"Save us, Oh FED"

Sat, Dec 20, 2014 - 12:22pm

I was on an anniversary vacation (27 years) in lovely Sedona Arizona yesterday, named after Sedona Schnebly whose hospitality and kindness was renowned in the early 1900s, when I noticed the headline on the USA Today weekend edition praising the FED for saving the stock markets. (ZH has noticed too with a different angle on the headline) I had to stop and read. Two things jumped out at me from the image below: 1) that the images and quotes are lying to the American people, 2) that we have come to expect the Fed to save us!

But wait just a minute... this "correction" started a lot higher! As I look at that newspaper image, it would appear that stocks are now stronger than before the pullback began. A look at the full chart, glancing back five more days, shows that indeed we have only recovered a portion of the losses. Is someone trying to deceive me?

Let’s say I am an investing novice, (“Jerome is an investing novice…”) with my money in a TIAA-CREF mutual fund, and I have been watching the economic headlines, like a diligent mutual fund investor always does, wondering if I should cash out for a while. Then I see this headline. “Wow” I think, “Looks all clear to me. I’m stayin’ in.” Then I look a little deeper at the front page and see that it’s a 709 point gain in two days—best since 2008. “Damn,” I say, “That’s when all the recession began. It really is over. And look at that graph, stocks are going up!” Then I read a bit more. “Wow. This expert says the correction in over.”

And I pay for my mocha latte at the store, go out to the car and continue with my vacation.

But I would miss what anyone who actually watched markets would notice. First, the downturn started with the Dow at 17,986, and fell 1018 points. A 709 rise still leaves us 309 short of a full recovery. So how is this “mini-correction” over, as David Kotok* says? The seasoned investor, might be optimistic, but still wants to see a higher high before saying it’s over. A reader might think that indeed the graph looks encouraging, but we are still 309 points below the highs!

Why did the newspaper select just that range? Was it simply to deceive me, the novice, into thinking markets have moved higher?


USA Today has deceived the careless reader with its graphing practices. (I might add that they regularly, break the charting rules to get a certain look, then add artistic flourishes to the graphs & charts for eye appeal.)

  • Somebody chose to select only the boxed in range, hiding the extent of the pullback.
  • Somebody chose to quote David Kotok rather than another more cautious, chart-watching economist.

And in making these choices, USA Today has continued to promote the grand narrative of “Recovery,” with just a bit of deception here that they could likely weasel out of if put to the question. But they, and all the other mainstream news outlets, cheat their headlines and graphs consistently in favor of the recovery story.

And the hell of it is that in our world, a lie is as good as the truth if people believe it. And the propagandists have figured out that you just have to keep repeating lies to increase the belief level. The wrong stories simply do not get past the editors, who may have a list in hand of what will and what will not be published. We have all seen a story slip through that does not support the recovery narrative, only to see it pulled of the internet before the day is over. We have seen frustrated journalists resign because their investigative work was canned. Edit out the wrong news, Highlight the desired news. Ignore and Augment.

Moreover, they have added in the idea that the FED is supposed to come to our rescue

“Get to work Mr. Chairman.” Now that expectation is becoming the norm. But isn’t this central planning? The Fed is not supposed to let the markets fall? But meanwhile they are simply steering return-conscious investors into a single asset category.

Yes, the news is controlled. Yes, the economic stories fudge, cheat, and flat out lie about what is going on in the economic world. The organizational system is in place to ensure that the majority of news outlets are controlled. The journalists are so absorbed in narrow ranges of writing, that few see the bigger picture. But I am preaching to the choir here, most likely. It just burns me to see news manipulation in action while I am trying to relax.

They didn’t actually change the numbers, they were just selective in how they showed them.

But in this world, that is all it takes to perpetuate the “right” story.

* Sorry for misspelling your last name in that image, David.

About the Author


Dec 20, 2014 - 12:52pm

Very important article

I watch often and I was fooled by the media

Dec 20, 2014 - 1:12pm

AM--great job

pulling back the curtain Silver66

Dec 20, 2014 - 1:44pm

@Silver66 I'll pass your


I'll pass your message on to Dr Jerome !

To Dr J. Nice article!

Dec 20, 2014 - 1:46pm

Lovely picture by your

Lovely picture by your headline. We used it for a family photo backdrop last year. If you want more than just a peek behind the curtain, may I suggest Dimitri Speck's "The Gold Cartel". The scope and scale of the deception is staggering.

Dec 20, 2014 - 1:57pm

Most excellent article Dr. J

Congratulations on 27 years. My lovely wife and I also celebrated that same amount of time together in November. We are two very lucky men to have women that love us and understand the need to prepare.

Dec 20, 2014 - 2:13pm

And the day will come

when Mr. Market will lose complete confidence in the central banks and their 'narrative', and it is at this point that gold and silver will 'shine'

Dec 20, 2014 - 2:41pm

Great job, Doc

Thank you and Happy Anniversary!

Dec 20, 2014 - 3:57pm


Shows you what happens before your first cup of Java in the morning.

What a STUPID i am !

Kudos Dr J


boomer sooner
Dec 20, 2014 - 4:08pm

Congratulations Dr J

You romantic devil ! My wife and I will celebrate #23 tomorrow. All I am doing is taking her to a steakhouse in a little town about an hour away.

As to the Fed saving us. The sheeple drink from that well, deep and often. The media promotes the way of someone else taking responsibility for our inaction. The financial gurus have sold the yarn of set it and forget it. Auto deposit, auto invest, auto pay, auto overdraft protection. My latest battle with "auto" was with Sirius radio last night. Found out that if you take the 6 mos special, you inadvertently agree to auto renewal, no notice required, at a really high rate. The 12 month agreement, they send you notice of renewal and if you do not respond, they keep coverage going and can charge for the delinquint payment. I will not have to deal with their auto anything in the future.

Thanks Dr J

Dec 20, 2014 - 4:15pm

I'm not really sure when the

I'm not really sure when the concept of "the Fed needs to save the markets" became embraced. It seems to be so widely accepted that you might as well have 3 heads to suggest otherwise.

Too many people are vested in the fact. There is no graceful way to end this.

Dec 20, 2014 - 4:34pm


Today we are having a very nice family holiday in AZ with lovely weather.

I could be worse, like someone somewhere is experiencing...

Dec 20, 2014 - 4:40pm

I always enjoy reading your words of wisdom

I was watching the news this morning, did you guys know this weekend people will be spending way more than last year, the biggest money wise weekend for retailers since years ago,the stock market is close to a all time high, consumer confidence is way up........... The list went on and on......

Talk about pump and dump on the American sheeple, it was actually kind of sickening as every sentence was a lie. I wish I could get that sound bite.

Dec 20, 2014 - 5:17pm

Thanks Dr J....

My husband was telling me he had lunch the other day with a friend who is certain the economy is in a recovery. I'm going to send this to him to give his friend. Of course, I suggested he tell his friend to ask his wife, anyone doing the grocery shopping knows better!

Congratulations on 27 years...your children are blessed. It will be 25 for us this year.

Merry Christmas to you and your family, Dr. J. Thank you for all you contribute here!

Safety Dan
Dec 20, 2014 - 5:34pm

Judge Rules Obama's Abuse Of

Judge Rules Obama's Abuse Of Executive Orders Is "Unconstitutional"

Submitted by Tyler Durden on 12/20/2014 - 14:04

President Obama’s unilateral legislative action violates the separation of powers provided for in the United States Constitution as well as the Take Care Clause, and therefore, is unconstitutional.

Safety Dan
Dec 20, 2014 - 5:38pm
Safety Dan
Dec 20, 2014 - 5:42pm

Couple Ditches Honeymoon To

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College Student Finds Innovative Way to Keep Homeless Warm—and Get Them Jobs


Dec 20, 2014 - 6:55pm
Dec 20, 2014 - 7:48pm

Good Job Dr. J.

I work out of town, so when I got home last night, my wife began telling me that while at dinner with a friend on Wednesday night, the talk turned to the economy. The neighbor is a LDS, so stored food is not the issue; but she wanted to know how my wife felt about the overall economy. So, my wife began explaining why we pulled out of all our Mutual Funds; IRA's; how I changed jobs to get my Pension Money out of the system; and the Taxes we had to pay. She explained that we bought AG/AU and paid off some bills. Since her friend seemed receptive, she continued with the recent Fed Budget and changes "for" the banking system. My wife explained the Bail In (Used Cyprus for her example, I was so proud!) and why we only leave a minimum amount in the bank. The look of fear is what my wife saw next, so she stopped talking.

My wife then tells me that the reason I have a hard time explaining what little I know about the economy to people is because they become afraid. I believe that she is on to something, as I have had the same problem many of you have shared in posts about people not believing (not wanting to believe) the information being presented.

The question becomes: How does one share information without invoking fear?

Dr. P. Metals
Dec 20, 2014 - 8:00pm

RE: Fear

I'm not sure fear is always a bad thing? I can be a great motivator.

Righting Moment
Dec 20, 2014 - 11:30pm

RE: Fear

Fear can indeed be a great motivator. As to how to talk with folks that reached the fear threshold - be patient. They need to process what they are afraid of and need to have someone that doesn't belittle their fear to be there once they cross the first hurdle. Most of us know this from our own experience. We needed a person or place ( like TF Metals) to be able to return to and pick up the conversation from the point where they left off.

I have learned so much here and was able to convince my wife to begin purchasing some PMs. Not that she's 100% onboard, but she's not fighting me either and is opening her eyes to the madness that is surrounding us these days.

So take your time. Be there when they return and be ready to pick up where they left off. There will be hurdles - many of them. Read and learn and prepare.

"Put your own oxygen mask on first..."

Dec 21, 2014 - 12:01am


The fed and the government are going to force a new definition to be written for the term "market maker".

Great find, Dr. J !

Dec 21, 2014 - 7:59am

for those not able to post comments here...

....feel free to go to dr. Js comment corner in the forums...great post dr. J....kinda reminds me of the chart cnbs put up showing

how volatile gold was.... (or wasnt) when you really checked, the graph they showed was for a short period of time when gold WAS looking volatile....vs the reality over a decade of time...I think you called them out on it or something....great job

Safety Dan
Dec 21, 2014 - 8:39am



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Dec 21, 2014 - 8:50am
Dec 21, 2014 - 9:03am

1920's Germany

Just go back to that era and think of Joseph Goebels and the Ministry of Propaganda. Then look at how well the stock markets did until they crashed 97% in November 1923. Then look at the price of gold and silver which went up a heck of a lot more than the stock market, but did not crash.

DeaconBenjamin Mickey
Dec 21, 2014 - 9:06am

Goebbels and the Weimar Republic

Hitler's government, including Goebbels, took office nearly ten years after the hyperinflation you reference.

Dec 21, 2014 - 9:19am

For Russia's economy, the worst is yet to come

  • People wait in line in a mall in central Moscow on December 15, 2014

Deep recession, skyrocketing prices and a fragile banking system: although the ruble seems to have stabilised after its abysmal drop this past week, Russia still faces the heavy consequences of the turbulence.

For most Russians, the week ended with relief: after trading at unbelievable levels of 80 to the dollar and 100 to the euro, the ruble appears to have stabilised at around 60 and 73, respectively.

With the ruble dropping by 20 percent on Tuesday -- bank websites crashed as too many users tried to connect, and crowds packed Ikea until 2 am to get a hold of goods before announced price increases took effect.

"The trend of the economy in the next six months is certainly going to be much worse" after this past week, said Chris Weafer, an analyst with Macro Advisory consultancy.

"Confidence is shaken -- in the central bank, in the currency, in the direction of the economy," he told AFP.

"Consumption and investment are going to take a hit because of higher (interest) rates, inflation will be higher because of the weaker currency... the banks are going to turn to the government and shelves will be empty after the New Year."

In a sign of the challenges ahead, several suppliers have halted deliveries in a bid to raise prices.

Some stores decided to close their shutters -- Apple stopped sales via its Russian online store, while Ikea suspended sales of kitchens and home appliances and warned that prices on the website "may differ from prices in stores".

Opel and Chevrolet are no longer delivering to dealerships.

Russian media said that stores selling imported alcohol or clothing including Zara, Topshop and Calvin Klein are also trying to avoid selling at a loss while observers predict that many Western brands will soon disappear from Russia.

That trend has begun and inflation -- already close to ten percent -- threatens to reach 15 percent in the coming months.

This will hit the purchasing power of Russians, whose real incomes already declined in the first 11 months of the year compared with 2013.

With the ruble having now lost nearly 50 percent of its value against the dollar in the past year imported food and consumer goods are quickly becoming luxuries.

"Events have moved quickly and there are now growing signs that the currency crisis is spreading to the banking sector," wrote emerging markets economist at Capital Economics William Jackson.

Russia's financial sector is particularly vulnerable, as its state-controlled banking behemoths and a multitude of smaller institutions have been unable to raise funds in the West due to sanctions over Russia's annexing Crimea and support for separatists in Ukraine.

The central bank announced measures Tuesday aimed at ensuring their survival by improving access to liquidity and easing accounting standards.

On Friday, Russian lawmakers approved a bill on the recapitalisation of banks worth one trillion rubles ($16 billion, 13 billion euros). The finance ministry is also hoping to increase capital in the banking sector by 13 percent and the volume of loans issued by 15 percent.

For many Russians, the downward spiral of the ruble brought back memories of the crisis in 1998, when Russia defaulted on its debt.

"People are behaving like it's 1998 but there is no reason for it: Russia was a bankrupt country then and now it's actually financially in a pretty good shape," Weafer said.

High oil prices over the past decade have allowed Moscow to pile up substantial hard currency reserves. Even after having spent heavily to support the ruble, the central bank's reserves still stand at around $400 billion.

Public debt is just over 10 percent of GDP. The budget remains balanced and the government has a big rainy day fund to draw upon to sustain social spending.


Dec 21, 2014 - 9:19am


Would be envious of the current media capture


Dec 21, 2014 - 9:23am

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"We hope the price would rebound by the end of the second half of 2015," he said. "We can't see the market now, we have to wait until the end of the second half of 2015 to see how the market react to these low prices."



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