Meet The Next Fed Chair: The Definitive Cheat Sheet

With the race for the next Fed chair in its final stretch as Trump is now expected to make his decision over the next few weeks, and following recent reports from Bloomberg, Politico and the WSJ, the three frontrunners to replace Yellen, according to PredictIt, are Kevin Warsh, Jerome Powell, Gary Cohn and unexpectedly, Neel Kashkari, following yesterday"s endorsement by Jeff Gundlach...

... Bank of America has put together a handly cheat sheet laying out a summary of the major views by the 4 key contenders.

Focusing on the top four candidates, BofA, predictably, sees Warsh as the most hawkish and most likely to change the way the Fed conducts monetary policy, leaning toward rules-based policy. BofA also thinks Warsh would favor a lower ultimate size of the balance sheet but would be a strong proponent of deregulation. Meanwhile, Powell is the establishment candidate who won"t "rock the boat" as his stance is consistent with the current framework of the Fed. As for Cohn, he would likely lean a bit more dovish and emphasize putting in place monetary policy to complement fiscal policy reform.

Here is the full breakdown, according to BofA, which shows just how "unconventional" Warsh is in the context of his peers.

With that in mind, BofA"s Michelle Meyer writes that the Trump administration presumably have two main goals when choosing the Fed Chair:

1. monetary policy to remain accommodative and


2. financial deregulation.

The ultimate goal is to generate stronger economic growth and prolong the business cycle. This puts Warsh and Cohn in a strong position as both have argued that the right set of monetary and fiscal policy can yield trend 3% GDP growth. However, Warsh may be perceived as more hawkish when it comes to monetary policy.

Below is BofA"s detailed breakdown of the "contestants":

Contestant #1: Kevin Warsh

Kevin Warsh is a lawyer by trade, who is currently a distinguished visiting fellow at the Hoover Institution and lecturer at Stanford. He was a Fed Governor from 2006 to 2011, which was the heart of the financial crisis. Prior to the Fed, he worked at the National Economic Council under the GW Bush administration and at Morgan Stanley as an investment banker. Since leaving the Federal Reserve, Warsh has published a number of op-eds where he has expressed his frustration with the Fed"s easy policy stance. Below are a few representative quotes from his op-eds and from the Fed transcripts.

Interest rate policy:

• Jan 2017 op-ed: "What would a well-conceived, rigorously implemented Fed strategy look like? It would be clearly delineated and broadly measurable. Its goals would be within the scope of the Fed"s policy tools, attainable over time and circumstance. Critically, the strategy would be squarely focused on the medium term, that is, the next several years."


• "Seeking in the short run to exploit a Phillips curve trade-off between inflation and employment is bound to end badly. …. The Fed should adhere to a concept I would term "trend dependence." When the broader trends begin to turn-for example, in labor markets or output-the Fed should take account of the new prevailing signal."

QE and balance sheet normalization:

• March 2009 on QE: "I am quite uncomfortable with the idea of purchasing long-term Treasuries in size. As the papers described to us, the benefits could well be quite small. My sense is the costs might not be."


• April 2009 on QE2: "…I oppose an increase in our Treasury purchases beyond what we did last time. In terms of the discussion about markets and their expectations that we had earlier in this round, Mr. Chairman, I think we should not be surprised that markets want more; and the more we give, the more they will want."


• Jan 2010 on B/S exit: "But I would be inclined to push down excess reserves so we can be more effective when we decide we have to make more-meaningful steps to remove policy accommodation. On the question of the long-run balance sheet in the steady state, I think we should "try to go home again." It is difficult, but I think that we should try to, and I think we should be pretty explicit publicly about that desire. I am concerned about the efficacy of our operating target."

Fed credibility:

• Jan 2010: "I think of our preeminent goals here as ensuring our credibility so that: we can increase control and the perception of control over policy rates; we can be perceived to be able to effectively tighten financial conditions; and we can find our way back to a balance sheet and a regime that preceded this crisis."


• Nov 2013 op-ed: "Full disclosure of its balance sheet and operations is essential to the Federal Reserve"s democratic legitimacy. But transparency in communications about future policy is not a virtue unto itself. The highest virtue is getting policy right. Given manifest uncertainties about the state of the economy, oversharing policy deliberations is not useful if markets are led astray, or if public commitments reduce policy makers" flexibility to call things the way they see them."


• Jan 2017 op-ed: "Short-term thinking and ad hoc measures by the Fed beget short-term reactions by financial firms, businesses and households. …. The Fed"s technocratic expertise is no substitute for a durable strategy. This make-it-up-as-you-go-along approach causes many Fed members to race to their ideological corners, covering themselves as hawks and doves. It causes economists to litigate a false choice between fixed policy rules and unfettered discretion.

Regulation and fiscal policy:

• Aug 2016 op-ed: "With the enactment of the Dodd-Frank Act, the Fed claims the mantle of reform. It now micromanages big banks and effectively caps their rate of return. The biggest banks" growth in market share corresponds to that of their principal regulator. "


• April 2016: "The U.S. should lead the world in driving a growth-enhancing agenda, and fast. Washington must pursue policies that create new demand, rather than sanction an economic tit-for-tat that merely diverts demand among contesting countries. Supply-side, structural reforms-including radical tax reform and pro-competition regulatory reform-would propel domestic growth, and show the world a better way forward. "


• Oct 2015 op-ed: "Efforts by the Fed to fill near-term shortfalls in demand through QE and so-called forward guidance have shown limited and diminishing signs of success. And policy makers refuse to tackle structural, supply-side impediments to investment growth, including fundamental tax reform."

Bottom line on Warsh: If appointed, he is unlikely to immediately change the stance of policy and would continue to call for a gradual increase in interest rates and reduction in the balance sheet. However, the tone of the FOMC will change with Warsh, showing a hesitance to discuss recent data or economic models and instead a focus on influencing medium term growth. We also think Warsh would look to announce a change to Fed communication, potentially adjusting the time period of the dots to remove the focus on near-term policy moves. We also think he would pencil in a higher long-run equilibrium Fed funds rate (R*) and emphasize the desire to return to a "pre-crisis" equilibrium for the balance sheet. The likelihood of the Fed delivering four hikes next year goes up.

Contestant #2: Jerome Powell

Like Warsh, Jerome Powell is a trained lawyer and not an economist. Powell has been a Fed Governor since 2012 and therefore was involved in the decision-making behind QE3 and then policy normalization in recent years. Prior to joining the Board, he was a visiting scholar at the Bipartisan Policy Center, a partner at the Carlyle Group, and worked at the Treasury under the GWH Bush administration. Powell has been a vocal member of the FOMC, giving regular speeches and appearing in the media. Here are the talking points:

Interest rate policy:

• June 2017: "The Committee has been patient in raising rates, and that patience has paid dividends. While the recent performance of the labor market might warrant a faster pace of tightening, inflation has been below target for five years and has moved up only slowly toward 2 percent, which argues for continued patience, especially if that progress slows or stalls. If the economy performs about as expected, I would view it as appropriate to continue to gradually raise rates."


• "In the case of the federal funds rate, the endpoint of that process will occur when our target reaches the long-run neutral rate of interest. Estimates of that rate are subject to significant uncertainty. The median estimate of its level by FOMC participants in March was 3 percent, more than a full percentage point below pre-crisis estimates."

QE and balance sheet normalization:

• June 2013: "Most research has found, and I agree, that the first round of purchases of longer-term securities, which began in November 2008, contributed significantly to ending the financial crisis and preventing a much more severe economic contraction. The second round of purchases that began in November 2010 also appears to have been successful in countering disinflationary pressures. Now that the financial crisis has receded and the economy is recovering at a moderate pace, are asset purchases still effective? In my view, the evidence across the channels is mixed, but positive on balance."


• June 2017: "To affect financial conditions, the Federal Reserve has therefore used administered rates, including the interest rate paid on excess reserves (IOER) and, more recently, the offering rate of the overnight reverse repurchase agreement (ON RRP) facility. This approach, sometimes referred to as a "floor system," is simple to operate and has provided good control over the federal funds rate. In November 2016, when the Committee discussed using a floor system as part of its longer-run framework, I was among those who saw such an approach as "likely to be relatively simple and efficient to administer, relatively straightforward to communicate, and effective in enabling interest rate control across a wide range of circumstances."

Regulation:

• June 2017: "Our objective should be to set capital and other prudential requirements for large banking firms at a level that protects financial stability and maximizes long-term, through-the-cycle credit availability and economic growth. To accomplish that goal, it is essential that we protect the core elements of these reforms for our most systemic firms in capital and liquidity, stress testing and resolution." Powell discussed five possible regulatory reforms.


• "The first is simplification and recalibration of regulation of small and medium-sized banks.


• "The second area is resolution plans. The Fed and the Federal Deposit Insurance Corporation believe that it is worthwhile to consider extending the cycle for living will submissions from annual to once every two years, and focusing every other of these filings on key topics of interest and material changes from the prior full plan submission."


• "Third, the Federal Reserve is reassessing whether the Volcker rule implementing regulation most efficiently achieves its policy objectives… there is room for eliminating or relaxing aspects of the implementing regulation in ways that do not undermine the Volcker rule"s main policy goals."


• "Fourth, we will continue to enhance the transparency of stress testing and the Comprehensive Capital Analysis and Review (CCAR)."


• "Finally, the Federal Reserve is taking a fresh look at the enhanced supplementary leverage ratio. We believe that the leverage ratio is an important backstop to the risk-based capital framework, but that it is important to get the relative calibrations of the leverage ratio and the risk-based capital requirements right."

Bottom line on Powell: Since joining the Fed, Powell has established a reputation as a centrist on the monetary policy spectrum, aligning his views with that of the consensus. In fact, he often references how the committee thinks (good practice for post-FOMC press conferences). Powell is a pragmatist when it comes to regulation, wanting to retain much of the post-crisis reforms but willing to revisit certain aspects that may have missed the mark, such as the Volcker rule. He would mean continuity at the Fed.

Contestant #3: Gary Cohn

Gary Cohn is the Director of the National Economic Council and Chief Economic Advisor to the Trump administration. He was formerly the COO of Goldman Sachs, having spent most of his career at the investment bank. He is not a trained economist. Cohn has been focused on tax reform but has been rumored to have the Fed Chair goal in mind. Press reports suggested that he was at the top of the list until September 6th when President Trump told reporters that he was "unlikely" to nominate him given a difference of opinions surrounding how the administration handled the Charlottesville event. More recent press reports indicate that he is still in the running. Cohn has not been as vocal on monetary policy as Warsh or Powell, but we put together some relevant commentary.

Monetary policy:

• April 2015 Bloomberg TV: He believes Yellen should be patient. She presumably has a desire to raise interest rates so that she has the ability to lower interest rates if something went wrong. But on the flip side, the Fed has a dual mandate and there is no sign of inflation in the system. He argues that Yellen may want to intellectually raise interest rates but will not be able to.


• Jan 2015 Bloomberg TV: He argues that there are currency wars as a result of global central bank policy. The US is just "watching" as other central banks devalue so our currency is appreciating rapidly. He argues that we are in a global economy where the prevailing view is that one of the easiest ways to stimulate economic growth is to have a low currency…which makes sense.


• Feb 2015 Bloomberg TV: He is not convinced that one good jobs report has changed the outlook. He thinks the Fed is going to be in a tough dilemma - will want to increase interest rates but will be constrained by circumstances and the strength of the dollar. Central bankers tend to need to see real inflation before hiking.

Fiscal policy and regulation:

• Sept 2017 CNBC interview: Expects the tax plan to bring about an enormous amount of growth. The plan will drive business back to the country and make the US more competitive. He thinks with tax proposal and deregulation, the economy can be "substantially" above 3% GDP growth. Economic growth will pay for the tax cuts.


• Oct 1, 2017 Fox Business: We started down a regulatory path which was our number one objective. We"re starting to have some wins on regulation. We"ve got a tax path…we"ve got infrastructure to do. The agenda is to drive the economy.


• Bottom line on Cohn: He would likely lean more dovish on monetary policy, looking to avoid a significant tightening of financial conditions. This means preventing significant dollar strengthening, higher rates or lower equity prices. On fiscal policy, he is clearly on the same page as the Administration with the goal of easing financial market regulation and implementing tax reform in an effort to generate 3%+ growth, which he believes is sustainable. In this respect, we would anticipate that his forecasts would be based on a longer business cycle, therefore implying a higher long-run equilibrium rate (R*).

Contestant #4: Janet Yellen

Current Fed Chair Yellen is also in the running as President Trump has been on the record praising her for her low interest rate policy. She also reportedly has a good working relationship with Treasury Secretary Mnuchin. Moreover, to the extent it matters, it is historic precedent to reappoint the sitting Fed Chair even after a change in the White House. Yellen"s policies are well known: she supports the gradual normalization of rates and the balance sheet. The balance sheet reduction is essentially on auto-pilot now and will continue even in the face of a weakening economy. She supports current financial regulation but has noted that there are policies that can be amended and that she would work with nominee Randy Quarles on adapting current regulatory policies to make them more supportive of fostering economic growth.

Would Yellen accept another term? We think she would. In our view, she would consider her job to be partly done and would like to complete the normalization process. When she accepted President Obama"s nomination, she presumably thought her term would last longer than four years. Moreover, she cares deeply about the integrity of the institution and maintaining independence from Congress, which she would be able to fight for.

* * *

Finally, here is BofA"s "prediction" on who the next Fed chair will be:

It remains a close race. Recent press reports suggest that Warsh and Powell have taken the lead.(*) We can also look to the betting markets: as of October 4rd, PredictIt showed about a 43% probability for both Warsh and Powell.

The reality is that it is still too early to tell and we should prepare for the potential of "dark horse" candidates. Moreover, while the focus is on the Chair spot, the Administration may also announce a nominee for Vice Chair and can work toward filling the additional three vacancies on the board (assuming Randy Quarles is confirmed in short order). The focus is on the Chair - as it should be - but there are several opportunities to influence the direction of Federal Reserve policy. Until there is clarity about Fed leadership, we suspect that market participants will be hesitant to take a strong position on medium term monetary policy.

The ONLY Variable That Matters To The Price Of Gold

Written by Jeff Nielson, Sprott Money News

There are all sorts of positive fundamentals when it comes to the price of gold. There are the positive supply/demand fundamentals. The gold market is in a supply deficit. Mine reserves are at a 30-year low. The price of gold is below what is necessary to sustain the gold mining industry.

 

There are the positive geopolitical fundamentals. The world’s two most-unstable leaders – Kim Jong-un and Donald Trump – have been constantly trading threats and insults. And both of these people have nuclear weapons at their disposal. There is the endless “War on Terror”.

 

There are the positive economic fundamentals. Western real estate bubbles in major urban centers are at never-before-seen levels of insanity. Western markets are generally also at bubble levels, with U.S. markets representing bubbles on steroids. Western governments are bankrupt.

 

In relative terms, none of these fundamentals count.

 

There is one more important fundamental for the price of gold. Not only is it the most important fundamental, but it involves a variable which dwarfs all other fundamentals in magnitude -- combined.

 

Regular readers have heard many times before that gold (and silver) is “a monetary metal”. The definition is simple. Gold is money. Therefore the price of gold must change proportionate to changes in the supply of other forms of “money” (i.e. currency).

 

This is not a theory. It is a function of simple arithmetic. An elementary numerical example will illustrate this principle.

 

Suppose (in the entire world) there was a total of 10 ozs of gold. Suppose also (in this hypothetical world) that there was a total of only $10,000 U.S. dollars. And in this hypothetical world, the price of gold is $1,000/oz.

 

Let us suppose the supply of U.S. dollars increases by a factor of five, and thus there are now $50,000 USD’s. What happens to the price of gold? All other things being equal, the price of gold must increase by a factor of five (in this case, to $5,000/oz), to keep our hypothetical world in equilibrium.

 

Now let’s return to the real world. What happened in the real world? The supply of U.S. dollars did increase by a factor of five. This was the most reckless money-printing binge since Germany’s hyperinflation during the 1920’s. Regular readers know this monetary orgy as “the Bernanke Helicopter Drop”.

 

 

Over a span of 50 years from 1920 through 1970 (while we still had a gold standard), the supply of U.S. dollars was virtually unchanged. In five years, 2009 – 13, B.S. Bernanke quintupled the U.S. money supply.

 

Did the price of gold quintuple? No, not even close. At the time that Bernanke began his money-printing orgy, the price of gold was roughly $800/oz. That was right after, the price had been driven roughly 30% lower by the banking crime syndicate. And even before that point, the price of gold wasn’t close to reflecting its full value.

 

At a minimum, the Bernanke Helicopter Drop should have propelled gold to $4,000/oz (USD), concurrent with that money-printing. Arguably, the price should have gone much higher than that. In actual fact, as we all know, the price never even reached $2,000/oz: less than half of the absolute minimum price.

 

That should have been the base price for gold in 2013: $4,000/oz USD. The supply of U.S. dollars has never shrunk. Forget about “tapering”. It never happened.

 

How do we know? B.S. Bernanke told us so. From 2009 – 13, virtually every week Bernanke boasted about “the wealth effect” from his money-printing: how U.S. stock markets were being pumped higher and higher and higher.

 

Obviously if quintupling the supply of U.S. dollars pushed U.S. markets up to their bubble levels, then withdrawing dollars would cause those markets to fall from their all-time highs. What have we seen? Instead, the bubbles have gotten bigger and bigger and bigger.

 

Obviously the U.S. money supply hasn’t shrunk, it has continued to grow. Bernanke and the Fed lied when they claimed they were reducing the supply of U.S. dollars. And as we also all know, the Federal Reserve absolutely refuses to allow any outside auditing.

 

Nobody knows what are on its books, we only know what the Fed-heads claim is on their books. And what they claim is not remotely plausible.

 

The U.S. market bubbles keep expanding, ergo the U.S. money supply keeps expanding. There is no other possibility. Yet the price of gold isn’t at $6,000/oz. It isn’t at $4,000/oz. It isn’t at $2,000/oz. It has been falling for most of the last six years.

 

During those six years, no one in the mainstream media (and very few in the Alternative Media) has made any mention of the gigantic disconnect with U.S. money-printing and the price of gold. The reason why the mainstream media propaganda machine has ignored this fundamental is obvious. Their job is to suppress the price of gold.

 

Why have practically no commentators in the Alternative Media been banging the drum on this subject? Ignorance. Sadly, few of these gold “experts” have a correct understanding of gold market fundamentals. They dwell on trivia.

 

Look at what we see around us today. These self-proclaimed experts debate whether or not the price of gold should rise above $1,300/oz. They point to North Korea. They point to incremental changes in demand for some of the major gold-consuming nations. Irrelevant.

 

The fact is that thanks to the success of the banking crime syndicate in discouraging the buying of (real) gold in the Western world, total gold demand hasn’t increased by that much. The largest, single incremental change was the switch by central banks from being net-sellers to net-buyers of gold. That was a very significant change, but it has flattened out and there is no indication that this will change further over the short term.

 

The fact is that (despite all the rhetoric) there is very little chance of any actual hostilities between the United States and North Korea. Discounted for this small probability, this is not a major driver of the price of gold.

 

The most ludicrous influence – and distraction – to the price of gold has been U.S. interest rates. High interest rates are a negative driver for the price of gold. The reasoning goes like this.

 

If savers can obtain a positive interest rate on their savings then they have an incentive to hold paper instead of gold. What is a “positive interest rate” in this context? If the interest rate on their savings is higher than the rate of inflation, then that is a positive interest rate.

 

If the savings rate is lower than the rate of inflation, savers lose money by putting it in the bank, and they are much better off holding gold instead.

 

Are current interest rates high? No, they are the lowest rates in history. This is despite the fact that B.S. Bernanke and all the other central bank liars promised to immediately normalize interest rates in 2009 – meaning in the range of 3% - 5%.

 

Today, after nearly nine years, the U.S. interest rate is at 1%. Meanwhile, real U.S. inflation has hovered between 4 – 8%, according to John Williams of Shadowstats. U.S. interest rates would have to rise by at least another 3%, just to begin to be a negative driver for the price of gold.

 

Current interest rates are a mildly positive driver for the price of gold. Otherwise, for the last nine years, everything said and done by the Federal Reserve with respect to U.S. interest rates has been totally irrelevant to the gold market.

 

If we combine every other variable that influences the price of gold, even put together they don’t come close to equaling the impact of the Bernanke Helicopter Drop. The U.S. dollar is now worthless.

 

It is backed by nothing. It has been diluted more than any other major currency going back a hundred years. The U.S. government is bankrupt. The U.S. dollar is currently being phased out as reserve currency – meaning the demand for U.S. dollars is shrinking to a fraction of previous levels.

 

What is the price of gold (or any hard asset), denominated in a worthless currency? The price is infinite. What is the current price for gold, denominated in worthless U.S. dollars? $1,300. The Crime of the Millennium.

 

For those readers who are still not convinced, just listen to Bernanke’s own words.

 

U.S. dollars have value only to the extent that they are strictly limited in supply.

- B.S. Bernanke, November 21, 2002 

 

Strictly limited in supply.

According to the former Chairman of the Federal Reserve, the Bernanke Helicopter Drop rendered the U.S. dollar worthless. That is why the Federal Reserve has falsified more recent versions of the chart above – to hide the dollar’s worthlessness. The phony chart produced by the Federal Reserve today bears no resemblance to what has actually happened to the U.S. dollar.

The U.S. government, the Federal Reserve, and the mainstream media pretend that the U.S. dollar still has value. They pretend that the price of gold should be at $1,300/oz (or less).

Ignore the trivia. Ignore the liars and idiots in the media. Ignore the Federal Reserve and all of its utterly pointless “meetings” about the U.S.’s irrelevant interest rates. Follow the money. It leads up – way, way up.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

Written by Jeff Nielson, Sprott Money News

 

FOMC Preview: Just 2 Things To Watch For In Today's Fed Statement

Unlike the June Fed meeting, the FOMC announcement at 2pm today is expected to be an uneventful affair: as DB"s Jim Reid pointed out earlier, "given its late July and given the Fed will likely announce an end to balance sheet reinvestment in September (starting from October), this could be a relatively dull meeting."

Big picture: the FOMC is expected to keep interest rates unchanged at this meeting at 1.00%-1.25%, after hiking last month. According to RanSquawk, all analysts surveyed by Reuters expect the Fed to keep rates unchanged. The market agrees with them: Fed Funds currently price in a 0% chance of a rate hike today.

And, as BofA notes, the market is clearly not expecting any Fed balance sheet reduction today either:

With no press conference from the Fed Chair Yellen or Summary of Economic Projections released at this meeting, focus will be on the accompanying statement for the Fed’s views on inflation and any timing on the beginning of normalising the balance sheet.

Indeed, there are just two things to watch in today"s press conference-free FOMC statement: (1) any hints that Fed balance sheet reduction will be announced in September and (2) adjustments to the language discussing the recent disappointment in the rate of inflation (after 4 consecutive CPI misses).

• On inflation: the previous statement said the Fed still expects inflation (PCE) to stabilise around the Committee’s objective of 2.0% in the medium term, although on a 12-month basis was still expected to remain below 2.0%. Deutsche Bank say the Fed “will need to acknowledge the further decline in inflation since the June meeting” but should keep their medium-term view unchanged. Since the last meeting, Yellen spoke to Congress and although she noted that it was mostly temporary factors holding inflation down, she said she “recognised the dangers of persistently undershooting the Fed’s 2.0% target.”


• On the balance sheet: The Fed appears to be committed to shrinking its balance sheet, with most analysts expecting an announcement by the end of the year. The Fed’s most recent forward guidance has suggested that the start of balance sheet normalisation will be implemented in 2017, provided the economy evolves in line with expectations. Most analysts are not expecting an announcement of the start date of balance sheet normalisation at this meeting but there could be a tweak in the language. HSBC say the Fed could announce that they will begin balance sheet normalisation “relatively soon”, opening the door for a September announcement, to begin shortly after. In her semi-annual testimony to Congress, Yellen said she “expects balance sheet reduction to begin soon”.

In terms of explicit phrasing changes to the FOMC statement, according to BNP"s Paul Mortimer-Lee - who has been relatively bearish on the US economy recently - one of most important potential changes to the FOMC statement will be whether the Fed drops "somewhat" in its description of core inflation below target. It would be a "big sift if dropped and would show Fed losing faith in its own projections." Mortimer-Lee also lays out "what could be a shocker at FOMC? 1 rate hike - close to impossible; 2 announce balance sheet adjustment <20%;  hoist white flag on inflation = 25%"

What could be a shocker at FOMC? 1 rate hike - c. impossible; 2 announce balance sheet adjustment <20%; hoist white flag on inflation = 25%

— Paul Mortimer-Lee (@MortimerleePaul) July 26, 2017

In similar vein, Citi thinks that it is more likely than not that the revised statement will use a phrase like “relatively soon” to signal that the committee plans to announce balance sheet reduction in September.

"This should provoke little market reaction as (1) most clients we speak with expect such a change (2) Chair Yellen used this phrase in Congressional testimony two weeks ago (3) Fed balance sheet reduction related news has provoked little reaction from long end rates and currencies and (4) this is a marginal change from the current language: “The Committee currently expects to begin implementing a balance sheet normalization program this year.”

Citi concedes that even if there is no change to the balance sheet normalization language the bank"s call would "remain for a September balance sheet reduction announcement followed by a December rate hike." The June FOMC meeting followed three significant downside misses to core CPI for March, April and May. June core inflation (received subsequent to the June FOMC) was stronger than March-June but still weak at 0.12% MoM.

In June the committee noted that inflation “declined recently” and “is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term.” It was noted that “the Committee is monitoring inflation developments closely.” This language still characterizes well the FOMC view of inflation, suggesting only small tweaks may be in order.

In the June press conference Yellen focused on the transitory nature of the slowing. But subsequently, Fed officials, including Chair Yellen, have been a bit more inclined to attribute some persistence to the slowdown in inflation. The medium term view of inflation returning to 2% has not changed substantially for the core of the committee. The July statement may acknowledge that risks to inflation are “two sided,” but we would be surprised to see, and take as dovish, any wavering in confidence that inflation will stabilize around 2 percent. Apart from inflation, the statement that “job gains have moderated” may be revised to indicate they remain robust.

* * *

Parsing the statement, Bank of America expects the following textual changes:

Paragraph 1: Current conditions

We think the language is likely to be tweaked to reflect the latest data. As such, we expect a more positive assessment about job growth given the strong gain in June, but a more cautious tone around household spending. The FOMC may also note the recent weakness in core inflation is *partly* a result of a few unusual reductions in certain categories of prices. As Chart 1 shows, even trimmed measures of core inflation have continued to slide, making it hard to argue the recent weakness is entirely transitory.

Paragraph 2: Economic outlook:

The FOMC is unlikely to change the characterization of economic activity or the labor market, in our view. We also think it will note that near-term risks to the economic outlook appear roughly balanced, as Chair Yellen reiterated at the semi-annual monetary policy testimony. On the inflation outlook, we expect them to note that inflation has remained subdued despite the low rate of unemployment. However, they are likely still to reiterate that they expect inflation to stabilize at the 2% target over the medium term. This would be a way of implying that the Phillips Curve relationship has weakened, as we demonstrate in Chart 2, but that Fed officials are still assuming that it is relevant.

Paragraph 3: Policy decision

We expect the FOMC to double down on the commitment to normalize the balance sheet. In the June statement, the statement read as "the Committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated". We think this will likely be changed to read that the Committee expects to begin implementing a balance sheet normalization program *soon*. This would, in our view, send a message that the FOMC is on track to announce the change at the September meeting. It is possible the FOMC goes a step further and explicitly signals the B/S normalization in September by stating the change will occur at the "upcoming meeting".

It is also possible, although a low probability in our opinion, that the FOMC announces balance sheet normalization at the meeting tomorrow. Fed officials have been consistent in the view that the time has come to begin shrinking the balance sheet. They have also made it clear that it is data independent; low inflation will not take them off course from starting the process. They believe it will be a non-event in the markets when it begins and it will be able to continue on autopilot. As such, we think it is possible Fed officials do not see a reason to wait for the September meeting. This would come as a surprise to the markets, however, and it is not the Fed"s intention to deliver surprises.

* * *

Market reaction:

Overall, this meeting should not be a game changer as the Fed tend to communicate changes to policy relatively far in advance and there has been no indication that they will venture too far from the script at this meeting. Barclays say that “an announcement on balance sheet normalization in July would leave open the possibility of two additional rate hikes this year. This would likely send a more hawkish signal than warranted given the incoming data on activity and, in particular, inflation.”

What the Banks are saying:

Finally, courtesy of RanSquawk, here is a breakdown of what various sellside desks are expecting will be announced today: 

• Goldman Sachs: We do not expect any policy changes at the July FOMC meeting and expect only limited changes to the statement, which will likely upgrade the description of job growth, but might also recognize that inflation has declined further. We think the statement is also likely to acknowledge that the balance sheet announcement is now closer to hand, and we continue to expect the FOMC to announce the start of it’s balance sheet normalization in September.


• JPM: We expect no change in the funds rate target and no change in balance sheet policy (we think there is a ~20% chance for the Fed to begin the balance sheet normalization process at the Jul meeting). The policy guidance will likely signal an inclination to begin the normalization process in Sept but we don’t anticipate changes to the Fed Funds outlook. We expect the statement will sound more upbeat on the labor market, about similarly confident on growth, but more cautious on inflation.


• Morgan Stanley: We expect the Fed to leave its interest rate target unchanged. The statement will likely indicate that the normalization of the central bank’s balance sheet will begin relatively soon, solidifying expectations for a September announcement. The Fed will also make a benign update on conditions, by saying that the economy continued to expand at a moderate pace and that the labor market is still strengthening; the Fed should also say that inflation is running below its 2% goal. Weak inflation data will continue to be a thorn in the Fed’s side for several months to come. The Fed will resume hiking rates in December.


• Deutsche Bank: We do not expect the Fed to take any policy firming actions this week, partly because inflation has continued to surprise to the downside of late. In our view, policymakers will need to acknowledge the further decline in (PCE) inflation since the June meeting, but their medium-term view that inflation will return to target should remain unchanged. This would keep the door open for the Fed to begin its balance sheet normalization program as well as raise interest rates another 25 basis points by year-end. While it is possible that the Fed announces the former on Wednesday, we believe this holds a low probability. We continue to view the September meeting as the most likely timing for the Fed to announce the tapering of SOMA reinvestments, which would ostensibly begin in October.


• Barclays: We expect the Fed to keep the target rate for the federal funds unchanged and expect few changes to the statement outside of balance sheet normalization. We believe the statement could point to an announcement on balance sheet policies at the September meeting. The risk to our view is that the FOMC announces its balance sheet normalization program at the July meeting since we believe the committee is eager to begin the process. That said, an announcement on balance sheet normalization in July would leave open the possibility of two additional rate hikes this year. This would likely send a more hawkish signal than warranted given the incoming data on activity and, in particular, inflation.


• SocGen: We expect the Fed to announce the start of its balance sheet normalisation plan in September, but we acknowledge that it is a coin toss between this week’s meeting and the next one. In any case, we do expect a tweak in the paragraph on the balance sheet that should confirm the market’s expectation that the Fed will announce the shift in September.


• HSBC: We expect the FOMC to leave the target range for the federal funds rate unchanged until December. We do not expect much change in the policy statement"s assessment of current economic conditions or the economic outlook. We expect the FOMC to say that it expects to begin implementing a balance sheet normalisation programme "relatively soon," a change from the June policy statement that indicated the programme would begin "this year". This would allow the Committee to formally announce the start of disinvestment in September, for commencement in October. However, there is also the possibility that the FOMC could simply announce the change in balance sheet policy at the July meeting, for commencement in October.


• RBC: This should be one of the more boring Fed releases in a while. There should be only modest adjustments to the characterization of the economic backdrop and we expect no change to the policy language. We think the announcement regarding the start of the balance sheet run-off comes at the September meeting when we also believe the committee will stand pat on rates (we expect the next hike in December).
  

NYC Mayor De Blasio Staffer Arrested On Child Pornography Charges

Content originally generated at iBankCoin.com

A 29 year old staffer for NYC mayor Bill De Blasio"s office has been arrested and charged with two felonies after police found a massive collection of child porn on his laptop, according to court documents. The NYPD"s investigation began March 29th when Jacob Schwartz, 29, handed over his laptop - on which over 3,000 images and 89 videos were discovered depicting sexual acts with children as young as 6 months old.

Schwartz - a computer programmer making $66k / year was also the president of the Manhattan Young Democrats - as well as VP of the NY State Young Democrats. When the NY Post reached the former organization for comment, they said they were "shocked" by the allegations against Schwartz - adding that he is "no longer a member of the board."

Schwartz thought he was hot shit in Democrat circles, rubbing elbows with and promoting Hillary"s campaign manager Robby Mook.

Breitbart obtained a now-deleted biography of Schwartz from the Manhattan Young Democrats:

Jacob was born and raised in the heart of Greenwich Village, and was involved in political organizing from a young age. Some of his oldest memories are handing out leaflets for his father, as he campaigned for District Leader. More recently, he helped start the New Democratic Alliance in New York City, and, in 2012, worked for the Obama campaign as a Field Organizer in the Lehigh Valley. A graduate of Lehigh University with an M.S. in Energy Systems Engineering and a B.S. in Electrical Engineering, Jacob currently works for the New York City Department of Design and Construction on their Build It Back Hurricane Sandy recovery and resiliency program. He is also the founder and executive director of a climate education non-profit called Common Climate, and previously served as Issues Assembly and Policy Director for MYD.

Schwartz was charged with promoting a sexual performance by a child and possessing a sexual performance by a child under 16, both felonies.

Schwartz"s father is huge Democrat insider

Jacob Schwartz"s father is Arthur Schwartz, a prominent Manhattan attorney, community activist, and DNC operator. Schwartz served as council to Bernie Sanders during the 2016 election. He was also a delegate during Barack Obama"s 2008 run for president.

Schwartz has also represented SEIU, several unions, and served as general council to ACORN from March of 2009 to October 2010.

He also made a killing in NY real estate

Arthur Schwartz turned a 2003 investment of $499,000 into $20.89 million when he sold in 2014.

The elder Schwartz has called his son"s arrest "a personal tragedy," and told the Post "He"s already in therapy for this."

The younger Schwartz is out on $7500 bail.

And poor NY Mayor Bill De Blasio - the vocal Trump critic who headed up an anti-Trump protest in Columbus Circle, clogging up traffic, railed against Trump"s Immigration Executive Order - calling it "Simply Un-American," accused Trump of being the cause of Anti-Semitic threats (which turned out to be an Israeli guy). De Blasio also refused to assign a label of terrorism to a Sept. 2016 Manhattan bombing carried out by Afghani named Ahmad Kahn Rahimi which injured 29 people. Even though a note left on an unexploded pressure cooker referenced al-Qaeda cleric Anwar al-Awlaki.

So, a rising star NY Democrat was arrested on charges of pedophilia, and two of Trump"s most vocal New York City critics on the left have been thoroughly dragged into the mud. 

Boy was Hillary"s timing bad...

During Friday"s commencement address at Wellesley College, Hillary tried to smear those investigating high level pedophilia:

Billionaire Banker David Rockefeller, Former Head Of Chase Manhattan, Dies At 101

David Rockefeller, the famous banker and philanthropist with the family name that controlled Chase Manhattan bank for more than a decade and wielded vast influence around the world in the world of finance, has died on Monday morning at his home in Pocantico Hills, N.Y. He was 101.

A family spokesman, Fraser P. Seitel, confirmed the death.

Below is an exccerpt of his obituary from the NYT:

Chase Manhattan had long been known as the Rockefeller bank, though the family never owned more than 5 percent of its shares. But Mr. Rockefeller was more than a steward. As chairman and chief executive throughout the 1970s, he made it “David’s bank,” as many called it, expanding its operations internationally.

His stature was greater than any corporate title might convey, however. His influence was felt in Washington and foreign capitals, in the corridors of New York City government, art museums, great universities and public schools.

Mr. Rockefeller could well be the last of an increasingly less visible family to have cut so imposing a figure on the world stage. As a peripatetic advocate of the economic interests of the United States and of his own bank, he was a force in global financial affairs and in his country’s foreign policy. He was received in foreign capitals with the honors accorded a chief of state.

He was the last surviving grandson of John D. Rockefeller, the tycoon who founded the Standard Oil Company in the 19th century and built a fortune that made him America’s first billionaire and his family one of the richest and most powerful in the nation’s history.

As an heir to that legacy, Mr. Rockefeller lived all his life in baronial splendor and privilege, whether in Manhattan (as a boy he and his brothers would roller-skate along Fifth Avenue trailed by a limousine in case they grew tired) or at his magnificent country estates.

Imbued with the understated manners of the East Coast elite, he loomed large in the upper reaches of a New York social world of glittering black-tie galas. His philanthropy was monumental, and so was his art collection, a museumlike repository of some 15,000 pieces, many of them masterpieces, some lining the walls of his offices 56 floors above the streets at Rockefeller Center, to which he repaired, robust and active, well into his 90s.

In silent testimony to his power and reach was his Rolodex, a catalog of some 150,000 names of people he had met as a banker-statesman. It required a room of its own beside his office.

Spread out below that corporate aerie was a city he loved and influenced mightily. He was instrumental in rallying the private sector to help resolve New York City’s fiscal crisis in the mid-1970s. As chairman of the Museum of Modern Art for many years — his mother had helped found it in 1929 — he led an effort to encourage corporations to buy and display art in their office buildings and to subsidize local museums. And as chairman of the New York City Partnership, a coalition of business executives, he fostered innovation in public schools and the development of thousands of apartments for lower-income and middle-class families.
He was always aware of the mystique surrounding the Rockefeller name.

“I have never found it a hindrance,” he once said with typical reserve. “Obviously, there are times when I’m aware that I’m treated differently. There’s no question that having financial resources, which, thanks to my parents, I learned to use with some restraint and discretion, is a big advantage.”

Ambassador for Business

With his powerful name and his zeal for foreign travel — he was still traveling to Europe into his late 90s — Mr. Rockefeller was a formidable marketing force. In the 1970s his meetings with Anwar el-Sadat of Egypt, Leonid Brezhnev of the Soviet Union and Zhou Enlai of China helped Chase Manhattan become the first American bank with operations in those countries.

“Few people in this country have met as many leaders as I have,” he said.

Some faulted him for spending so much time abroad. He was accused of neglecting his responsibilities at Chase and failing to promote aggressive, visionary managers. Under his leadership Chase fell far behind its rival Citibank, then the nation’s largest bank, in assets and earnings. There were years when Chase had the most troubled loan portfolio among major American banks.

“In my judgment, he will not go down in history as a great banker,” John J. McCloy, a Rockefeller friend and himself a former Chase chairman, told The Associated Press in 1981. “He will go down as a real personality, as a distinguished and loyal member of the community.”

His forays into international politics also drew criticism, notably in 1979, when he and former Secretary of State Henry A. Kissinger persuaded President Jimmy Carter to admit the recently deposed shah of Iran into the United States for cancer treatment. The shah’s arrival in New York enraged revolutionary followers of the Ayatollah Ruhollah Khomeini, provoking them to seize the United States Embassy in Iran and hold American diplomats hostage for more than a year. Mr. Rockefeller was assailed as well for befriending autocratic foreign leaders in an effort to establish and extend his bank’s presence in their countries.

“He spent his life in the club of the ruling class and was loyal to members of the club, no matter what they did,” The New York Times columnist David Brooks wrote in 2002, citing the profitable deals Mr. Rockefeller had cut with “oil-rich dictators,” “Soviet party bosses” and “Chinese perpetrators of the Cultural Revolution.”

Still, presidents as ideologically different as Mr. Carter and Richard M. Nixon offered him the post of Treasury secretary. He turned them both down.

After the death in 1979 of his older brother Nelson A. Rockefeller, the former vice president and four-time governor of New York, David Rockefeller stood almost alone as the remaining family member with an outsize national profile. Only Jay Rockefeller, a great-grandson of John D. Rockefeller, had earned prominence as a governor and United States senator from West Virginia. No one from the family’s younger generations has attained or perhaps aspired to David Rockefeller’s stature.

“No one can step into his shoes,” Warren T. Lindquist, a longtime friend, told The Times in 1995, “not because they aren’t good, smart, talented people, but because it’s just a different world.”

A Privileged Life

The youngest of six siblings, David Rockefeller was born in Manhattan on June 12, 1915. His father, John D. Rockefeller Jr., the only son of the oil titan, devoted his life to philanthropy. His mother, Abby Aldrich Rockefeller, was the daughter of Nelson Aldrich, a wealthy senator from Rhode Island.

Besides Nelson, born in 1908, the other children were Abby, who was born in 1903 and died in 1976 after leading a private life; John D. Rockefeller III, who was born in 1906 and immersed himself in philanthropy until his death in an automobile accident in 1978; Laurance, born in 1910, who was an environmentalist and died in 2004; and Winthrop, born in 1912, who was governor of Arkansas and died in 1973.

David, the youngest, grew up in a mansion at 10 West 54th Street, the largest private residence in the city at the time. It bustled with valets, parlor maids, nurses and chambermaids. For dinner every night his father dressed in black tie and his mother in a formal gown.

Summers were spent at the 107-room Rockefeller “cottage” in Seal Harbor, Me., weekends at Kykuit, the family’s country compound north of the city in Tarrytown, N.Y. The estate was likened to a feudal fief. As Mr. Rockefeller wrote in his autobiography, “Memoirs” (2002), “Eventually the family accumulated about 3,400 acres that surrounded and included almost all of the little village of Pocantico Hills, where most of the residents worked for the family and lived in houses owned by Grandfather.”

In that bucolic setting he developed a fascination for insects that would lead to his building one of the largest beetle collections in the world.

David was 21 when John D. Rockefeller died. “He told amusing stories and sang little ditties,” Mr. Rockefeller recalled in 2002. “He gave us dimes.”

His sense of noblesse oblige was heightened by his early education at the experimental Lincoln School in Manhattan, founded by the American philosopher John Dewey and financed by the Rockefeller Foundation to bring together children from varied social backgrounds. He went on to study at Harvard, receiving his B.S. in 1936, and then spent a year at the London School of Economics, a hotbed of socialist intellectuals. Mr. Rockefeller was awarded a Ph.D in economics from the University of Chicago in 1940.

Moved by the Great Depression at home and abroad, he stated in his doctoral thesis that he was “inclined to agree with the New Deal that deficit financing during depressions, other things being equal, is a help to recovery.” The notion that a Rockefeller would take such a liberal economic view was major news; the family, rock-ribbed Republican, was known for its fierce opposition to President Franklin D. Roosevelt, the New Deal’s author.

After receiving his doctorate, Mr. Rockefeller became a secretary to Fiorello H. La Guardia, New York’s pugnacious, liberal Republican mayor. In 1940, he married Margaret McGrath, known as Peggy, whom he had met at a dance seven years earlier, when he was a Harvard freshman and she was a student at the Chapin School in New York. His wife, a dedicated conservationist, died at 80 in 1996. They had six children: David Jr., Abby, Neva, Margaret, Richard and Eileen. A complete list of his survivors was not immediately available.

Mr. Rockefeller enlisted in the Army in 1942, attended officer training school and served in North Africa and France in World War II. He was discharged a captain in 1945.

He began his banking career in 1946 as an assistant manager with the Chase National Bank, which merged in 1955 with the Bank of Manhattan Company to become Chase Manhattan. Banking in the early postwar era was a gentleman’s profession. Top executives could attend to outside interests, using social contacts to cultivate clients, while leaving day-to-day management to junior officers. Mr. Rockefeller found plenty of time for such activities. In the late 1940s he replaced his mother on the Museum of Modern Art’s board and eventually became its chairman. He courted art collectors. In 1968, he put together a syndicate, including his brother Nelson and the CBS chairman, William S. Paley, to buy Gertrude Stein’s collection of modern art. David and Peggy Rockefeller’s own prized paintings — by Cézanne, Gauguin, Matisse, Picasso — were lent to the museum permanently.

Expanding a Bank Globally

Mr. Rockefeller’s rise in banking was swift. By 1961 he was president of Chase Manhattan and its co-chief executive with George Champion, the chairman. Promoting expansion overseas, Mr. Rockefeller clashed with Mr. Champion, who thought that the bank’s domestic business was more important. After Mr. Rockefeller replaced Mr. Champion as chairman and sole chief executive in 1969, he was able to enlarge the bank’s presence on almost every continent. He said his brand of personal diplomacy, meeting with heads of state, was crucial in furthering Chase’s interests.

“There were many who claimed these activities were inappropriate and interfered with my bank responsibilities,” Mr. Rockefeller wrote in his autobiography. “I couldn’t disagree more.” His “so-called outside activities,” he insisted, “were of considerable benefit to the bank both financially and in terms of its prestige around the world.”

By 1976, Chase Manhattan’s international arm was contributing 80 percent of the bank’s $105 million in operating profit. But instead of vindicating Mr. Rockefeller’s avidity for banking abroad, those figures underlined Chase’s lagging performance at home. From 1974 to 1976 its earnings fell 36 percent, while those of its biggest rivals — Bank of America, Citibank, Manufacturers Hanover and J..P. Morgan — rose 12 to 31 percent.

The 1974 recession hammered Chase, which had an unusually large portfolio of loans in the depressed real estate industry. It also owned more New York-related securities than any other bank in the mid-1970s, when the city was edging toward bankruptcy. And among major banks, Chase had the largest portfolio of nonperforming loans.

Chase also got caught up in a scandal in 1974. An internal audit discovered that its bond trading account was overvalued by $34 million and that losses had been understated. A resulting $15 million drain in net income tarnished the bank’s image. In 1975, the Federal Reserve and the comptroller of the currency branded Chase a “problem” bank.

Even as he struggled to reverse Chase Manhattan’s decline, Mr. Rockefeller found time to address New York City’s financial problems. His involvement in municipal affairs dated to the early 1960s, when, as founder and chairman of the Downtown-Lower Manhattan Association, he recommended that a World Trade Center be built.

In 1961, largely at his instigation, Chase opened its 64-story headquarters in the Wall Street area, a huge investment that helped revitalize the financial district and encouraged the World Trade Center project to proceed.

In the mid-1970s, with New York City facing a default on its debts because of sluggish economic growth and uncontrolled municipal spending, Mr. Rockefeller helped bring together federal, state and city officials with New York business leaders to work out an economic plan that eventually pulled New York out of its crisis.

Continued reading at the NYT

The Cultural Purge Will Not Be Televised

Via Mark Jeftovic of EasyDNS.com,

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, and our ideas suggested, largely by men we have never heard of…. It is they who pull the wires that control the public mind.”

– Edward Bernays, Public Relations

I’ve been trying not to write this post, because really, who needs a bunch of shrill, hysterical snowflakes calling you a racist nazi for committing the egregious sin of pointing out the many contradictions in the #deleteshopify boycott and the wider witch hunt mentality that pervades social discourse these days?

The main factor holding me back is not cynicism but actually fear. For the first time in my life I’m afraid to speak my mind. The possible ramifications of exercising my inalienable right to free speech frighten the crap out of me. So much so that I really don’t want to do it. I’ve become known as the type of person who speaks candidly and frankly about some tough issues and I’ve never had a problem doing that in the past. I’ve gone up against some pretty intimidating forces such as the City of London IPCU and the US FDA, but I’ve never been as scared as I am now to speak out.  For that reason I’m just going to have to suck it up and do it.

There is a cultural purge in progress.

It is directed against not only those who are perceived as “pro-Trump” (which as a card carrying Libertarian I am not. I think that he’s no friend to free speech, privacy or the internet), but targeting even those who are not “anti-Trump enough”.

This cultural purge has a two-pronged approach, from one side, from elements within the corridors of power (or those recently ejected from it) who have successfully floated the concept that free speech is not inviolable and that it would be a good thing for “truth” to be curated by “somebody” who knows better:

“We are going to have to rebuild within this wild-wild-west-of-information flow some sort of curating function that people agree to… There has to be, I think, some sort of way in which we can sort through information that passes some basic truthiness tests and those that we have to discard, because they just don’t have any basis in anything that’s actually happening in the world…That is hard to do, but I think it’s going to be necessary, it’s going to be possible,”

— Barack Obama in speech at Frontiers Conference, Pittsburgh, PA, Oct 13, 2016 (emphasis added)

The other half comes from the trenches, comprised of manic flashmobs directing enmity against, literally, anything remotely connected to those deemed responsible for the greatest political upset of our time.

The mainstream media, outlets like Washington Post and the New York Times, among others, are complicit, providing the glue or the lubricant between this pincer movement and its chilling effects. The combination gels into an echo chamber drowning out all rationality and renders differing philosophies and legitimate dissent as blasphemous.

Let me explain my choice of title for this post and how it captures what I see going on here:

This post title is obviously a riff on Gil Scott-Heron’s song ‘The Revolution Will Not Be Televised’, and the backstory behind this song is quite instructive to times like these:

Gil Scott-Heron saw first hand how altruistically motivated social activism can turn ugly when a campus protest action he initiated went horribly overboard. After the death of one of Gil-Heron’s schoolmates, he started a grass roots movement with the goal of improving the medial conditions on his campus, including making the college infirmary operate 24×7, something he felt would have saved his friend’s life.

The laudable aim of improving conditions on campus with the possibility of saving future lives derailed into a menacing fracas. A mob congregated on the front lawn of the infirmary’s doctor’s home where they proceeded to burn him in effigy:

“The protest grew angry, culminating with some students hanging the doctor in effigy from a tree in his front yard and setting it on fire. The doctor came out of his house and swore that he wasn’t responsible for the deaths. As he proclaimed his innocence, he had tears in his eyes.

When Gil arrived at the protest, he stood between the students and the doctor, looking at the doctor’s children staring out the window in fear. ‘A cold flash scampered across the back of my neck, ‘ wrote Gil later to describe his sudden fear that events could spiral out of control into violence, a fear which was allayed only when the students went back to their dorms.

The realization that radical action sometimes leads to unintended consequences and violent overreactions haunted Gil, and that image of a distraught Dr. Davies lingered in his mind for months to come. The experience reinforced Gil’s instinct to avoid violence and militant action in the struggle for social change.”

One should easily concede that today there are many reasons to petition for change. Our governments still have us all under wholesale surveillance, we are still involved in numerous unsanctioned wars, continue to provoke toward new ones, and the government continues to methodically destroy the economy via financial repression.

But we should all take Gil Scott-Heron’s lesson to heart and try to keep in mind that we are all human beings. We all have rights, we should all be secure in our ability to speak and associate freely.

But that isn’t what’s happening.

Today, the mainstream media, rather than objectively and rationally report on facts, are instead complicit in a sustained, wide-ranging campaign of demonization of “all things non-Democrat”. There is blanket categorical denial of any valid basis for why the citizenry worldwide are rejecting what they increasingly see as an “Establishment Elite” agenda.

Greece, Brexit, Trump and quite possibly soon, Marine Le Pen in France are all continuations of a theme. These events are referendums unto themselves and those “Global Elites” are on a losing streak. Instead of trying to understand the basis of these rejections (that the populace are sick and tired of having a two-tiered society in which their civil rights are eroded and they get saddled with all the debt, while the elites get to operate under a different set of rules and gobble up all the assets); they have mounted a concerted campaign of outright propaganda and mind-numbingly nonsensical narratives to dismiss away these acts of “defiance”.

As alt-market.com’s Brandon Smith commentary  observes:

“One of the most favored propaganda tactics of establishment elites and [those] they employ … is to relabel or redefine an opponent before they can solidly define themselves. In other words, elites [and their media] will seek to “brand” you (just as corporations use branding) in the minds of the masses so that they can take away your ability to define yourself as anything else.” (emphasis added)

And this is exactly what’s happening. For example, when you say “Breitbart”, your average person is so inculcated from the repetition of the words “white supremacist”, “racist”, and “ nazi” that people just assume that’s what it is. From there people think that it’s ok to #boycottshopify simply for supplying basic online ecommerce services to them (where does it stop? Btw, Breitbart derives 100% of it’s revenues from the internet, perhaps everybody in a twist about it should do us all a favour and boycott that too).

Is Breitbart really white supremacist, racist nazi hate site? Actually, no it isn’t. Most people think it is however, because they’ve been conditioned to believe it, and they’ve never actually gone there to see for themselves.

How do I know that Breitbart isn’t really the white supremacist, neo-nazi hate-site that we are incessantly brainwashed  to believe it is? Well for one thing, I’ve seen the real deal. They look like this:

This place is called “Shitskin Plantation”. They wound up on easyDNS (my company’s system ) for about a week by the time we kicked them. The fact that we did eject a real honest to god racist, neo-nazi hate site doesn’t bolster the #boycottshopify movement for three reasons:

#1) Shitskin is clearly racist and contains actual language condoning violence toward an identifiable group. It was right there for anybody to see. Here in Canada such material is codified into law as “hate speech” under the Criminal Code.

#2) We chose. We assessed our AUP, found them in violation and kicked them. Specifically we found them in violation of “the Non-Aggression Principle” in our plain english Terms of Service. The NAP has grey areas and subjective rabbit holes. Libertarians debate it relentlessly. But the important thing is that nobody else forced us to do it in the absence of due process. We made our own determination, and that’s important. Sacrosanct, in fact.

And #3) Breitbart is an ultra-conservative, hard-right political opinion site. That’s all. They seem also have a penchant for inflammatory, click-bait headlines (who doesn’t these days?) You may not like it, I may not like it, but they absolutely have the right to be online and to publish.

That anybody who has even the most tenuous affiliation with them is fair game for having their rights curtailed, their livelihood sanctioned or sabotaged is indefensible. The only legitimate mechanism for these people to suffer in their fortunes is through the failure of their ideas in the marketplace of thought. By being rejected, not through being repressed (see below).

It is entirely reasonable for Shopify, or  any other vendor to keep supplying services to Breitbart (at present they have no services with easyDNS)

It is also reasonable for any of those vendors to choose not to supply services to them of their own volition (you can’t have it both ways folks, you can’t force Shopify to dump Breitbart and simultaneously force some Bible-thumping redneck to bake a cake for a gay wedding).

What isn’t reasonable is to coerce or compel anybody else to take any action they would not themselves take under their own judgement. It’s truly frightening that there is a growing sentiment that this is acceptable behaviour.

Do you really want to live in a world where people sever business and personal relationships because a literal flash mob demands it? Where mobs get to pick and choose who you are allowed to associate with?

Shopify has over 300,000 customers. You honestly expect them to sort through those and kick out the ones that you think are morally objectionable?

In 2010, when easyDNS was itself embroiled in the Wikileaks debacle I was absolutely appalled when ranking politicians applauded the vendors for severing ties with them. Senator Lieberman congratulated Amazon and Paypal by name for “breaking their contracts”, he literally used those words. A ranking politician applauding behaviour that should rightly get you sued. The public backlash then was huge and pro-Wikileaks. In our own small way, we stood up for Wikileaks then, we maintain a congruent position now. I applaud Shopify for standing firm and refusing to sever their ties for the same reason.

The “Right Side” of History

Whenever I hear a lot of activists whining about the current situation I frequently hear references to being “on the right side of history”. Nobody wants to be on the wrong side of that. Actually that’s a nonsensical statement since history is amoral, or as Winston Churchill famously observed, “One damned thing after another”.

However there is one rule of thumb I’ve formulated over the years which I think can keep one onside of the grand currents sweeping through time and society and helped me understand my sympathy with Libertarianism and anarcho-capitalism. That is to know the fine line between rejecting an idea that one finds immoral, unethical, obsolete or otherwise objectionable and repressing it.

Morality is largely subjective. Very few people act in a way they themselves consider immoral. Almost everybody thinks that whatever they’re doing, they’re on the side of the angels. The tiny sliver of participants who are fully cognizant of their own immoral action and proceed anyway are criminals and sociopaths (the majority of them gravitate into politics).

When enough people’s ethical compasses align you get a cultural or societal norm. One of the cultural norms that we fought hard for over the ages was that people have a right to free speech and free association. You can disagree with what I have to say but respect my right to say it.

These rights were so hard won that they were codified into universal laws and into the very Constitutions that govern most civilized nations. I believe one of the more well-known words for it was “inalienable”.

Until now. Now people are putting conditions around “free speech” and “free association”.

The idea that free speech has its limits somewhere around the point where it hurts somebody’s feelings is beyond idiotic and dangerous.

Tweet of person exercising her free speech to encourage economic harm to others…

The world is not one big foam insulated, bubble wrapped safe space. This may come as a shock to you but there is a widespread sentiment, a backlash dare I say, against the idea that a Saviour State should watch over everything and smooth out all the world’s sharp edges.

Besides…

Boycotts usually backfire.

Back in the mid-90’s, Bob Rae was the Premiere of Ontario and I was in a failed metal band out of London, Ontario. Mr. Rae wrote a nice song about multiculturalism called “Same Boat Now” and submitted it to various record labels who promptly rejected it and told him not to quit his day job. My band recorded a power-pop version of his song and released it on 7” vinyl. Our label  put an open letter to Mr. Rae on the back sleeve that was highly critical of his socialist political platform (albeit quite tame by today’s standards). I was mortified, fearing a media backlash but felt trapped. I called Jack Richardson, my former college prof from Fanshawe College’s Music Industry Arts program and widely credited with having single-handedly created the Canadian music industry and asked his advice.

Before I finished relaying the details he was laughing. “Mark”, he said, “The only thing that truly matters is that they spell ‘Landslide’ right. That’s it”.

This has been bourne out countless times since that event. I could list them here but the point is, boycotts usually invoke The Streisand Effect and actually bolster the target of the boycott. We can cite a couple brief examples:

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  During the Bob Parsons era of Godaddy, when he shot the elephant, or when he aired some super-sexist Super Bowl commercial, Godaddy numbers, in terms of net-new domains-in or registered usually  went up not down, in the face of consumer outrage and boycotts.

  
  


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  Wikileaks, again – when we did help their mirror sites get back online there was a counter-reaction against that. Every once in awhile I check the emails from the customers who sent me extremely hostile emails telling me they were leaving, and almost all of them remained (and some still do) customers to this day.

  
  


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  Shopify itself, who is publicly traded, has been on a tear in share price for most of the year, and it’s continued unabated since  #deleteShopify began.

  
  

So what can you do?

You can only govern yourself. Your only recourse is whether to associate or disassociate with somebody. Yes, you are perfectly within your rights to #boycottshopify but as I’ve outlined, you’re being naive doing so and will likely have the exact opposite effect if you’re enough of a loudmouth about it .

But if this Cultural Purge proceeds we will actually, for real, lose what used to be inalienable rights. Our right to free speech, our right to free association and our rights to our own minds. If something you say is considered “hurtful” (which will more closely resemble dissent or criticism of the Official Narrative than anything else) you will be sanctioned. You will tow the line or you will be penalized – contracts severed, vendors disassociate themselves, boycotts ensue. Whatever you do, just don’t say or think the wrong thing, because not going along with the crowd will make you a pariah.

If you want to prevent that:

1) you have the duty to look at the issue first hand and decide for yourself if it has any merit. Don’t ever come to me and tell me “XYZ is white supremacist, neo-nazi hate speech” unless you can show me an article that has the hate speech in it. Show me the white supremacist rhetoric. If you tell me you believe it simply because that’s what Wapo told you then you are a fool. You are Wapo’s useful idiot. A Wapobot.

2) you have to be prepared to call b/s whenever some whining snowflake demands safety from any contrary opinion, whenever some pundit robotically repeats the “white supremacist, hate speech, homophobe, Russian hackers” mantra, and whenever you’re asked to jump on some witchunt bandwagon against someone who dares to dispute the Official Narrative.

3) you have to be able to take the heat. Guess what? You’ll be next. Speak out against this nonsense and you’ll be subjected to hysterionics, character assassination, guilt by the most tenuous of associations, distortions of fact and a co-ordinated piling on by mobs of unquestioning ideological berserkers.

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  You’ll be Peter Thiel (there was a popular outcry to remove him from Facebook’s board, why? Because he endorsed Trump.)

  
  


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  You’ll be Scott Adams (his crime? Correctly predicting that Trump was going to win)

  
  


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  You’ll be Ivanka Trump (facing a co-ordinated attack on her livelihood for her transgression of being born a Trump).

  
  

That is a cultural purge.

Hell, I’m probably next just for writing this piece. So be it. My credibility as a non-racist, free-speech Libertarian are unassailable and am categorically unaffiliated with Russian intelligence. My duty is to speak out precisely because it is becoming more dangerous to speak out.

“In times of universal deceit, telling the truth is a revolutionary act”. — Unknown

The NEW U.S. Economic Mythology

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Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)

The Corporate media lies to us, all of the time. This is not an assertion, merely an elementary observation. With a real “free press”, we see occasional moments where different media outlets may agree on the interpretation of particular events and/or the relative importance of events. All other times, we see a divergence of opinion between media outlets.

This is what we would expect to see. Homo sapiens are a contrarian species. We all have our own ideas – or at least we used to.

What do we see with the Corporate media today? We see a small collection of gigantic corporations which control everything we see and hear. That’s called an oligopoly. It is not even legal. And with rare exceptions, we see these gigantic corporations saying the same thing, all the time.

That’s not a free press. That’s a propaganda machine. And when a propaganda machine repeats the same message over and over, we have a name for that too. We call it brainwashing.

For example; for many, many decades, marijuana was supposedly one of the Demon Drugs. Not only did it pose several grave perils to our health, but it was a “gateway drug”. Let little Johnny or Janey get their hands on a joint, and next thing you know they would be shooting heroin.

Was any of that true? Of course not. It was all propaganda.

Today, we know that marijuana’s active ingredients have many benign and even therapeutic applications. As jurisdictions across North America now begin legalizing the recreational use of marijuana, the only difference being noticed by the governments of those jurisdictions is more tax dollars in their coffers – and less-crowded jails.

We’re not only fed legal propaganda and brainwashing, we’re also subjected to economic brainwashing. And nowhere do we see more intense brainwashing than with respect to the Mighty U.S. Economy.

For many, many years, when the U.S. economy was genuinely prosperous, successive U.S. governments had an overt and explicit “strong dollar policy”. A strong currency was good. Having each dollar in a consumer’s wallet stretch farther was good, because that consumer could buy more goods.

However, when the evil Alan Greenspan and his successor B.S. Bernanke were ordered by their oligarch Masters to begin to rapidly dilute and debase the U.S. dollar, the elementary logic of a strong-dollar policy became inconvenient for the oligarchs. New propaganda had to be invented.

Suddenly, a strong currency was bad. “Competitive devaluation” became the new mantra of the U.S. government and the subordinate puppets across the Western world. It was good to have a weak currency. It was good for each dollar in a consumer’s wallet to be devoured by inflation. It was good for consumers to buy less and less goods because their dollar was shrinking – not stretching.

It never made any sense. But the brainwashing has been repeated to us over and over, year after year, and so we (most of us) believe it.

Then these same oligarchs decided to manipulate the U.S. dollar upward, pushing it to absurd heights versus almost every currency on the planet. Has the (new) “strong dollar” hurt the U.S. economy? Apparently not, because what we hear every minute of every day is that the Federal Reserve is on the verge of pulling the trigger on higher interest rates because the U.S. economy is so damn strong.

Then we have oil.

For many, many years; we have been told that high oil prices are bad. Why? Because we use oil (directly or indirectly) in almost all human economic activity. Dramatically pushing up the price of a primary economic input is like a tax on the economy. Indeed, the mainstream media has often uttered precisely that phrase: “higher oil prices are a tax on the economy.”

Just as it is elementary logic that a strong currency is good, it is also elementary logic that high oil prices are bad – bad for everyone except oil producers. But this logic is suddenly no longer convenient for the oligarchs, so once again they have ordered their media foot soldiers to invent new propaganda. Note the speed with which this new propaganda message has been injected into the Corporate media megaphone.

The crazy idea that higher oil prices might be good for the economy right now

That propaganda headline was rolled out less than a year ago at the Washington Post. See how audacious this propaganda machine has become. It acknowledges that the mere suggestion that high oil prices might be good is crazy. Then the propaganda mouthpiece who wrote this propaganda goes on to “explain” to the insipid sheep reading the article why high oil prices are actually a good thing.

Scarcely more than six months later; we see this propaganda headline from the hardcore brainwashing machine known as Bloomberg News.

What Will Lift World Economy? Goldman Says Higher Oil Prices

Suddenly, the “crazy” idea that higher oil prices are a good thing is no longer being introduced in a sheepish, almost apologetic manner. Now it is being presented to us as the new wisdom, uttered by none other than the economic sages (i.e. compulsive liars) of Goldman Sachs.

We’re brainwashed with various forms of ludicrous mythology on a regular basis. The point of this article is not to merely point out that the Corporate media has once again been caught passing off ridiculous lies. That’s nothing more than another “dog bites man” story.

The real importance of pointing out the New U.S. Economic Mythology comes in looking past the mere propaganda itself. There could be no possible reality where imposing a “tax on the economy” could be good for the economy. It might be good for the government collecting the tax, but it’s certainly never good for the economy itself.

How has the propaganda machine endeavoured to pass off this ridiculous lie? Why has the propaganda machine been told to pass off this ridiculous lie?

First the “how”. Why are high oil prices now supposedly “good for the economy”, when this could never possibly be true? It’s because – get ready for this – there is “not enough inflation”. There’s nothing at all new about that lie. The prostitutes of the Federal Reserve have been peddling this nonsense for years. From 2013, and once again from Bloomberg:

Why the Fed Worries Inflation Is too Low

Regular readers already know that this is a heinous lie. Inflation is economic cancer. Inflation is exactly like “a tax on the economy” because as with a tax, it claws away our purchasing power. It is impossible for a human being to have “not enough cancer”. It is impossible for an economy to have “not enough inflation”.

Making this lie especially heinous is that we have much too much inflation. Food prices are soaring at a double-digit rate, with only brief lulls between the next explosion in prices. Housing prices are soaring higher at a rate never before seen in our lifetime. We have far too much inflation, yet the liars of the Corporate media and the liars of the Federal Reserve and the liars of our puppet governments tell us there is “not enough inflation”.

So why bring oil into this? Why try to pass off two utterly absurd lies together, simultaneously? We need higher oil prices because there is not enough inflation.

To understand the necessity for the Corporate media to attempt to pass off two ridiculous lies simultaneously requires turning back the clock a few years, back to when the U.S. government chose to manipulate the price of oil to a rock-bottom level. That’s what we were told.

Barack Obama publicly boasted that lower oil prices were “part of the U.S. strategy” to punish Russia. Of course in reality the actual manipulation of oil markets was carried out by the banking crime syndicate, known to regular readers as the One Bank. But the bankers kept oil prices too low for too long.

Russia is still standing. However, a few more months of $30/barrel would have completed the vaporization of the much-hyped U.S. shale oil sector. That would have been embarrassing for the oligarchs. Shale oil had to be saved. Oil prices had to rise. But now another problem.

How does the Corporate media continue to pretend there is a “U.S. economic recovery” as oil prices rise significantly? How can the Federal Reserve continue to pretend that it’s “about to raise interest rates” with oil prices rising? More potential embarrassment for the oligarchs and their lackeys.

New mythology was necessary. Higher oil prices are good (a lie) because there is not enough inflation (a lie). And those lies are now necessary because the Corporate media has been ordered to continue to pretend there is a U.S. recovery (a lie) and pretend that the Federal Reserve is “about to raise interest rates” (a lie).

Oh what a tangled web we weave when first we practice to deceive.

One caveat on the last of the Big Lies currently being passed off about the U.S. economy. It is possible that the Federal Reserve may suddenly begin to normalize interest rates – once their oligarch Masters give them the word that it’s time to torpedo the U.S. stock market bubble.

Warren Buffett is 86 years old, and currently sitting on a cash hoard of $85 billion vampire-dollars. Those two numbers both tell us that the Next Crash is coming sooner, not later.

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Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)