Even a small rise in interest rates could cause all kinds of problems with the trillions and trillions of interest rate derivatives…if all those derivatives start blowing up, the Fed would have to print trillions and trillions more dollars to save the banks.
And all those trillions and trillions of dollars would sink the dollar.
Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:
Try to find people you can have an intelligent conversation with about all of this – they’re all inside the matrix including all those idiot economists who thought the Fed was going to raise interest rates. How can you be an economist and think that? – Dr. Paul Craig Roberts, Shadow of Truth
Deflate-gate: if you dropped into the U.S. from another planet on the first day of 2015, you would have that “deflate-gate” was the most serious issue facing this country. This is because the entire media system in the U.S. is one massive propaganda machine designed to deflect the public’s attention away from the truth by inundating us with stories designed to calcify our brains with an overdose of useless news that should be relegated to the back-side of bubble gum wrappers.
The truth is that this country’s economic and political system is collapsing while the U.S. neocons running the Department of Defense are busy fanning the flames of war all over the world.
Perhaps the most serious “unspoken” problem facing the U.S. financial and economic system is the $100’s of trillions in derivatives that have been created by America’s Too Big To Fail Banks.
It’s a new thing and we don’t have experience to go on because we’ve never had this type of exposure to risk that no one can quantify. How it plays out we have no real way of knowing. We can not go by the past because it wasn’t there in the past. When I was in the Treasury none of these derivatives existed. In fact, they called derivatives “Treasury bond futures.” – Dr. Paul Craig Roberts
The size of this cache of weapons of mass financial destruction is even bigger now than it was in 2008, when derivatives caused the de facto collapse of the financial system.
Even a small rise in interest rates could cause all kinds of problems with the trillions and trillions of interest rate derivatives. I don’t know much about them – I don’t think the banks that are holding them knows much about them…if all those derivatives start blowing up, the Fed would have to print trillions and trillions more dollars to save the banks. And all those trillions and trillions of dollars would sink the dollar. – Dr. Paul Craig Roberts
The Fed has been threatening to raise interest rates ever since Ben Bernanke’s infamous “taper” speech in May 2013. In between every FOMC meeting the Fed officials play out a well-choreographed stage-play of “good cop/bad cop,” where mostly “bad cops” give speeches threatening us with a rate hike at the next FOMC meeting. Then, at the next meeting the Fed invariably defers.
Twenty-five basis points. The Fed is terrified of raising its Fed funds rate by even a measly 25 basis points. One-quarter of one percent. If the Fed can’t lift rates by one-quarter of one percent, it’s because to do so would cause irreparable damage of some sort in the financial and economic system.
Here’s is Part 2 of the Shadow of Truth’s conversation with Dr. Paul Craig Roberts in which we process the Fed’s inability to raise interest rates at the September FOMC even though more than 80% of Wall Street’s “brain trust” expected the Fed to move needle a paltry 25 basis points: