highly critical of the Fed, and he says it is to blame if the economy tanks. Shipp explains, “God bless Donald Trump because he is the first President to call out the Fed like he is doing.”

“He has got the Fed shaking in their boots. When the Fed gags its board of directors and its members, that is not good. Something not good is going on. Perhaps they are bringing the interest rates down to zero. Perhaps it’s the fact we are entering into, not only U.S., but a global recession. So, they have put the lid on any comments coming out, and I think they have done it for a reason that is concerning…

I think it is tied to an upcoming global recession, and we may see quantitative easing (money printing) rates go to zero, and they don’t want the President or the public to know what they are about to do.”

Shipp thinks the Fed is “out to get President Trump” and contends, “Under Barack Obama, the Fed raised rates only two quarter points. Under President Trump, they kicked it into full gear and have done seven adjustments (rate hikes) in just two years starting just after his inauguration.” – READ MORE at ZeroHedge

Report by Mich St. Econ Prof. and Catherine Austin Fitts, former Asst. Sec. of Housing Indicates DOD and HUD Lost $21 Trillion from 1998-2015

A new report by Dr. Mark Skidmore, a professor of economics at Michigan State University, and Catherine Austin Fitts, former assistant secretary of housing analyzed the budgets of both the Department of Defense (DOD) and the Department of Housing and Urban Development (HUD) and discovered that these two departments alone lost over $21 trillion in taxpayer funds between 1998 […]