Wolf Richter with radio host Jim Goddard on This Week in Money, dissecting the Fed’s focus on inflated asset prices, which pose risks to the banks, and how this focus is impacting monetary policy. To top it off, the Fed’s policy-setting FOMC may be an entirely different ball of wax next year. We also discuss “flood cars” — which will show up everywhere — and the chilling side effects of the Internet of Things:
The reaction of the 143 million consumers whose data was stolen in the Equifax hack has been strong. Now lenders and companies with consumer products, such as automakers, are beginning to fret. Their doom-and-gloom scenario: Consumers suddenly becoming prudent. Read… Debt-Slave Industry Frets over Impact of Mass Credit Freezes
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The Fed’s “next moves” haven’t changed since 1913:
Step 1: Create fake money stealing value from everyone
Step 2: Loan the fake money to people with interest
Step 3: Take people’s stuff when they can’t repay the debt
Step 4: Get government to enforce our fraud
Step 5: Plunder humanity
I think you forgot a couple of steps.
Step 0: Let all our insiders (probably less than a 1000 people) know that they should purchase as much as asset as possible before the new fake money sends their prices to the moon.
Step 2B: Let all our insiders know it is time to unload all the assets at the top of the market.
Step 0: People have to be stupid enough to allow 1 to 5 to happen.
Borrowing a large amount of money to buy things. LOL. It’s a choice, not a necessity.
Muppets, more dangerous than anything. The Fed’s been around since 1913, but debt has been around since 5000 years. Saying everything started with the Fed is the epitome of Muppet’s dangerousness.
The fall of the Muppets is fully deserved.
Even people who are financially responsible and refuse to take on irresponsible levels of debt are being screwed over by the Fed’s debasement of the currency and asset bubbles, especially in housing.
We will not have honest markets or sound money until we end the Fed.
The tendency to blame “the vicitm” or consumer is a red herring distracting awareness from the real source of the mess
6. Call it capitalist creative destruction
7. Provide lots of bread and circuses
step 8: blame it all on Keynes, who as we all know, was in charge of the US economy in 1913, and who never, ever clearly delineated the many differences between monetary policy and fiscal policy.
(/s, in case one is ignorant of economic history)
Gershon – No!
1- Create money. Get it to the upper 1% with NO interest. Let them profit from the skim from asset inflation. Deny the existence of asset inflation.
2- NO interest causes no interest income for the 99%. This causes deflation because personal income falls. The capital providers are crowded out by printed money at 0-ish% interest.
3- Fed laments about low inflation. Some FOMC members ponder more QE to spark the inflation their models say should be there.
4- Go to step 1
No ill will or outright criminal fraud required. They are only responding to what their models state they should do based on the best academic theory available that they consider credible. Wall Street supports their efforts. So do reputable think tanks. Only an extremest or a nut would disagree with this support.
Oversight of the financial industry is deliberately inefficient
Why because the political will to address this is not there beyond speech making at election time
When that simpsons episode about the y2k aired “everything being connected to the Internet” was a joke. Nowadays you can literally hack a toaster.
BLM has hacked my toaster, its been burning my toast, throwing crumbs against my glass lid and everything is put in there has is covered up by masks…
Don’t know where you were back then, but my computer came with a CD-ROM discussing connecting everything, i.e. TV, computer, coffee pot, etc. — in 1995.
I’ve seen this/your sentiment posted before and wanted to state that the concept of connecting devices was not a joke and is not a recent event.
I remember my Windows 95 computer (IBM Aptiva) I got in 1997 had with it some weird home-control things, X.10 I think it was called? So the computer could control things like lights etc in the home.
Internet of things is an idea that goes ‘way back. The idea of automatic, interconnected things goes back to well before the internet; it’s just the same old ideas hashed over again and again, the internet being just the latest fillip.
http://www.gs.cidsnet.de/englisch-online/originals/soft_rains.htm
I searched trying to find stuff on this topic and your IBM Aptiva came up in the first results—“IBM Home Director”. I didn’t have an IBM but it came with a TON of software, I assumed something Microsoft. I can’t remember what it was for sure, but it involved plugging in those modules like IBM Home Director. Google it, I found an article and there are YouTube videos.
At the end of the 1997 article… “Luddites beware: every aspect of your domestic life could soon be dependent on the PC”.
So has the idea of flying cars, jetpacks, moon colonies… yet save for the flying cars, nothing of that has happened yet.
The idea of a “smart house” predates the Internet but it was fiction or just too expensive at best.
And I knew it was a bad idea even back then because I used to be a fan of remote controled model planes until I learned you could just turn them off in mid air with the right TV remote control.
I was like “OMG they will mess up with my ‘smart’ fridge if I ever get one.”
So yeah call me old fashioned but I think smart TVs and so on are more trouble that they are worth.
No—you missed the point. You could literally control these things as described back in 1995. Whether it’s a good thing or not is a whole other topic. I never remotely (no pun intended) insinuated you were old-fashioned. I am a Luddite myself. My sibling hooked my parents’ TV to some Roku sh/t—-I didn’t even bother to bring up the security issues (“You’re paranoid.” … “How do I get to Google?!!!!!!!!!!!!!!!!”).
Hacking of medical devices will eventually also become a concern
Not eventually. This in 2015…
https://www.computerworld.com/article/2932371/cybercrime-hacking/medjack-hackers-hijacking-medical-devices-to-create-backdoors-in-hospital-networks.html
I think I read some hacked toasters are churning out bitcoins for said hackers. Way better than ransomware. The gift that keeps on giving.
But you won’t be able to hack Elon Musk’s rocket to Mars. You will not end up on Venus, or your money back.
Love these comments. Especially the toaster item
They must not be too concerned if their plan is to raise rates .25% once a quarter.
As always well worth listening to Wolf.
Wolf did touch on a quite hot potato, ie IoT or more specifically, the security of IoT devices ( read the nonexistent security ).
When you buy that connected lightbulb, fridge or stove, for how long will you be able to get the needed security patches for your devices ?
Someone who has the knowledge can reasonably protect his/hers network with all nice IoT toys at home, but most ordinary Joes consider IT security as something more or less edible and act accordinly, their main argument being “I haven’t got anything to hide” and thus they’ve lost the game already ….
As Wolf so nicely did say, everything that is connected to the internet is hackable …
This show actually lets Wolf talk at length and in depth! How fortunate for him and us.
On YouTube, I recently watched a glib, superficial host with a third rate intellect “interview” Nassim Taleb as though they were on an equal footing. The contrast couldn’t be greater.
FFS any journo attempting to match wits with Taleb would bring to mind Polish Cavalry against German tanks as far as “quantum of mismatch” goes.
The next useful thing I ever hear from a financial journo will be the first.
A few trillion in QE wasn’t going to make a dent in a worldwide banking system that created 25 trillion in currency leverage alone, and making money cheap was probably not the best response to a crisis that was caused by made up money. But the Fed never seemed to care about the reason for the crisis – its first instinct was to save the banks that caused it. The fact that the Fed has re-created the conditions that existed prior to the last crisis shows that these people aren’t qualified. It’s time to replace the economists at the Fed with people who know how the economy actually works.
Speaking of hacking …. interesting article over at Slashdot concerning the Equifax CEO saying –
There are two kinds of companies, according to a saying that former Equifax CEO Rick Smith shared in a speech at the University of Georgia on August 17. “There’s those companies that have been breached and know it, and there are those companies that have been breached and don’t know it,” he said.
https://news.slashdot.org/story/17/09/30/2036215/equifax-ceo-all-companies-get-breached
And the subset of companies that get breached because they spend way more energy on maximizing executive compensation while being criminally lax on IT security because there’s no short-term profit in it.
I can’t imagine any Fed head who isn’t totally onboard with the Fed’s mandate, since it’s 1913 inception, of systematically transferring the wealth and assets of the vanishing American middle and working classes to its oligarch cohorts. But at least the possible new Fed head is criticizing Janet Yellen’s slavish capture by “the markets” – possibly disingenuous on his part, but we’ll see if he backs up his talk with action.
https://www.cnbc.com/2017/10/02/fed-chair-favorite-warsh-believes-central-bank-is-slave-of-the-sp.html
The Fed is going raise rates no matter what, I think that is the news. At the long end of the curve rates will rise according to the balance sheet reduction. They are going to normalize. Short of appointing his children to the post Trump cannot do much about it.
great interview. thank you for the data. i appreciate it. stay blessed mr. ritcher.
sorry for the typo. mr. richter. love your info.
No problem. You put up with my typos all the time :-]