E The Ghost Of The Feds Past: Rate Hikes, Rate Cuts, And The Great Collapse

Brief Introduction:

Just as this author had addressed beginning of summer in an article regarding oil and the Ghost of the 1985, it appears oil is going to further its decline. But then again, everything is going to decline - courtesy of the Federal Reserve. It appears no matter what tricks or delays the elites use, a bust is always inevitable. 

Yellen: Delussional

In December, the Fed led by Janet Yellen lifted rates for the first time in nearly a decade. College graduates that went to work on Wall Street during 2006 thus have never even been on the trading floor during a rate hike. So what could anyone expect?

Here are some of the points she made from her much awaited press conference (full transcript; 12/2015).

Point 1. "The labor market has clearly shown significant further improvement toward our objective of maximum employment...The unemployment rate, at 5 percent in November, is down 0.6 percentage point from the end of last year and is close to the median of FOMC participants’ estimates of its longer-run normal level," said Yellen. If the Fed wanted maximum employment, the government could simply hire individuals to dig then refill ditches. What happened to achieving max productivity, not max employment? Flashback to take a look at the October 2015 Jobs from the BLS report to gauge employment quality:

It appears more than roughly 75% of the jobs went to individuals aged 55-69, while individuals 25-54 of age actually lost jobs. Also, the labor participation rate is at a 40 year low - thus lowering the percentage further. 

Also important to note with the energy market all but on life support and significant major job layoffs from major oil companies such as BP, Halliburton (HAL), Chesapeake (CHK), Shell, and countless many small companies - how will this affect other markets. How will this affect oil states in the long term? These were high paying salaried jobs which are being put to rest and low paying hourly jobs replacing them through service sector and retail. 

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This is a column I wrote in my recent newsletter issue.

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Joe Economy 4 years ago Member's comment

Even if Yellen did seem too overly optimistic about the state of the economy when she decided to raise interest rates, I still believe that whatever turbulence we are seeing now in the stock markets are not as a result solely of that rate hike. China was and still is extremely volatile, oil continues to spiral downwards, and the US dollar is stronger than almost any other currency which makes US exports expensive and pressures the US economy in a myriad of ways.

Adem Tumerkan 4 years ago Author's comment

I also dont think it is the sole reason either.

But mentioning China, they had a similar volatile and our markets also plunged in August, just as the crowd as positive the Fed would hike rates - then they didnt and markets rocketed.

The data is clear, we are in a recession.

Alot of the issues you just named are symptoms of a strong dollar in my opinion (or atleast the strong dollar added to the damage).

Currency Trader 4 years ago Member's comment

Agreed, well done.

Gary Anderson 4 years ago Contributor's comment

Amazing that.25 percent hike is destroying liquidity. Must be a pretty fragile financial system.