Pumping up financial markets as Fed prints its way to economic oblivion and credit downgrades

September 15, 2012 – WASHINGTON - The latest round of quantitative easing announced Thursday by the Federal Reserve triggered a rating downgrade by Egan-Jones. Already the rating agency had warned on Wednesday when it affirmed the U.S. rating at AA that “QE3 will likely trigger a negative action.” Given that the outlook is already negative (AA-), a downgrade to AA- was the logical next step for the rating agency. “We are not receiving QE3 positively,” Vice President and co-manager of the ratings’ desk Bill Hassiepen told MNI Thursday, while the fiscal situation is a “nightmare.” While the Fed is seeking to support economic growth through its quantitative easing, Hassiepen argued that the central bank’s “massive monetization” is instead causing “sluggish to stagnant economic growth.” In fact, he expects growth to become stagnant within six months as a result of the Fed’s policy. The reason the country does not have a weaker rating, he said, is that it remains “the only viable reserve currency in the world.” The Federal Reserve Open market Committee said Thursday it “agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month,” but did not announce an end date. At the same time, it will continue its Operation Twist through the end of the year as it is currently scheduled, while “maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.” The Federal Reserve’s “money printing,” Hassiepen said, has not “really contributed to the improvement in the general economy” so far. Instead, all it has done is increase inflation and the cost structure in the general economy, as will the new round of QE just announced Thursday. “We actually think this is going to cause unemployment, not employment,” he said. The Fed’s policy will reduce household’s disposable income and raising costs will also “lead companies to lay off people,” he said. “Let’s say six months from now, you might see job actions” in some of the more commodity-sensitive industries that are particularly vulnerable to an increase in commodity prices and a weak dollar, he predicted. “This is going to cause the economy to completely stagnate,” he said, expecting the effect to start within three or four months. He first expects a “rapid uptick in gasoline and food prices,” which will affect households’ disposable income. This in turn will take several months to work its way through into the general economy. “People are going to feel nostalgic for the 1.7% for the last quarter,” he said, referring to the second quarter GDP growth. “Unfortunately we have a Federal Reserve that simply does not recognize the inflationary impact of food and energy prices any longer,” he said. He expects another “massive uptick in the speculation in the strategic commodities and energy markets.” Speculators, he said, hedge themselves against a depreciating dollar by “boosting up the cost of the commodity.” “They have been doing it since 2004 and it’s worked,” he said. While the Fed’s policy is increasing the costs structure in the economy, he said wages are stagnant. “You don’t have the buying power in the economy,” he argued, and buying more securities won’t resolve that issue. Hassiepen also stressed that “the United States’ financial flexibility is almost gone given $16 trillion in debt,” which is 104% of GDP, and there is no real plan to put “the fiscal house under control.” In fact, even sequestration would not solve the problem of U.S. deficits, he said.

If the present global and solar system 'regime' is on its way out -- things might get very interesting. I doubt 'they' would go peacefully -- and I doubt 'they' would be friendly and helpful toward a new global and solar system regime. Poison pills and a scorched earth policy would be highly likely. 'They' might go out with a bang or a wall of water. I don't know that a change is coming -- but I keep hearing rumors -- and I think the factional fighting might get VERY nasty. A new regime might not necessarily consist of good guys and gals either. I suspect ancient hard-feelings and unsettled-scores at the highest levels of global and solar system governance. The more I think about all of this -- the more frightened I become. I continue to advocate evolutionary change -- rather than revolutionary change. Whatever is at the center of global and solar system governance has been at this game for a very long time -- and various methods and networks are probably very sophisticated and very deeply entrenched. Perhaps the New World Order is thousands of years old. Perhaps we have been living under a One World Government for thousands of years. I suspect a One Solar System Government -- going back at least to a Pre-Exodus Ancient Egypt. Regime changes are likely to be VERY painful -- and I doubt the general public will understand. A new regime might not last more than a couple of decades -- and then we might be back in bed with whoever we're sleeping with presently. We might even be sleeping with the devil. Things might be bad -- no matter who rules -- and no matter what we do. I lean toward changing everything -- without seeming to change anything. The New Guy might be the Fall Guy.

There is so information flowing in at this time it's difficult to sort out what's going on. I just don't see how the US Federal Reserve can keep printing money when there is nothing but debt behind it. Things are so bazaar it's totally insane - yet folks in the US are so totally ignorant that it's unbelievable. All most know is what they see on the media controlled TV - except, the tide may be turning sooner then later.

How can an unsustainable structure keep going?

The unsustainable structure will likely keep going until 'they' hand the 'keys to the kingdom' over to the new guys and gals. Then 'they' will likely laugh as everything goes to hell. I keep wondering if Earth is a Subsidiary of a HUGE Galactic Business Empire -- with Banking, Religion, and the Military at the Center of the Control Structure??!! Even Jesus said "I Must Be About My Father's Business". One might interpret this several ways. I'm not necessarily saying these things shouldn't be central -- but the abuse and corruption seem obvious.