Tag Archives: Fed

The $100 Trillion Reason the Fed is Terrified of Deflation

by Phoenix Capital Research

Falling Prices Ahead

Over the last few months, Janet Yellen, head of the Federal Reserve Bank repeatedly stated that lower oil prices were “positive” for the US economy. This is simply astounding because the Fed has repeatedly told us time and again that it was IN-flation NOT DE-flation that was great for the economy.

And yet, repeatedly, the head of the Fed admitted, in public, that deflation can in fact be positive.

How can deflation be both positive for the economy at the same time that the economy needs MORE inflation?

The answer is easy… Yellen doesn’t care about the economy. She cares about the US’s massive debt load AKA the BOND BUBBLE.

Yellen knows deflation is actually very good for consumers. Who doesn’t want cheaper housing or cheaper goods and services? In fact, deflation is actually the general order of things for the world: human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper.

However, DEBT DEFLATION is a nightmare for the Fed because it would almost immediately bankrupt both the US and the Too Big To Fail Wall Street Banks. With the US sporting a Debt to GDP ratio of over 100%… and the Wall Street banks sitting on over $191 TRILLION worth of derivatives trades based on interest rates (bonds), the very last thing the Fed wants is even a WHIFF of debt deflation to hit the bond markets.

This is why the Fed is so obsessed with creating inflation: because it renders these gargantuan debt loads more serviceable. In simplest terms, the Fed must “inflate or die.” It will willingly sacrifice the economy, and Americans’ quality of life in order to stop the bond bubble from popping.

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This is also why the Fed happily talks about stocks all the time; it’s a great distraction from the real story: the fact that the bond bubble is the single largest bubble in history and that when it bursts entire countries will go bust.

This is why the Fed NEEDS interest rates to be as low as possible… any slight jump in rates means that the US will rapidly spiral towards bankruptcy. Indeed, every 1% increase in interest rates means between $150-$175 billion more in interest payments on US debt per year.

If you’ve ever wondered how the Fed can claim inflation is a good thing… now you know. Inflation is bad for all of us… but it allows the US Government to spend money it doesn’t have without going bankrupt… YET.

However, this won’t last. All bubbles end. And when the global bond bubble bursts (currently standing at $100 trillion and counting) the entire system will implode.

What Happens When Your Friend’s Smartphone Can Tell That You’re Lying?


Get ready for that smartphone to know your true feelings. (Michael Nagle/Bloomberg)

In just a few weeks, the next installment of “The Hunger Games” will arrive in movie theaters. The latest in a long line of films to depict a future all-knowing or controlling government — think “1984” or “Minority Report” — the dystopian tale will likely be a runaway hit. But the power to seem all-knowing – or at least know more than do now – may soon lie in technology that’s already in the palm of your hand.

We are nearing a point where our smartphones will be able to recognize a face or voice, in real life or on-screen. And identification is only the most basic of the possibilities. Many app-makers are experimenting with software that can also analyze – able to determine someone’s emotions or honesty just by a few facial cues.

This interpersonal assessment technology promises to make our lives easier. For instance, facial recognition technology can allow people to get immediate and amazing customer service. If a restaurant or retailer can identify me before I walk in the door, it would be able to identify me as a returning customer, accessing my favorite dishes or products. I would be greeted like an old friend (whether I were, or not).

Similarly, algorithms are now being developed that link thousands of facial cues with human emotions. Our brains do this naturally – we know without asking whether someone is happy or upset based only on their expressions. Law enforcement and poker players take this a step further, using facial cues to determine someone’s honesty. But with technology augmenting our brain’s natural behavior – possibly providing direct, measurable and verifiable input – we can produce measurable and verifiable data. As sensors move from our smartphones to activity trackers to smart watches from Apple and Samsung, we are measuring more than ever and are not far off from continuously tracking our emotions. And software is now in development to interpret people’s emotions, then project the results via an app onto a screen such as Google Glass.

Technology can also analyze the human voice to determine emotion – again, not just mimicking, but surpassing our brain’s abilities. Moodies, an app developed by Beyond Verbal, is able to detect a speaker’s mood based on nothing more than a voice. Worldwide call centers are testing the technology to help operators determine whether callers are upset and likely to switch their business to a competitor.

There are also some potentially negative consequences. If you can simply run a person’s image and voice through an app to determine their emotions and veracity, we will have to adjust as a society. Many of our daily interactions are built on small lies: “So happy to see you”, “Of course I remember you,” and “This is the best (food, activity or place).” In other words, society’s function is smoothed by little white lies – do we really want to eliminate that?

As we uncover our deceptions – implicit and explicit, including those of which we have convinced even ourselves – a market for technology that hides our emotions will arise. Entrepreneurs may create “emotion-cloaking devices.” Facial coverings may become more popular. Perhaps there’ll be sanctuaries where no devices are allowed, either by custom or law — an atmosphere akin to how we now feel about taking pictures in public bathrooms and kids’ classrooms.

One thing is for sure: politics is in for a major overhaul. With every smartphone possessing a virtual lie-detector test, elected officials will need to be creative in the ways they talk to us. In fact, my fear is the most insecure and most powerful politicians will resist, and quickly seek to regulate or restrict these technologies — ignoring their obvious good — in a hidden but discoverable attempt to preserve their own power and half-truths.

Ready or not, technologies are quickly arriving, which allow us to assess other people to a degree of accuracy we never before imagined. While by no means a cure for Alzheimer’s — at least in the disease’s early stages — facial recognition software could supplement a sufferer’s slowly deteriorating memory and help recall acquaintances, friends and loved ones.

Before we rush to decry these assessment technologies, we must also consider their incredible array of benefits. If this “recognition revolution” can indeed realize its potential, won’t it absolutely be worth a little uncertainty today?

‘Calibration issue’ in Maryland voting machines switches GOP picks to Democrat

 

BUSTED? Voting machines in Maryland are moving Republican votes to the Democrats’ column. By Jessica Chasmar

A calibration issue in multiple Maryland voting machines is reportedly switching voters’ picks from Republican to Democrat.

“When I first selected my candidate on the electronic machine, it would not put the ‘x’ on the candidate I chose – a Republican – but it would put the ‘x’ on the Democrat candidate above it,” said Donna Hamilton, who voted at the Frederick County Center, Watchdog.org reported.

“This happened multiple times with multiple selections. Every time my choice flipped from Republican to Democrat. Sometimes it required four or five tries to get the ‘x’ to stay on my real selection,” she said.

Miss Hamilton said she notified officials of the problem. “I’m not sure what was done about it. If someone is not paying close attention, they could end up voting for the wrong candidate,” she told Watchdog.org.

Queen Anne’s County Sheriff Gary Hofmann, a Republican, said the same thing happened to him when he voted early in Queen Anne’s County.

“This is happening here as well. It occurred on two candidates on my machine. I am glad I checked. Many voters have reported this here as well,” he told Watchdog.org.

Two other Maryland voters reported the same issue Friday in Anne Arundel County. A Diebold touchscreen voting machine switched their Republican votes to Democrats, Watchdog.org reported.

Joe Torre, election director in Anne Arundel, called it a “calibration issue” involving a single machine, Watchdog.org reported.

A similar issue was reported in a Chicago-area voting machine last week, as a Republican candidate for the Illinois state legislature tried to vote for himself and ended up selecting his Democratic opponent.

“While early voting at the Schaumburg Public Library today, I tried to cast a vote for myself and instead it cast the vote for my opponent,” Jim Moynihan said in a blog he linked to on Twitter. “You could imagine my surprise as the same thing happened with a number of races when I tried to vote for a Republican and the machine registered a vote for a Democrat.”

He said he also tried to vote for fellow Republican Larry Kaifesh in the 8th Congressional District race, but the vote was again cast for the Democratic opponent, U.S. Rep. Tammy Duckworth. Mr. Moynihan said he brought the error to the attention of a judge, who determined the machine hadn’t been calibrated correctly.

Jim Scalzitti, deputy communications director for the Cook County clerk’s office, said the machine in question was removed from service to be re-calibrated immediately and that there were no other reports of voters having similar problems.

Mr. Moynihan was eventually able to cast the correct votes.

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50 Years Later: Reagan’s ’A Time for Choosing’ Speech

Fifty years ago Monday, Ronald Reagan gave the speech that launched his career in politics and made him a star.  The speech, called “A Time for Choosing,” aired to a prime time NBC audience and made him a household name.

 

 

Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required


Carole Hinders at her modest, cash-only Mexican restaurant in Arnolds Park, Iowa. Last year tax agents seized her funds. Credit Angela Jimenez for The New York Times

by Shaila Dewain

ARNOLDS PARK, Iowa — For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.


The I.R.S. seized almost $33,000 from Ms. Hinders. Credit Angela Jimenez for The New York Times

“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”

On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”

Richard Weber, the chief of Criminal Investigation at the I.R.S., said in a written statement, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.” He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The new policy will not apply to past seizures.

The I.R.S. is one of several federal agencies that pursue such cases and then refer them to the Justice Department. The Justice Department does not track the total number of cases pursued, the amount of money seized or how many of the cases were related to other crimes, said Peter Carr, a spokesman.

But the Institute for Justice, a Washington-based public interest law firm that is seeking to reform civil forfeiture practices, analyzed structuring data from the I.R.S., which made 639 seizures in 2012, up from 114 in 2005. Only one in five was prosecuted as a criminal structuring case.

The practice has swept up dairy farmers in Maryland, an Army sergeant in Virginia saving for his children’s college education and Ms. Hinders, 67, who has borrowed money, strained her credit cards and taken out a second mortgage to keep her restaurant going.

Their money was seized under an increasingly controversial area of law known as civil asset forfeiture, which allows law enforcement agents to take property they suspect of being tied to crime even if no criminal charges are filed. Law enforcement agencies get to keep a share of whatever is forfeited.

Critics say this incentive has led to the creation of a law enforcement dragnet, with more than 100 multi-agency task forces combing through bank reports, looking for accounts to seize. Under the Bank Secrecy Act, banks and other financial institutions must report cash deposits greater than $10,000. But since many criminals are aware of that requirement, banks also are supposed to report any suspicious transactions, including deposit patterns below $10,000. Last year, banks filed more than 700,000 suspicious activity reports. Owners who are caught up in structuring cases often cannot afford to fight. The median amount seized by the I.R.S. was $34,000, according to the Institute for Justice analysis, while legal costs can easily mount to $20,000 or more.

There is nothing illegal about depositing less than $10,000cash unless it is done specifically to evade the reporting requirement. But often a mere bank statement is enough for investigators to obtain a seizure warrant. In one Long Island case, the police submitted almost a year’s worth of daily deposits by a business, ranging from $5,550 to $9,910. The officer wrote in his warrant affidavit that based on his training and experience, the pattern “is consistent with structuring.” The government seized $447,000 from the business, a cash-intensive candy and cigarette distributor that has been run by one family for 27 years.

There are often legitimate business reasons for keeping deposits below $10,000, said Larry Salzman, a lawyer with the Institute for Justice who is representing Ms. Hinders and the Long Island family pro bono. For example, he said, a grocery store owner in Fraser, Mich., had an insurance policy that covered only up to $10,000 cash. When he neared the limit, he would make a deposit.

Ms. Hinders said that she did not know about the reporting requirement and that for decades, she thought she had been doing everyone a favor.


Jeff Hirsch, an owner of Bi-County Distributors on Long Island. The government seized $447,000 from the business, a candy and cigarette distributor run by one family for 27 years. Credit Bryan Thomas for The New York Times

“My mom had told me if you keep your deposits under $10,000, the bank avoids paperwork,” she said. “I didn’t actually think it had anything to do with the I.R.S.”

In May 2012, the bank branch Ms. Hinders used was acquired by Northwest Banker. JoLynn Van Steenwyk, the fraud and security manager for Northwest, said she could not discuss individual clients, but explained that the bank did not have access to past account histories after it acquired Ms. Hinders’s branch.

Banks are not permitted to advise customers that their deposit habits may be illegal or educate them about structuring unless they ask, in which case they are given a federal pamphlet, Ms. Van Steenwyk said. “We’re not allowed to tell them anything,” she said.

Still lawyers say it is not unusual for depositors to be advised by financial professionals, or even bank tellers, to keep their deposits below the reporting threshold. In the Long Island case, the company, Bi-County Distributors, had three bank accounts closed because of the paperwork burden of its frequent cash deposits, said Jeff Hirsch, the eldest of three brothers who own the company. Their accountant then recommended staying below the limit, so for more than a decade the company had been using its excess cash to pay vendors.

More than two years ago, the government seized $447,000, and the brothers have been unable to retrieve it. Mr. Salzman, who has taken over legal representation of the brothers, has argued that prosecutors violated a strict timeline laid out in the Civil Asset Forfeiture Reform Act, passed in 2000 to curb abuses. The office of the federal attorney for the Eastern District of New York said the law’s timeline did not apply in this case. Still, prosecutors asked the Hirsch’s first lawyer, Joseph Potashnik, to waive the CARFA timeline. The waiver he signed expired almost two years ago.

The federal attorney’s office said that parties often voluntarily negotiated to avoid going to court, and that Mr. Potashnik had been engaged in talks until just a few months ago. But Mr. Potashnik said he had spent that time trying, to no avail, to show that the brothers were innocent. They even paid a forensic accounting firm $25,000 to check the books.

“I don’t think they’re really interested in anything,” Mr. Potashnik said of the prosecutors. “They just want the money.”

Bi-County has survived only because longtime vendors have extended credit — one is owed almost $300,000, Mr. Hirsch said. Twice, the government has made settlement offers that would require the brothers to give up an “excessive” portion of the money, according to a new court filing.

“We’re just hanging on as a family here,” Mr. Hirsch said. “We weren’t going to take a settlement, because I was not guilty.”

Army Sgt. Jeff Cortazzo of Arlington, Va., began saving for his daughters’ college costs during the financial crisis, when many banks were failing. He stored cash first in his basement and then in a safe-deposit box. All of the money came from paychecks, he said, but he worried that when he deposited it in a bank, he would be forced to pay taxes on the money again. So he asked the bank teller what to do.

“She said: ‘Oh, that’s easy. You just have to deposit less than $10,000.’”

The government seized $66,000; settling cost Sergeant Cortazzo $21,000. As a result, the eldest of his three daughters had to delay college by a year.

“Why didn’t the teller tell me that was illegal?” he said. “I would have just plopped the whole thing in the account and been done with it.”

 

10 Rye Whiskeys


by Gear Patrol

You’ve heard it before, but here’s another shot: Rye whiskey is on the comeback. We’ve long contented ourselves with corn-based bourbon, and we’re not ready (in the least) to change that habit — but to be sure, rye deserves some serious sipping. Long handcuffed to mixed drinks like the Manhattan, rye’s extra boldness and spice in comparison to corn-heavy whiskey is particularly pertinent after a long day of work. It’s simple, like good things should be, served straight up or over ice, and of course still works beautifully in cocktails.

And something with an extra kick-your-ass? That’s what whiskey’s all about. Rye whiskey sales have tripled in the last five years, so it’s time you jumped on this train. Here’s 10 great rye sippers at price points for the thirsty pauper or the libational prince.

Wild Turkey 101 Rye

This affordable 4-5 year aged rye rendition serves dual threat as a killer Manhattan mixture and a straight sipper with some serious zip. It’s solidly anchored in rye spiciness with a bit of apple and honey. Unfortunately, it’s a bit hard to find right now; the 81 proof iteration is similarly affordable and delicious.

George Dickel Rye Whiskey

Stop giggling at the name. This inexpensive rye whiskey is smoothness incarnate, aged five to six years using 95% rye. Plus, charcoal filtering means lots of tasty flavors, like vanilla, raisin and fruit — all at a poor college kid price.

Knob Creek Rye Whiskey

Knob Creek has long boasted tasty bourbons that won’t break the bank, and their rye blend is no different. Bare spice up front with earthy sweetness make this an interesting sip, and distinctly different at a still-affordable price.

Van Winkle Family Reserve Rye 13 year

With maturity comes layers of depth and intensity that our elderly readers are well aware of. Old Rip Van Winkle’s 13 year aged rye blends “cocoa, vanilla and white pepper” into rye’s standard kick. It’s rare to find this many years of aging at such a low price — you should jump on this discontinued whiskey before all the bottles are gone.

Michter’s US*1 Single Barrel Rye

This single barrel rye whiskey gives both spiciness and fruity flavors like plum and marmalade. Sound interesting? We think so.

Whistlepig Straight Rye Whiskey

Brewed by former Maker’s Mark Master distiller Dave Pickerell, this 100% Canadian rye whiskey is aged for 10 years in oak barrels before it makes its way into your happy stomach. That oak aging mellows the rye bite with vanilla notes, and the utter absence of corn still makes this a distinct, and tasty, drink.

Journeyman Ravenswood Rye

Tasty doesn’t have to mean aged. This young whiskey, made from organic rye and wheat, has bold grain notes and is smooth throughout — sounds perfect for a cocktail drink, doesn’t it?

Buffalo Trace Colonel E.H. Taylor, Jr. Straight Rye Whiskey

This corn-free, to-be-released creation has it all: alcohol burn, caramel, rye spice, cinnamon, and even strawberries. Oh, and it’s named after one of the founding fathers of American whiskey. He’d be proud of this one.

Sazerac 18 year Rye

Balance is key in one of the most sought-after rye whiskeys on the market. 18 years of relaxation mellow the usual oakiness and spice and induce citrus and honey. Only 28 barrels are released per yearly bottling, so if you can sniff this one out, hide it well from moochers.

Masterson’s 10 Year Old Straight Rye Whiskey

For those with a sweet tooth, Masterson’s first foray into whiskey is a treat. The usual spice (have we drilled that point home yet?) in this Canadian import is finished with raisin and orange notes. Not bad, eh?

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How to Survive: Preparing to Survive Pandemics, Disease Outbreaks and Disasters

by Robert Richardson

While many in this country have become extremely fearful over the current Ebola crisis, I still don’t think there’s a reason to panic. While there are some very real reasons to be concerned – any disease outbreak that has a 70% death rate is troubling, to say the least – the real crisis brought forward by this situation is our country’s level of preparedness when it comes to fighting any disease outbreak or pandemic.

Throughout history millions upon millions of people have died as the result of pandemic outbreaks; in fact, almost every recorded civilization has been affected by one of these outbreaks. From smallpox, which killed an estimated 300-500 million people during the 20th century, to things like tuberculosis, the 1918 Flu Pandemic and the Third Pandemic, caused by the Bubonic Plague, which wasn’t fully contained until 1959, pandemics are a very real cause for concern.

While most people, up until this recent Ebola crisis believed our medical system was equipped to deal with these types of outbreaks, because of modern technology and modern medicine, the fact is, we are no more prepared today than we were a hundred years ago. In fact, I believe we are in worse shape today, and I believe our modern world has somewhat set us up for disaster.

The risk of seeing a major Pandemic Outbreak has never been Greater

We live in an interconnected world; this makes it increasingly likely that we will see a major disease outbreak in the very near future. While it may not be this current Ebola outbreak, we will see some sort of pandemic outbreak at some point.  It’s a process that’s highly predictable.

When you consider the fact that the 1918 flu pandemic killed an estimated 50 million people, it’s actually quite frightening to think about a disease like that breaking out in today’s world. The 1918 Flu Pandemic took around 6 months to spread throughout the world. In today’s environment, where a disease outbreak is only a plane trip away, this same thing could be accomplished in a single day. The chance of a pandemic strain spreading throughout the world is greater than it’s ever been.

The Government is not ready, and will not be able to help.

I’ve been telling people this for over a decade. In fact, it was the basis for why I wrote my book, The Ultimate Situational Survival Guide: Self-Reliance Strategies for a Dangerous World.

After attending a number of high level conferences with the top government preparedness agencies, I was shocked at how little these people actually knew about preparedness. While I always recognized they wouldn’t be able to adequately respond to a large-scale disaster, it was actually shocking to see their complete lack of experience firsthand.

Even worse were the actual conference tracks. Conference after conference was dedicated to things like handling PR after the agency dropped the ball, how to talk to the media without making the agency look bad, or how to respond to an angry public on social media. Instead of figuring out why things went bad during previous disasters, these people instead choose to focus on how they should have responded in a way that made themselves look better ­– Simply Disgusting!

Over the years I’ve received a lot of criticism; mostly from unprepared people who were too lazy to take their own health and safety seriously. These people insisted the government was there to help; insisted that the billions of dollars we spend every year on federal preparedness was enough; insisted I was crazy for saying anything to the contrary. Well, after watching the government’s failed response to a single case of Ebola showing up inside the United States, I think most of that doubt has been put to rest.

A lot of really unprepared people are finally waking up to the realization that they need to be their own first responders, because to count on the government to do it isn’t an option that’s going to keep them breathing when the shit hits the fan. Sorry if that may be a little graphic for you, but what’s happening in our government isn’t pretty, and what happens during any crisis in this country, whether it’s a natural or man-made disaster, isn’t pretty when you’re not prepared. In fact, it quite possibly could be deadly.

Things the average person can do to protect themselves.

Understand what threats are out there: Only you can decide what threats to prepare for, but it should be based on a realistic threat assessment. Before spending a single cent on emergency preparedness gear, supplies, or whatever it is you think you need, you need to understand what the most likely threats are that you’ll face, and then formulate a plan to deal with them.

Prepare now! The time for pretending the government can help you, or all those days spent putting it off until tomorrow are over. It’s only a matter of time before you are affected by some sort of disaster, crisis, economic problem, or threat to your health and safety. Whether it’s Ebola, or some future threat we’ve yet to see, you need to start taking steps to protect yourself and your family now.

You need a stockpile of food, water and emergency supplies. Even during small-scale disasters our country’s infrastructure is quick to be affected. How many times have we seen entire grocery stores wiped out in the lead up to a major storm or hurricane? Now imagine a pandemic outbreak that affected the country for 3 – 6 months. If you don’t have an adequate supply of food and water, you’re going to starve or die of dehydration. I don’t mean to be harsh, but there’s simply no way to sugar coat what’s going to happen.

You need to be able to defend yourself. In the case of a deadly pandemic outbreak we are going to see major social unrest. The moment people realize they can’t feed their families, or they see people in their neighborhood dropping dead, all hell is going to break loose. Listen, people riot in this country over a basketball game; imagine these same people when they’re starving, and people are dying around them.

The Stock Market Has Lost Confidence In Central Banks As Gods

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The Fed’s Last Monetary Bullet is Spin

By Pam Martens and Russ Martens

Yes, there is a wall of worry that the stock market is no longer climbing but is now descending. The greatest worry, that makes all others pale in comparison, is that the U.S. central bank, the Federal Reserve, has nothing left in its monetary arsenal but one bullet – Fed-Speak, otherwise known as spin.

After three bond buying programs known as Quantitative Easing (QE) flooded Wall Street with bountiful amounts of play money while failing to significantly lift wages or economic growth, the U.S. central bank now has a balance sheet that has quadrupled since the 2008 crisis to $4.4 trillion. That it would be allowed to engage in QE4 in the next crisis is highly doubtful since QEs have proven to be financial bubble makers, income inequality makers and of little help to the average citizen.

Equally problematic, the Fed is already at the zero-bound range in interest rates with no bullets left to fire in that arena as the specter of deflation begins to emerge around the globe.

There is a growing reappraisal on Wall Street as to what the Fed was really attempting to do with all this talk of the potential for a rate hike next year. Was it simply attempting to reload monetary bullets into its empty gun? If one talks endlessly about a rate hike and then faces a financial crisis, will simply saying you will delay the hike have the same impact as a rate cut?

If that was the Fed’s reload option, it doesn’t appear to be working. Over the weekend, Fed Vice Chairman Stanley Fischer delivered a speech to the International Monetary Fund, stating that “if foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise.” Rather than stemming the panic, the Dow sold off another 223 points on Monday.

Veteran traders on Wall Street understand that markets will trade on perception, and spin, for only so long. At some point, ample doses of reality overtake Pollyanna perceptions. The new reality includes the following:

The Treasury market is reading far different tea leaves than the Fed. What it sees is softening demand and the potential for recession – hardly a situation requiring a rate hike by the Fed next year. As of this morning, there is a spread of just 182 basis points (1.82 percentage points) between the two-year U.S. Treasury note and the 10-year note with the two-year yielding an anemic .38 percent and the 10-year having dropped since last Friday from 2.28 to 2.20 percent.

At the same time that yields on Treasuries are declining, yields on riskier debt are rising. Junk bond prices have been setting lower lows (pushing up yields) since July. (See the chart below.) This is the same scenario that played out during the 2008-2010 financial collapse.

Any significant rise in corporate bond yields would throw cold water on a key artificial impetus in the stock market – corporations borrowing heavily to buy back their own stock.

There is growing evidence of both a global economic slowdown and the potential for deflation. In Germany, industrial output, factory orders and exports have posted their worst results since the heart of the last financial crisis. The Eurozone produced zero growth from the first to second quarter.

Just this morning, business media are reporting that the U.K. inflation for September came in at a tepid 1.2 percent, down from 1.5 percent in August. The Bank of England, the U.K.’s central bank, has the same policy dilemma as the Fed: its benchmark rate is already at the low rate of .5 percent.

Commodity indexes are confirming a global economic slump and the potential for deflation. A glut of crude oil as demand weakens has ignited a price war among OPEC members, bringing crude prices to four year lows. Bloomberg’s Commodity Index, a measurement of 22 commodities from agriculture to metals, slumped 11.8 percent in the last quarter – the largest decline since the crisis of 2008.

And while the Ebola scare may be negatively impacting the share prices of airline stocks, it is a minor player in the overall wall of worry, at present at least, since the seeds that have fed this market rout became rooted in July, two months before the Ebola scare erupted in the U.S.

If there is a silver lining to be found in any of this, it just might be that the legislative branch of our government might be compelled to stop passing the buck to unelected members of the Fed and reassert its policy leadership role on behalf of Main Street rather than just Wall Street.

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Junk Bond Prices Have Been Setting Lower Lows Since July