Oh no it's the end of the financial world! Not really. The financial markets are going through a rough patch because of the mountain of debt the world piled on in response to the 2008 crisis. Everything is not going into shutdown right now. Stop hyperventilating and filter out some of the crazier posts on Zero Hedge. The crisis of 2008 really started with the 2005 housing market top when the hot real estate markets ran out of marginal borrowers and the FED started to inch rates up, creating financial ripples that caused Bear Sterns to blow up in 2007. Wait a while for the real fireworks. A bigger issue is the FED cannot even get their media minions to report their moves right. The system is running into problems.
Last summer, I posted how Lee Adler is one of the financial writers I read to peek behind the curtain. In the financial blogging world, Lee Adler and his stable of writers are the closest to seeing the cathedral or polygon of power in America today. Lee has a great piece on the disconnect between the FED and the media. The FED has changed its focus and concern, but the media is not catching on nor reporting it. The FED cannot even use its flunkies, like go-to mouthpiece Jon Hilsenrath of the Wall Street Journal, to communicate to the right thinking people what the FED wants to do. This reveals the different motives to pieces of the polygon.
The FED opened their meeting minutes in July differently than prior months by focusing on raising rates and shrinking the balance sheet. This was a change from prior discussions and meetings. This would be important to report on, yet the media focused on the FED's take on the state of the economy. Raising rates and shrinking balance sheets will change the game that the current FIRE system has been operating under since the 2008 crisis reaction or band aid. Go back to the FED inching rates up graph in my first link. Look at what happened the last two times the FED has moved rates up after easy money policies. Note their pathetic step by step method, too. Crisis, recession and pain follow the rate increases because the marginal borrowers disappear as we do not have true economic growth that provides people wage growth to sustain consumption.
This would be important to put out to the public because the next crisis is coming, just a matter of when, and rising rates and shrinking balance sheets will herald it. Why is the media avoiding this discussion and focusing on the Fed's take on the economy? Lee Adler says it is because this is good copy. The media right now is in a pinch because with normal people feeling economic pain, 50 million Americans on food stamps and no nominal wage growth, no one is buying the recovery talk. Partisans will point to rising stock markets and lower unemployment rates (artificial and virtually useless measures now) as good work by Team Obama. A stock market collapse or even 20% drop hurts The Narrative. The media wants the goldilocks story to sell to the street.
The media also wants to avoid the discussion of looming economic pain because look outside your window. Political fracture is on all sides and all over the West. Blacks are attacking "white allies", forgetting they are 12% of the population and publicly calling for a race war in manifestos, and the media is suppressing it. A section of whites have said "screw it" and are embracing identity politics... and writing off liberal whites. Someone has finally said "deport", and found that a sizeable fraction of the American electorate likes it. Hell, even the open socialist, Sen. Sanders, darling of the white progressives, is anti-immigration. Even some Swedes are waking up that it's keep the social welfare system for us or keep letting in them. It is Weimar politics, even the NY Times admits it. We have not had our Weimar economic breakdown, and note that it took ten years between that and the Nazi takeover. The media needs to keep this off the front pages or even the back pages.
The media needs a materially comfortable population to keep the consumer machine going and democratic facade alive. If the West is fragmenting like this with Medicare facing insolvency in 2030 and Social Security reducing benefits automaticlaly in 2033, what happens when those numbers get 2020s dates? This will happen with the next recession because we have had crap for jobs and wage growth. When the money glue cannot keep the multicultural gollem together, what happens to these already strained racial and ethnic relations? Are white Millenials going to pull the plug on gramma in order to pay for Demarcus' 3rd kids' after school program and his SSI for "anxiety"? Are "on the fence", apolitical Boomers going to keep buying the progressive pupu platter, staying quiet and paying for some Buffalo Bill's reassignment surgeries to feel pretty when the system they paid into for decades cuts their benefits by 25%? No.
This also points out the problem of just about every bit of government interference in banking and the centralization that the creation of the FED fostered. Even after the Great Crash, the problem could have been handled specifically by the NY FED but was addressed by the FED. It would never have been possible had there been no FED, but big biz and the progs under Wilson wanted a FED. We created the FDIC and removed risk and secure management of a bank from a consumer's decision making process, therefore all they can compete on is rate, and we get a "race to zero" for the marginal borrower and customer. Banking becomes a centralized, government utility for the progs to play with, as long as their paymasters get their cut.
The FED wants one message out: change may be coming in policy, prepare for the possibility, look at what happened the last two times. The media does not want that message out, especially not in an election cycle. These are pieces of the same power structure, but they have different motives and concerns. The media wants to spin on the state of the economy and pitch all is well. "Liberal control is good. People say the game is rigged??? Bah, don't listen to that demagogue that we will compare to Hitler weekly. Even if it is rigged, it is a good game that provides you comfort and gives you steady bread. Isn't that enough?" The FED does not care about that message. It has a service to the TBTF banks, hedge funds, and investors that the casino will continue for their benefit. Liquidity will be provided for all your trading needs. Never make a deal with the progs and its polygon of power because eventually a piece of it will sacrifice you to continue its control of the system.