US Federal Reserve

For savvy investors the fact that the US Dollar loses value every year is no surprise.  CEO of JP Morgan (JPM) Jamie Dimon characterized this eloquently with an analogy of ‘musical chairs’ – basically that at some point some asset class has to blow up.  There’s actually a reason for this, because in a debt based fiat monetary system, fresh credit needs to be created on a growing basis even to payback the interest on previous credit, or the system will implode (systemically speaking).

Authored by Stefan Gleason via Money Metals Exchange,

The Federal Reserve can make or break a president.

Monetary policy influences all financial markets as well as the cycles in the economy. No president wants to have to run for re-election when the stock market and economy are turning down.

The Fed is becoming increasingly trapped: despite the FOMC's "best intentions" to telegraph that the economy is improving with the unemployment rate at a paltry 4.3% - because otherwise it clearly wouldn't be hiking, right - CPI has now missed consensus estimates for 5 consecutive months, and what worse, the biggest historical driver of inflation in recent years, shelter and rent inflation, appears to have peaked and is now declining. Worse, wage inflation is nowhere to be found, much as one would expect from a bartender and waiter-led "recovery."

Speaking on Bloomberg Radio to Kathleen Hays this morning, outspoken St.Louis Fed chair James Bullard dropped two somewhat shocking reality-check tape-bombs... that we are sure will quickly be rescinded and translated for the hard-of-understanding...

First, Bullard was aksed about concerns over a US economic recession. He began with the 'standard' response of any establishment type:

"I don't see any recession on the horizon."

Once Janet Yellen's favorite indicator (until it started to turn down, and became just "experimental"), The Fed's Labor Market Conditions Index (a 19-factor smoothed model that has historically correlated extremely well to recession) has been abandoned because The Fed "believes it no longer provides a good summary of changes in the US labor market."

The Fed writes...

As of August 3, 2017, updates to the labor market conditions index (LMCI) have been discontinued.