Reposting This Excellent Video
We first posted this video from John Titus back on September 16, just days before the most recent FOMC when The Fed was expected to "raise interest rates". No time like the present to post it again and we implore you to take the time to watch it.
In the 90 days since, we've gotten to know John a little bit and we've even had him in for an A2A webinar. That show is public, too, and I encourage you to listen when you have the time: http://www.tfmetalsreport.com/podcast/7227/a2a-john-titus
Financial media seem certain that Mother Fellen is going to raise the Fed Funds rate later today, perhaps by 25 basis points. So why is Mother so hell-bent on raising rates RIGHT NOW, even though all of the economic data is still awful? After all, we've stated for years that The Fed can't and won't raise rates. Remember, though, we've also told you countless times that "the FOMC/Fed will do whatever they deem is in the best interest of their (TBTF) member banks"? In this case, it's all about the excess reserves as described in John's video.
- Mother can't eliminate the interest on excess reserves that The Bernank started paying in 2009. Recall the hissy fit Jamie Dimon threw at the mere mention of an excess reserve interest rate cut a few months back?
- But Mother also can't force The Banks to lend nor can she force the banks to reverse repo the cash back to The Fed.
Therefore, she's considering raising rates by 25 bps. Why?
- By doing so, she might "drain" $800B or more from the system. See here: http://www.zerohedge.com/news/2015-12-03/its-just-025-rate-hike-whats-bi...
- More importantly, by raising rates she hopes to narrow spreads, therefore enticing Banks to lend a little and move the economy forward, even while maintaining the excess reserve welfare/transfer payments.
All of this is sort of what David Stockman discusses here: http://davidstockmanscontracorner.com/december-16-2015-when-the-end-of-the-bubble-begins/
The bet is that the "economy" can withstand higher rates and the flattened yield curve that usually foreshadows recession. Again, this is all uncharted territory, thanks to the criminal Bernank. Mother has NO IDEA of whether this will work. Perhaps, she'll hesitate again later today out of fear and uncertainty. We'll know soon enough.
Regardless of whether she does or doesn't, my plans aren't changing as I continue to add and stack physical precious metal. 2016 looms as a volatile and uncertain year. The news later today will only serve to raise the stakes.