Federal Reserve “Revisions”

imageThis is something to read carefully and think about.  The Federal Reserve is revising the way it reports the H.6 money supply figures.


Yep.  Here’s how it’s explained on their site:

H.6 (508)

The Federal Reserve revised its measures of the money stock and their components to incorporate updated seasonal factors and a new quarterly benchmark.
This release includes seasonally adjusted measures of the monetary aggregates and components produced with revised seasonal factors, which were derived from data through December 2014 and estimated using the X-12-ARIMA procedure.[1] The revisions to the seasonal factors resulted in a lower growth rate for seasonally adjusted M2 in the first half of 2014 and a higher growth rate for seasonally adjusted M2 in the second half.
This release also includes a new quarterly benchmark, which incorporates minor revisions to data reported in the quarterly deposit reports, and it takes account of deposit data from Call Reports for banks and thrift institutions that are not weekly or quarterly deposit reporters.[2] These revisions to deposit data start in 2013. In addition, this release incorporates data from Call Reports on the amount of small-denomination time deposits held in individual retirement accounts (IRAs) and Keogh accounts; related revisions to deposit data start in 2014. Likewise, the benchmark incorporates revisions to IRA and Keogh balances held at retail and institutional money market mutual funds; these revisions to data on money market mutual funds begin in 1996. This release also incorporates the receipt of historical information from other sources of data.
The effects of both the revisions to seasonal factors and the new quarterly benchmark on the growth rates of M1 and M2 are outlined in appendix tables 6 and 7.

What is shocking is that just like Alan Greedspan axed the M3 monetary measure which would have outed the Housing Bubble, we now see how her Janetness is jiggering the books to make it look different than what it is.,

Of course, there’s two sides to the discussion – at least in theory.  Ure’s side (*and maybe yours, too) would be to ask “WTF?”

In reality, this side of of the discussion means nothing- because it’s not a discussion  – as the Fed doesn’t ask before watering down the money supply (along with Congress which abdicated its Constitutional duty in the dark of December 1913).

The Fed data was all over the road in 2014.  So now what do we see?  Revise the data to fit management’s expectation, of course!

This is equivalent to rolling back the odometer…and once they get away with it this time, we can expect future truth leaks to be papered over as well…just like Greedspan buried the facts of M3.

I’m hoping my friend Trader Bart at www.nowandfutures.com will toss this into his M3b reconstructed pile, too.

The game of “hide the sausage” is on again.  The Fed is the hider and we’s the hidees.

How the US Bail-In is Already Working

imageBack in 2008 I bought $5,000 worth of savings bonds from www.treasurydirect.gov.  In 2014 (about the same month, too).  I received $5,408.  And I was just 1099’ed for the $408.

Now, here’s my problem:  I went over to the Minneapolis Fed inflation calculator over here and worked out what current purchasing power of my $5,000 from 2008 ought to be:  About $5,485 and change.

So now (because of our tax bracket) I will actually net about $300 of after-tax interest when to keep up with inflation, I needed $485.

Thus my words of warning to you this morning:  Non-cash investments are the only honest game left.  Buy things like solar panels, a wood stove, anything that can convert current income into something which will have future value or will reduce future cost.

Seriously:  As this example shows, inflation is the government’s bail-in that’s already working us over.

Still Sinking

The Baltic Dry Index (BDI) is down to 720 this morning.  Some of the decline is no doubt due to the price of oil, but since the BDI also runs ahead of collapses and market breaks, we’re starting to look at the month of February as a good time to think about shorting.  Ideally our trading model will have a blow off top any old time, which gets me to looking for…

300 points to Lift-Off

Yes, the Saudi king died.

No, the world did not end, as doomers and gloomers have been merrily touting.

What’s more, the market before this month is our stands an almost even-money chance of going on to new all-time highs shortly.

Over on our www.peoplenomics.com site, our Trading Model, developed to keep me from following my stupid gut and losing that area I sit on, was persistently bullish in 2014. 

I may rant and rave and scream about how dishonest the American government is (more on this in a sec) but I’m not so stupid as to trade against my model.

Some short-term profits may come off today, but I keep sensing a top but my Model says chill…at least through the early hours of today.

The futures are up slightly, my consigliore thinks Europe will implode first….and that’s likely to drive more money to the safety of US markets.

Even oil is remaining rational.

Our Lousy Office Pool

Between Elaine, Panama, and the cat, there aren’t too many spots picked yet in the UrbanSurvival Office Pool.  Which, unlike the pool in your office has nothing to do with football.

Our pool is to pick the date the European Union will collapse.

Denmark is tasting the lash this morning.  You go Euro…print like crazy and beat them fool member states!

But since EU countries only buy their own bonds, tell me again…what’s the point of a Euro anyway?  More important, what’s the point of immigration policies which will take Islamic populations from effectively near zero 30-years ago and pump them up to 10% in many countries by 2025?

Observe, class, the fine line between political correctness and outright stupidity. 

Tell me again, how Europeans aren’t  arrogant, aristocratic idiots.  I must be missing something.  Oh wait, did I just commit an EU hate crime? 

I mean mentioning a seething cauldron of simmered idiots isn’t a hate crime here yet, but then we haven’t taken a country from Rosey to rotten in 30-years, either, although we seem to be working on it, I must admit.


More after this, suggested by my editor, Zeus the Cat


Federal Reserve “Revisions” — 8 Comments

  1. I bought gold in 2008 at $754. Never crossed my mind to buy anything else. Sold $10,000 worth at $1600 to finish off our apartment building which gives us a livable income. Bought the apartment house with 1999 gold purchased at $256, so it’s cost in 1999 dollars was about $30k. Our income tax to the Ecuadorian government in 2013 was $132. Since we declared our apartment building as a commercial property, they raised our property taxes from $26 per year to $94 for about 7,000 square feet under roof. Our utilities for 4 apartments, electric $50 a month, water $15. Hired a woman to clean the place every week, cost $17. Tenants are required get their apartment cleaned every week for $5. If someone doesn’t hire a cleaning girl, we consider them to be abusing their wife. That’s how it looks from Ecuador.

  2. Practically all of the European states had birthrates that were below replacement rate. That is, they weren’t reproducing enough to keep their populations steady or growing. That was part of the attraction of encouraging Muslim immigration. Bodies were needed to replace the aging and declining native population.

    Of course there were other factors involved as well. Some leaders though “Eurabia” would result in expanded markets for European manufacturing.

    Little thought was given to cultural difference. After all, everyone thinks like us. Or at least they recognize the superiority of our culture and will come around to seeing things our way. No?

  3. Had the 2015 kick off meeting with our financial adviser aka wealth management professional today. Not doing too bad by my look but our normal 1 hour meet went over by a half hour after we got into a spirited discussion of the Baltic dry index you so eloquently report upon and the fact I know things are not quite as rosy as it would appear. That along with my desire to steer my precious savings into more conservative vehicles such as hard non cash items like guns, tools, seeds, and either a new sawmill or this slick new front end loader for the tractor. You know good solid investments, but my wife calls them my toys. Funny she doesn’t sing the same song when she is justifying dropping a s&*%load of cash on season baseball tickets.

    As usual my math is somewhat different than his but that’s what I keep him around for. I guess I’ll keep him on the payroll for another year since he is much smarter than I in some of these money matters, as long as can eat 3 times a day and use lots of TP I am good to go.

  4. Hi George,

    Sorry you got screwed when you put $5000 in a Treasury Direct account 6 years ago. Although these are considered “risk free,” the only risk being avoided is actually coming out ahead. Let’s look at the numbers you provided, assuming an investment period of exactly 6 years.

    Your investment returned $408 in 6 years. Compounding the interest means you averaged about 1.31% annual compounded return. At the same time, the average reported inflation rate was about 1.55%. You didn’t keep the purchasing power of your investment. To add insult to injury, you will have to pay about $108 of the $408 “earnings” in taxes – about 26%.

    Looking at it another way, you received an after tax increase of $300 when reported inflation would indicate you needed $485 to remain even on a purchasing power basis. To break even on an after tax basis, you would have needed to earn about $655 – a compounded annual interest rate of about 2.07%. Your before tax earnings were $247 less than what was needed to keep up with taxes and inflation. If there were no inflation, you could park your money under your mattress and break even forever.

    Let’s get out of the weeds. Bottom line is that you and every other saver is getting screwed by the Federal Reserve policy of “moderate” inflation. Their policy is causing measurable damage. Is there any way that a class action suit can be brought against the Federal Reserve to compensate for the damage they are inflicting?


    • On the other hand, things like our gold and silver have done well. But once again, like housing or bonds, timing is everything! If we had bought Gold at $1900 (instead of $275) I could be pissed about that, lol.

      With most things the best investment you can make is sweat equity into something which will have higher future value…

    • I agree that sweat equity is the best defense. Nonetheless, we can’t have all assets in tangibles. Those on a fixed income feel the wrath of inflation every time the Fed manipulates the financial system to generate inflation. There are winners (banksters and other big boyz) and there are losers (middle class who are forced out into risky positions to gain a modicum of yield.)

      This isn’t right. Since their inception over a century ago, they’ve diminished the value of the dollar by over 95%. If that is what they call a “stable currency”, I’d hate to see their definition of an unstable currency.

      I’m wondering if there is any way to stop them. If the legal system won’t protect the downtrodden, what is it good for?

      I’m asking you because you have a bad habit of thinking outside of the box and coming up with sound ways to achieve objectives.


  5. The Greeks had to build the horse first before the silly Troyans hauled it behind the gates. The EUropeans – my oh my – they just open the gates and turn their backs.

  6. I sure hope you are wrong with the predictions. Unfortunately I have the same thoughts on future events’.