The minutes of the previous Fed meeting seem to hint that the “recovery” may be far enough along to raise rates in December.
But before you get really excited, let’s look at a little hard reality.
First there is the 10-year Treasury. Check the chart over here and you will see that in the past year we have already seen almost 2.5% and on Wednesday, the 10-year closed at 2.269%.
What that seems to tell me is that the market isn’t too sure about this yet. If it was, the rates might already have moved back up to nearer that 2 1/2% level. Or, they will edge up in coming weeks ahead of the mid-December meeting with the decision due on the 17th if I’m reading their calendar right.
As the pre-open chart from our friends over at Kitco shows (click here for current), there hasn’t exactly been a rush to load up on the yeller dog. In fact. I would think that if the Fed really were about to raise rates, rather than just talk our ears off, again, we would be seeing a lot more reaction than the muted response evident so far.
Still, the hype machine is ramping up: “U.S. Federal Reserve signals December rate hike more likely” is how one outlet is seeing it.
Here is the exercise I keep running through my head.
Let’s say that the Public Debt is really $18.7-trillion dollars. I know, it’s more, you know it’s more – likely closer to $25-trillion – but let’s pretend, since that’s how mass delusions work.
Let’s also think that the current interest rate is 2.25% for the long term debt and say that it goes up to 2.5% by the time of the Fed meeting and they really raise and it goes to 2.75% subsequent to their meeting.
At 2.25%, the interest ALONE on the federal debt is (at least) $420.75 billion per year.
Let’s also assume only working people pay for the national debt. As one of about 148-million people working, your piece of the rock is $2,842.90 per year just for the debt service.
Now, let’s see what 2.75% does, shall we?
Clicks up to $680 billion of interest expense and your working person’s share is what?
In other words, the portion of working person debt service will go up how much? 61.6%!
Now pretend you are a working person.
Let’s see what’s on the horizon for 2016 just on Obamacare: Penalties are going up dramatically – to 2.5% of modified adjusted gross income. If you make $80,000 as a couple and have skated on healthcare, that would be a potential hit of $2,000 for not getting Obamacare.
Since two people are working, that’s an increase of $2,000 on top of $3,503.40 which is two working people’s share of the higher interest rate on the national debt. $5,503 or $458.61 in monthly income. You enjoying this?
For those who have not been sliding – and have been in the program, the employer mandate will be fully implemented in 2016 and that will further eat into what’s available for wage increases. What are those?
When all is said and done, it looks to me like between Obamacare *(where many plans will be increasing fees 20%) tossed on top of a 61.6% hike in every worker’s share of the public debt will just about run a stake through the myth of recovery.
I think the Fed knows it, I think the market knows it, I think real estate prices will be coming down, and I am not looking for a huge run-up in inflation until the price of gasoline starts to rise.
But in the meantime, the price of gold is either skeptical because the gold market doesn’t believe the Fed yet, either. OR since the increases in healthcare costs are still ratcheting up, no one will have the money to buy gold and we are setting up for what I have been telling you will be the post election let-down.
That’s when the democrats will seize the White House again, the yet-to-be-indicted Hillary will be anointed, and we will keep our borders open and voting machine records will still not be auditable.
Makes you proud to be an American, don’t it?
You can find the Fed Minutes over here. It’s better fiction than my latest novel.
It is easier for the Fed to pump money out the back door than be transparent – a word which has so little application in public life today that it serves no purpose other than to describe lingerie.
Still, Employment Isn’t Bad
In fact in this morning’s weekly update we find this:
In the week ending November 14, the advance figure for seasonally adjusted initial claims was 271,000, a decrease of 5,000 from the previous week’s unrevised level of 276,000. The 4-week moving average was 270,750, an increase of 3,000 from the previous week’s unrevised average of 267,750.
And yes, there is a ton of new home construction going on here in the Phoenix area, so the numbers are not completely unbelievable. Just mostly, at least for the 94-million who would like to be working.
But if you have fewer people in the workforce than is 2008, it’s statistical magic, that just happens to smell differently.
The Philadelphia Fed outlook continues to improve, though:
Manufacturing conditions in the region showed slight improvement this month, according to firms responding to the November Manufacturing Business Outlook Survey. The indicator for general activity was slightly positive this month, following two months in negative territory. Indexes for new orders and shipments remained negative, although they increased from lower readings in October. Firms reported slight increases in overall employment this month but declines in average work hours. Manufactured goods prices were near steady. The survey’s future indicators showed improvement. Only a small percentage of firms expect a downturn in business activity over the next six months.
The futures are about flat, Copper is down to $2.07 which means war is becoming affordable again…
While the open-door idiots continue to bring in Middle East military-aged men, we can’t help but notice that Donald Trump’s rankings are rising. Ted Cruz will also likely benefit because both are quite articulate and adamant about open border idiocy.
It seems that only big events, like Pearl Harbor and 9/11 make it past the mental fog bank that engulfs the nation’s capitol.
Breitbart is reporting 8 Syrians have been caught at the Texas border. I don’t know how stupid people in Washington are on this stuff, but it’s well past very in any language.
While the neighborhood-organizer-in-chief is touting “nothing to fear from widows and orphans” we have to notice is was a woman terrorist who blew herself up this week and that the Boston Marathon bombers arrived as kids.
Like I said, though, stupidity well to the radical left of very and impeachable for failure to defend America from foreign enemies by shifting budgets around in very questionable ways, as I see it. Unfortunately, the founding fathers left impeachment to Fools on the Hill rather than a jury of 12 peers, unscathed by lobbyists. How could they have known, though? Corporations hadn’t seized power, yet.
The GOP still has a testosterone problem that desperately needs treatment starting with Paul Ryan announcing he heads up the Obama Wing of the GOP in the interest of honesty in advertising.
It’s a very bad time for American noses: ISIS is rubbing our noses in our own stupidity saying they have been here for years and a neener-neener from them. And from our political leaders, more BS gets rubbed in the other nostril.
GTFU: We have passed humanitarian and we are into the main thrust of the invasion game already.
Whole thing stinks. Countries, like fish, rot from the head.
Meantime, she the anointed one still hasn’t been indicted on the email deal, and I would love to be a fly on the wall to hear how to Obama posse is trying to derail justice on this one.
Yeah, sure, you bet’cha.
And I’m the frigging Easter Bunny.
The only good news today is that there’s no shortage of BS in high places. And on a supply and demand analysis that means the price of BS should be coming down. And verily, it is.