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.

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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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