{"id":1502220,"date":"2024-11-14T02:45:00","date_gmt":"2024-11-14T07:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1502220"},"modified":"2024-11-14T02:45:00","modified_gmt":"2024-11-14T07:45:00","slug":"peter-schiff-the-fed-is-trying-to-save-itself-at-your-expense","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/peter-schiff-the-fed-is-trying-to-save-itself-at-your-expense\/1502220\/","title":{"rendered":"Peter Schiff: The Fed Is Trying To Save Itself At Your Expense"},"content":{"rendered":"

Peter Schiff: The Fed Is Trying To Save Itself At Your Expense<\/span><\/p>\n

\n

Authored by Peter Schiff via SchiffSovereign.com,<\/em><\/a><\/p>\n

Well, inflation is up again. You\u2019re probably not surprised, and neither are we.<\/strong><\/em><\/p>\n

<\/a><\/p>\n

Over the past few months, in fact, we\u2019ve repeated again and again that inflation will keep rising, and even identified some strange reasons why.<\/strong><\/p>\n

Remember back during the early days of the pandemic when used car prices went through the roof? Supply chain dysfunction and stay-at-home orders prevented the big auto manufacturers from producing too many new cars. So, demand for used cars surged\u2026 and used car prices shot to the moon.<\/p>\n

But used car prices eventually started to fall back to earth. And throughout this year, the government inflation reports showed steep drops in used car prices\u2013 like 10 to 12% year-over-year declines.<\/p>\n

We made two key points about this:<\/p>\n

1) The big drop in used car prices was essentially dragging down the inflation average. Other prices, like housing, medical care, etc. were still rising by 5% or more. But after averaging in the negative 10% used car price declines, the overall inflation rate seemed to be falling.<\/em><\/p>\n

2) We also said this would be temporary. Used cars could only fall for so long before they reached \u2018normal\u2019 levels. And once that happened, inflation would start to rise again.<\/em><\/p>\n

This appears to have now happened.<\/strong><\/p>\n

During the summer, for example, used car prices fell 10.9% year-over-year in the month of July. Then in August, the year-over-year decline decelerated to -10.4%. Then the following month to -5.1%. Well, the October data was released just this morning, and used cars index fell 3.4%.<\/p>\n

In other words, we\u2019re almost at the end of the \u2018used car deflation\u2019 benefit that dragged down the government\u2019s inflation report. So, it\u2019s no coincidence that we also see inflation once again rising, from 2.3% in September to now 2.6% in October.<\/strong><\/p>\n

And there are plenty of categories that are WAY more that 2.6%, especially the things that people buy on a regular basis. Health insurance is up 6.8%. Car insurance is up 14%. Airfare is up 4.1%. Housing costs are up 5.2%. Daycare is up 6%.<\/p>\n

Sure, there are obviously categories where prices have fallen. And congratulations if you were in the market for a men\u2019s sport coat last month\u2013 you paid 5.9% less.<\/strong> Plus, the all-important \u201cdishes and flatware\u201d category plunged 7.4%.<\/p>\n

But these hardly make up for the big price hikes in the key categories that are essential to most people.<\/p>\n

This is what makes the Fed\u2019s policy actions so bizarre.<\/strong><\/p>\n

Last week they cut rates, again, for the second time this cycle\u2026 which is the OPPOSITE of what a central bank would normally do in the face of rising inflation.<\/p>\n

In the same way that they pretended inflation was \u201ctransitory\u201d throughout 2021, they are now asserting with equal vigor that the inflation beast has been tamed.<\/p>\n

They\u2019re so full of self-congratulatory hubris,<\/strong> in fact, that Fed Chairman Jerome Powell stated that he will refuse to step down if Donald Trump demands his resignation.<\/p>\n

Bear in mind, Powell is the guy who totally missed inflation in 2021. I mean, he was MISTER Transitory.<\/strong> He failed to act in a timely manner and waited until mid-2022 to start hiking rates in earnest. He then failed to predict any negative consequences from the rate hikes\u2013 including the meltdown in the US banking system.<\/p>\n

Powell even testified before Congress\u2013 just TWO DAYS before Silicon Valley Bank went bust last year\u2013 that he saw \u201cnothing in the data\u201d to suggest there were any risks to the Fed\u2019s monetary policy decisions.<\/strong><\/p>\n

I would also point out that during Powell\u2019s chairmanship, two of the most senior Fed officials were found to have been personally profiting from their monetary policy decisions through questionably timed stock trades. It was almost as if Nancy Pelosi was running the joint.<\/p>\n

So, Powell\u2013 who has been consistently wrong in the most remarkable ways\u2013 now insists that he will NOT step down. Apparently, HE and HE ALONE can lead the Federal Reserve. And we\u2019ve seen that arrogance before from Joe Biden, Tony Fauci, etc. It\u2019s not a good look and doesn\u2019t bode well for the Fed.<\/p>\n

All that aside, it\u2019s pretty clear that the Fed is in a bind. Inflation is rising, so they should realistically hike rates. But interest rates\u2013 even at current levels\u2013 are killing the federal government.<\/strong><\/p>\n

The US spent an unbelievable $1.1 trillion in the last fiscal year paying interest on the national debt. That will almost certainly increase for this current fiscal year. And if rates stay where they are now, the total interest bill will exceed $2 trillion in a few years.<\/p>\n

That\u2019s a pretty bad situation considering that interest rates are still relatively cheap on a historical basis.<\/p>\n

But it\u2019s not just the federal government. Current interest rates are also bad for banks.<\/strong><\/p>\n

Remember that banks across the United States bought mountains of Treasury bonds during the pandemic\u2013 at a time when interest rates were at record lows, and those bonds yielded as little as 5 basis points (i.e. 0.05%).<\/p>\n

Thanks to the Fed\u2019s interest rate hikes, those banks\u2019 bond portfolios have tanked in value. (When interest rates go up, bonds lose value.) In fact, across the entire US banking system, the total unrealized bond losses exceed $500 BILLION. That\u2019s about 20% of the total capital in the US banking system.<\/p>\n

Naturally banks don\u2019t want to take that hit.<\/strong> And the only way to unwind those losses is for interest rates to fall, i.e. the bonds once again increase in value. So, yeah, banks desperately want rate cuts too.<\/p>\n

But the most important one is the Fed itself.<\/p>\n

Just like banks across the country bought US government bonds during the pandemic, the Federal Reserve bought literally TRILLIONS of dollars of bonds. And their interest rate hikes have caused unbelievable losses to the Fed\u2019s own bond portfolio.<\/p>\n

How big are their losses? Roughly ONE TRILLION dollars.<\/strong><\/p>\n

In other words, the Fed is wildly, woefully insolvent. And at this point, they\u2019re just out for self-preservation. Cutting rates is the only way to reduce those unrealized losses and prop up their solvency, even if that means more inflation\u2026 or even stagflation that could be worse than the 1970s.<\/p>\n

That is especially significant since, during his last press conference, Powell admitted that the Fed has no contingency plan for stagflation. They\u2019re not even thinking about the risk. They\u2019re just focused on saving themselves at your expense.<\/strong><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nWed, 11\/13\/2024 – 21:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/peter-schiff-fed-trying-save-itself-your-expense<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Peter Schiff: The Fed Is Trying To Save Itself At Your Expense Authored by Peter Schiff via SchiffSovereign.com, Well, inflation is up again. You\u2019re probably…<\/p>\n","protected":false},"author":0,"featured_media":1502221,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1502220","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1502220","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1502220"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1502220\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1502221"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1502220"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1502220"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1502220"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}