“Sturdy” Non Farm Payroll Numbers Provide The Fed With Cover To Raise Interest Rates

JM Bullion

Podcast Summary

Introduction 0:00-4:56

How The Fed Managed to Keep Interest Rates Low and Print $4.3 Trillion Without Crashing The Dollar

4:56-8:03- Discussion of how the Fed manipulates market perception and interest rates. The three legged propaganda stool, company share buybacks and the “wealth effect” are discussed.

The False Job Recovery

8:03-11:30 The most recent non farm payroll data is discussed. The top line number was good despite poor economic data. While the media touts job creation as the best in decades, little discussed is the quality of the jobs and to whom they are going.

Who is Getting Jobs?

Labor Force Participation Rate Among Senior Citizens

labor participation rate 65+ chart

The labor force participation rate has increased fastest in the age group 65+.

Labor Force Participation Rate Among Those in their Prime Working Years

labor participation rate 25-54 chart

The labor force participation rate among those aged 25-54 has decreased since the recession ended.

Media and Wall Street Reaction to Negative First Quarter GDP

“The weakness in the U.S. recovery is not like a cart losing its wheels because the labour market remains healthy and housing activity is picking up,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.

AP: US economy shrank in winter but staging a spring rebound

but activity already has rebounded modestly.

Fed on Interest Rates: The Game of Back and Forth

11:30-14:50 the contradictory positions on whether to raise rates expressed by the Federal Reserve Regional Presidents, the International Monetary Fund and the media are discussed.

Chicago Fed President Charles Evans– no rate hike before early 2016

Reuters: Sturdy U.S. jobs report boosts chances of Fed rate hike

IMF’s Christine Lagarde to Fed don’t raise interest rates!

New York Fed President William Dudley: Interest rate hike on track for 2015.

First Quarter QDP Calculations are faulty says the San Francisco Federal Reserve. No they aren’t says the New York Fed

Once the Fed raises rates, they will talk for a while about whether they will raise them again. These types of equivocal statements keep the focus on the Fed and give the power.

The next president will figure out how to spend more money on government programs. The Fed wants Congress to spend more money. Spending more means issuing more bonds.

People say that the US government can’t afford higher rates. The US government can’t afford ANY of the money it spends over its budget. The deficit is financed by new bond issuances and the higher interest will be financed the same way.

Bankruptcy in America

Consumer Spending

14:50-17:40 Bankruptcy in America is discussed. Consumer spending stalled because the debt levels are elevated.

BUT BUT BUT the media insists:

Bloomberg: “Consumers, who’ve been using the money freed up by low gasoline costs to pay down debt or rebuild their balance sheets, would be more inclined to shop as wages accelerate. Sustained improvement in household spending, which accounts for almost 70 percent of the economy, is needed to ensure growth rebounds as Federal Reserve officials project.”

“Consumer spending remains a bit restrained,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit and among the top forecasters of spending in the past two years, according to data compiled by Bloomberg. “It suggests a weak start to the quarter and puts growth estimates at risk. I still think things will improve. We’re going to gain some momentum. All the fundamentals are in place for it.”

Yet the reality is consumers are tapped out, productivity is declining and labor costs up. Employers are also tapped out.

Millennials and Housing

17:35-23:21 The unaffordable price of homes and millennials is discussed. The general state of the real estate market is discussed.

WSJ- Why Isn’t the “Stingy” U.S. Consumer Spending Now that the Weather is Warmer?

23:21-30:20 A recent Wall Street Journal article is discussed and trashed. Why the Housing Market WON’T Go Ballistic this Spring. Consumers can’t spend money or buy homes with money they don’t have.

Yet, car sales are higher, fueled by sub prime loans:

new car sales chart1995-2015

New car sales have rebounded to pre recession levels based on sub prime loans.

More on Why The Fed Will Raise Interest Rates

30:20-37:40 investment demand for US Bonds will be generated with higher rates to offset lost demand for dollars due to de-dollarization initiatives. The rate rise has already happened by market forces. Raising rates will make the Fed appear credible. Rates need to be pushed higher so they can be lowered again.

The news history of our era will show that the US economy had recovered from the Great Recession, job growth was “solid” and unemployment was low. THEN- something “unexpected” happened!

The next President will find more ways to spend money. This will create a greater need for more bonds to be issued.

People say the Fed can’t raise interest because the U.S. government can’t afford the higher interest payments. The U.S. government can’t afford any of the spending it does over the deficit. It finances the additional spending by issuing more bonds. The higher interest payments will be paid for the same way. It’s how a ponzi scheme works and why it’s essential to create greater demand for US bonds via higher interest rates.

Social Security is Broke

37:40-40:45 There is no money left for Social Security or ANYTHING. They never say there is no money left for welfare or the Department of Education. The government won’t scale back itself, it will only not pay out.

The Rise of China

40:45 The rise of China is discussed in the context of the rise and fall of nations.The U.S. is more interest in dividing the pie than growing the pie, more interested in political correctness than production. Hilary Clinton’s companies don’t create jobs comment is discussed. The business of America is no longer business.

Bernie Sanders’ economically ignorant proposal for a 90% tax bracket is analyzed. Differences between the 1950’s economy and today are discussed. Bank fines are discussed in the context of “tributes” to the government in order to receive market protection.

The U.S. currenty has an underproductive work force that is earning less and costing employers more! The economy is not getting better but the Fed will justify a rate hike on the pretext that the economy is strengthening.

The Silicon Valley scam company culture is discussed. The most successful companies are not the ones that are productive in terms of profit but ones where silicon valley and wall street can make their stock prices rise by convincing each other and investors that the company’s valuation should be higher.

“Sturdy” Non Farm Payroll Numbers Provide The Fed With Cover To Raise Interest Rates

Get Free Updates From Smaulgld.com

Subscribe to Smaulgld.com and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.

Subscribe to Smaulgld.com to receive free gold and silver updates, news and analysis.

Buy American Gold Buffalo Coins

Further Reading:

The Fed Will Raise Interest Rates

Does the Fed Need to Raise Rates to Combat De-Dollarization Initiatives?

List of Foreign Holders of U.S. Treasuries

The Three Legged Economic Recovery Propaganda Stool

Bankruptcy in America

The Housing Recovery and the Law of Small Numbers

Will US Infrastructure Bonds Be The New Stimulus

Initial Jobless Claims

Please visit the Smaulgld Store for a large selection of recommended Kindles, books, music, movies and other items.

You can support Smaulgld.com by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the JM Bullion, BGASC, Bullion Vault, Gold Broker, Golden Eagle Coin, GoldMoney, Perth and Royal Canadian Mint ads on the site.

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

Chart Disclaimer: Information presented here has been obtained from a third party and is presented for information purposes only. Smaulgld can not and does not guarantee the accuracy or timeliness of the data displayed on this site and therefor the data provided should not be used to make actual investment decisions. You should always consult a professional investment adviser before investing in precious metals or any type of investment. You acknowledge that Smaulgld assumes no responsibility for the integrity of data on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation