The Fed Announces
The Federal Open Market Committee announcement:
The bond market announcement:
Daily Treasury Par Yield Curve Rates
The Fed-worshiping media have been banging the drums about the prime importance not so much of today’s expected rate cut, but what the Fed says about next year. Balderdash. It’s not like the Fed knows what it’s going to do next year and is hiding it up its sleeve, waiting for clever reported to eke it out. Too much can change. As a notable example, the Fed had no inkling at this time in 2019 that it would be slashing rates to zero and printing by the trillions in barely three months. Even its biases change. If the stock market tanks, you can count on the doves flocking in force.
Supposedly worried about both inflation and unemployment, the Fed has backed itself into a corner of its own making. It lost its nerve before it finished its inflation fight a couple years ago. No mere Monday morning quarterbacking; I said so at the time. Had it been the truly independent Fed it’s touted to have been, kept its promise to act with resolve, and finished the job, it wouldn’t have the inflation problem it has now and would have much more latitude to ease if it were warranted.
Let’s talk about the candidates for Chairman. They’re all well qualified, and none appear to be rabid inflationists, although Hassett is getting a lot of guff from the establishment media on the premise that he’s too close to Trump. He’s not bad, but probably my least favorite just because he strikes me as the most political. Although let’s be clear; it is a political position. Bowman, and Waller are among the best inside candidates. I like Reider because he’s a market guy. Of the short list candidates, Warsh would probably be my top pick, but for that reason he’s probably least likely to make it.
You never know in advance, but I don’t see any Martins or Volckers in the running. Far as I know, Ron Paul’s hat isn’t in the ring. It’s definitely going to be a “right stuff” kind of challenge ahead. What is needed most is someone who would apppear before Congress and tell them they need to get their deficit act together, because we’re not going to be your bottomless piggy bank. Renounce the “2% inflation target”, “forward guidance”, and ultimately all attempts to target interest rates. Balance sheet assets will consist solely of Treasuries and gold. Adhere to the real statutory mandate of keeping the monetary aggregates in line with the economy.
The real news has nothing to do with rate cuts, but with the resumption of QE. The Fed says it’s restricted to short term Treasuries and solely for the purpose of managing reserve balances. Call it Quiet QE if you want, but it’s direct money creation no matter how you spin it.
Powell is emphasizing the importance of not allowing a one time increase in inflation from becoming entrenched. Sorry, you had your chance a couple years ago and blew it. Cutting rates and restarting QE isn’t going to stuff that genie back in the bottle.
I was already terribly angry at the totally unnecessary rate cuts over the past year and this purchasing of short-term Treasury debt (are these Treasury bills or are they secondary market notes and bonds that due to mature in a year or less?) just takes the cake. Is this a “surreptitious” (everybody knows what these losers are actually doing) way of lowering the Fed Funds Rate designed to drive Treasury bill rates to zero? Does the Federal Reserve actually believe that people will buy longer duration Treasury notes and bonds to get some sort of a yield?
They can count me out. I am not going to be something akin to a Silicon Valley Bank who gets destroyed when rates jump “unexpectedly” higher (I and I suspect everybody else has ZERO confidence that the Federal Reserve will ever end these stupid games) but, unlike SVB’s depositors, doesn’t get bailed out.
At this point, the Fed might as well just send every American $1B (heck, let’s give everybody on the planet $1B) and get the hyperinflation over with. If they cannot fix the banking system after nearly 20 years of unprecedently easy monetary policy and neverending bailouts, they’ll never fix it.
What a joke and what an even bigger joke are the colleges that produce these people.
IIRC it was “Treasury bills”. Probably just a coincidence that Treasury has heavily concentrated its issuance there.
If it were the Fed’s sole objective to debase the dollar, it could just as well cut checks to citizens. Send everyone from Billy Gates to Billy Beer and chips the same amount. But you don’t see that happening because that’s not the goal … inflation is a wealth transfer mechanism and needs to be done through certain channels for it to do that. The first in line benefit at the expense of those further on down. Inflation exists because it is very popular with the constituencies that control the system. Theft with neither the knowledge nor consent of the victims.
Hi Gang
Ok, couple of points…………
1st Mum is out of hospital, she has an infection in her bowls & has tablets, should clear up ok.
Next Milton Kuo, sir that is the best post you have ever made over the years…..simple & from the heart i 120% agree with you!
“They” are totally corrupt & incomperant …….these MF’s tried to play “The Great Game”, they lost.
Glad to hear your mum is on the mend, Mike.
New Nato Buffer zone?
🇺🇲🇪🇺 Leaked document shows US wants to pull four countries out of the EU as part of Make Europe Great Again strategy’ – Daily Mail
The countries that Trump plans to “separate from the EU” are:
🇮🇹 Italy
🇵🇱 Poland
ðŸ‡ðŸ‡º Hungry
🇦🇹 Austria
Hmmmm………….didn’t Putin demand Nato roll back?
A bit of a head scratcher … what happened to this and this?
Everything is in flux……………US reclaiming Central/South America
Russia “Dumped” Syria in exchange for……..?
New NEW world order
What’s in NATO and what’s in the EU are distinct but related questions. Personally I think Europe was better off with the original trade union or common market idea and let it get out of control with this new federalized European state. But if the admin is serious about this new road map it’s not up to the US to say what’s in the EU and what’s not.
NATO is a different story … it involves US obligations. It may have outlived its usefulness altogether. The US should just exit. It’s not as if the US would refuse to get involved if there were clear aggression against the heart of Europe and was asked for help. It didn’t need a NATO to do that in WWII.
Everytime the invisible hand/free market attempts to sort the problem……
https://www.telegraph.co.uk/business/2025/12/11/bank-of-england-inflation-surge-says-lord-king/
Britain would have suffered cash crunch without QE, claims Bailey
Governor defends money-printing scheme amid claims the Bank ‘contributed significantly’ to inflation
Funny that sounds a lot like what the Fed said yesterday to justify restarting QE.
Which raises the question; so freakin’ what? What if they just let the “cash crunch” happen? What happens when millions of ordinary families suffer a “cash crunch” because of central banks’ inflation?
………………….because “They”bet the farm on beating Russia/Bricks….. they failed.
Thus MORE money required………..
I was thinking what’s the Fed’s excuse, but I see where you’re coming from;-)
Trump Administration Plans to Boost Tax Break for Corporations
🙄
180° off. Corporations got the lion’s share of tax relief last time around. They’re already taxed at lower rates than many individuals. If a progressive rate structure is good enough for people, it’s good enough for corporations.
Higher rates on trillion dollar corporations, but let corporations deduct dividends paid on stocks, just like they can deduct interest paid on bonds. Then you also don’t need special walled-off categories like REITs, BDCs, MLPs…
A little more AIr out of the bubble …
The CNBC headline is “Dow jumps 600 points to record as Oracle sparks rush out of AI trade into broader market: Live updates“. Just the kind of markets the advanced Financology Model Portfolios are positioned for.
Not just a one day wonder …
Dow rises to fresh record as rotation out of tech continues: Live updates
This is looking more and more like a real trend change … I previously pointed to October 29, 2025, though looking at a broader range of charts it could have been October 30 or October 31 … appropriately enough, Halloween …
That was a great call, since then its been a steady downward progression.
Well, well
The European commission has crossed the Rubicon…………it will “Permanently freeze” Russian assets. Against the advance of America/Japan/IMF/BIS/Bank of England/European central bank/Euroclear……….etc.
Its going to turn out to be the best money Russia never spent, ends NATO & European union!
Mike
Both NATO and the EU started out with reasonable goals. But they outgrew them. The EU went beyond a common market and started to morph into a federal nation state. NATO turned imperialistic, expanding eastwards towards the Russian frontier. Getting too big for your britches is the prelude to geopolitical suicide.
Abandoning basic principles like property rights for geopolitical expediency is a giant leap towards the cliff.
That was a great call, since then its been a steady downward progression.
The EEC was a cloaked post WW2 Nazi project……….now they want to rearm to attack Russia by 2030…………Good luck MFers.
Meantime
https://www.youtube.com/watch?v=JuRBU8UVhDU
AI getting a sell off………..
🇩🇪🇨🇳 Germany’s Foreign Minister Johann Wadephul flew to China to negotiate rare earth materials, the Chinese government refused to meet with him – Reuters
Back in October, when China frozed rare earth exports – the metals that power EVs, wind turbines, electronics, everything, German automakers immediately warned of production shutdowns.
Wadephul tried to fly to Beijing. China denied him meetings with Foreign Minister Wang Yi and Commerce Minister Wang Wentao.
Markets are soft mostly across the board today, Gold and platinum are among the few the upside exceptions.
I continue to believe that investors can mostly follow their default allocations except skew towards value around the world; the 20:20:30:30 Portfolio has been right in the sweet spot of markets lately.
In yesterday’s post-meeting press conference, Powell tried to blame elevated inflation on tariffs. This is either economic ignorance or intentional dishonesty, neither of which is excusable for the Chairman of the Federal Reserve.
Anyone wishing to attempt to defend that view is invited to do so in light of the analysis given here:
Tariffs Are Not Inflationary
Are Sales Taxes Inflationary?
[… crickets …]
BIS says gold and equities are in bubble territory
That’s not an unreadable case to make, depending on how you define bubble. US stocks are certainly in a bubble, trading at rarified valuations comparable to 1929 and 1999. Gold is historically expensive compared to its commodity kin.
The question is where would that leave investors? The fundamentals for the remaining major asset classes, currency and bonds, aren’t exactly consistent with safely stashing all or even most of your nest egg in. You could buy non-gold commodities, but they tend to be more correlated with stocks. You can buy non-US stocks, and it’s not a bad idea, but making a whole portfolio of them is taking a bit of a long walk on the risk pier too.
Ultimately you have to make choices and while you might underweight overvalued assets, avoiding them completely isn’t really an alternative. A rational takeaway from the BIS analysis suggests that completely avoiding cash and bonds would be imprudent as well.
Steve Forbs on Blighty
https://www.youtube.com/watch?v=X22jc1yn-Zo
Mega’s Dispatch from England:- UK about to have its “Samuel L Jackson” moment?
I refer to the last scene from “Pulp fiction”….. in the Dinner…………”Now Ringo I am going to count to three & when i count three you going let go your gun & sit you ass down”.
I think the UK is very much in this position, China is its main crediter & US its political crediter.
I think “Ringo” is going to get sat down in a room & China/US may be even Russia itself will give them “terms”.
As Churchill said “Defeat has a certain odor” & Ringo you stink of it.
As i see it this is what is play:-
Trump intends to “Trim off” the nations bordering Ukraine.
Us will dump Nato
US will offer protection to the newly liberated nations.
Hence the newly liberated nations will act as “Buffer zone” required by Russia.
Western Nato will be left to fade away………….
Just one facet of the new trade/security agreement………the NEW grand bargain.
Mike
Mega’s Motoring Market:- Future Welfare Queen transport
https://www.youtube.com/watch?v=watS4IoAq68
3RD world transport that might be heading this way……….
Based on a Forklift running gear (i joke you not) this little honey boasts some very good stuff like Airbags/ABS some crash testing. Power comes from a 44 bhp EV motor, 60 mph flat out……………Just what your BMW driving welfare queen needs to find themselves in…
Schwab’s Market Perspective: 2026 Outlook
“A weakening trend in the labor market is the major factor driving the Fed to ease policy given that inflation has held above the Fed’s 2% target for more than four years.”
It never ceases to amaze me how different people can look at the same set of facts and reach completely different conclusions. The fact that the Fed has held “inflation” above its 2% target for over 4½ years and the labor market is nevertheless in a weakening trend should call into question the whole assumption that the inflation, bad enough in its own right, isn’t even delivering the presumed benefits to employment.
It’s all downside. The Fed never could sustainably benefit employment. It can only control the value of the currency it issues.