Laugh of the Day
The Fed’s Projection Materials that accompanied today’s FOMC Stay-the-Course Non-News provides the laugh of the day.
The vote for no hikes this year was a unanimous 18-0 score by the FOMC participants. After that it gets interesting.
Base Rate Projections
- 2021: 0.1
- 2022: 0.1-0.4
- 2023: 0.4-1.1
- 2024: 0.9-2.1
In 2024, one participant thinks the Fed will have short-term rates at 2.50-2.75%. What a hoot!
I assure you the participant who thinks the Fed Funds Rate will only be 0.5-0.75% will be closer to the mark.
Interest on National Debt
The national debt is over $28 trillion and rising fast. By 2024 it will be at least $33 trillion.
At 2.75%, annual interest on the national debt would be $907,500,000,000. Call it $900 billion.
Of course, the Treasury could lock in 30-year rates now, but it never does and won’t again.
What About a Recession?
The Fed has never forecast a recession and never will. They believe they are omnipotent with unlimited power to stop recessions.
History shows the Fed actually cause recessions.
I bet we see another recession between now and 2024. Even if we don’t, the Fed will not hike if there is any weakness at all.
Previous Dot Plots to Laugh At
That was from the April 2016 meeting. Here are some more Dot Plots with my anecdotes at the time.
Dot Plot June 14, 2017
Dot Plot September 26, 2018
Dot Plot December 2018 Fantasyland
My Comments Then and Now
- June 2017: “Who the hell is this dreamer?”
- December 2018: “The expectations for 2020 and 2021 are pure fantasyland material.”
- September 2021: “The expectations for 2023 and 2024 are pure fantasyland material.”
If you put any faith at all in these dot plots, you are simply nuts.
They do not factor in recessions or even slowdowns. Nor do they consider interest on the national debt or deflationary boomer demographics.
Fed Repeats Inflation Nonsense But Stays the Course For Now
Earlier today I commented Fed Repeats Inflation Nonsense But Stays the Course For Now
In practice, the Fed’s policies are so asymmetric that the Fed just starts to hike when it should be slowing.
Of course, the problem is the Fed itself. There should not be a Fed to repeatedly make these mistakes in the first place.
Real World
In the real world, bubbles eventually matter.
The problem is timing. It is very difficult to predict when things finally matter.
But when bubbles do matter, what the Fed then does or says is “Too Late To Matter.”
Huge imbalances ensure that another recession is baked in the cake. However, virtually no one see it coming.
Another Debt Ceiling Non Crisis Deja Vu Or Does This One Matter?
This morning, I commented Another Debt Ceiling Non Crisis Deja Vu Or Does This One Matter?
Stock market psychology is very important.
In addition to debt ceiling concerns, here are the pending items: An infrastructure package, another $3.5 trillion on top of that, tax hikes, and AOC’s demand for 80% clean energy by 2030.
This is a potentially explosive mix on top of a massive stock market overvaluation issue.
A psychology change away from risk will be very important and it’s guaranteed to happen at some point.
If it happens now, some will blame the debt crisis, others China, but stock market greater fool exhaustion will be as good an answer as any.
Huge Credit Stress Starting in China
Meanwhile, in case you missed it, please consider Huge Credit Stress Starting in China May Easily Rock the Whole World
Once again, and right on cue, hyperinflationists are again moaning. Forget about it just as you should discount anticipated Fed rate hikes.
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At a level of government debt that is more than 266% of its gross domestic product (GDP), Japan is the second-most indebted nation in the world. With bond yields in negative territory, the government is now getting paid to borrow. By charging private banks interest on reserves held at the BOJ, Japan’s central bank is effectively transferring wealth, and thereby the ability to control the economy’s resources, from the private sector to the public sector. It amounts to a “helicopter drop” of new money that is channeled into the economy either through tax cuts or direct government spending. Sounds a lot like debt monetization.
Less than two years before the COVID-19 pandemic began, scientists at the Wuhan Institute of Virology planned to genetically alter viruses to make them more infectious for humans and release them into bat caves.
The research proposal was part of a trove of documents released this week by a group of scientists and activists who are trying to determine the origins of the pandemic, which has killed 4.7 million people around the world, according to Johns Hopkins University.
The Wuhan scientists were listed as partners on a funding proposal the environmental health nonprofit EcoHealth Alliance made to the U.S. government’s Defense Advanced Research Projects Agency (DARPA)
The growing suspicion of China’s official version has been driven in large measure by the Decentralized Radical Autonomous Search Team Investigating COVID-19 or DRASTIC, which released the documents this week. The documents could not be verified by Newsweek.
Throughout the pandemic, about two dozen DRASTIC researchers and correspondents, many anonymous, working independently from many different countries, have uncovered obscure documents, pieced together the information, and explained it all in long threads on link to newsweek.com. link to newsweek.com.
The documents showed researchers aspired to genetically alter coronaviruses and monitor their release and transmission in bat caves to determine the risks those viruses posed to humans.
In a Monday post on DRASTIC Research’s website, the group said documents shared by an unnamed whistleblower showed the EcoHealth Alliance “collaborated” with the Wuhan Institute of Virology to “carry out advanced and dangerous human pathogenicity Bat Coronavirus research” through a grant proposal EcoHealth Alliance filed with DARPA.
DARPA is a research agency within the U.S. Department of Defense which aims to “preserve military readiness by protecting against the infectious disease threat” through its PREEMPT program.
In its funding request, EcoHealth Alliance “proposed injecting deadly chimeric bat coronaviruses collected by the Wuhan Institute of Virology into humanised and ‘batified’ mice,” DRASTIC Research said.
A copy of EcoHealth Alliance’s proposal shared by DRASTIC Research said the proposed project aimed to “defuse the potential for spillover of novel bat-origin high-zoonotic risk SARS-related coronaviruses in Asia.” The proposal’s executive summary said researchers would “intensively sample bats” in field locations where scientists “identified high spillover risk” for coronaviruses.
EcoHealth Alliance wrote in the document shared by DRASTIC Research that it planned to work with researchers at the Duke-NUS Medical School in Singapore, the University of North Carolina, the Palo Alto Research Center in California, U.S. Geological Survey’s National Wildlife Health Center and the Wuhan Institute of Virology in Wuhan, China. It requested $14 million from DARPA to conduct its research, which was estimated to take three and a half years.
The proposal was dated March 2018, less than two years before SARS-CoV-2, the coronavirus that causes COVID-19, began spreading around the world. The virus is believed to have begun spreading among humans in Wuhan, where the first wave of infections was reported.
Thanks to DRASTIC, the world now knows that the Wuhan Institute of Virology had an extensive collection of coronaviruses gathered over many years of foraging in the bat caves, and that many of them—including the closest known relative to the pandemic virus, SARS-CoV-2—came from a mineshaft where three men died from a suspected SARS-like disease in 2012. It knows that the Institute was actively working with these viruses, using inadequate safety protocols, in ways that could have triggered the pandemic, and that the lab and Chinese authorities have gone to great lengths to conceal these activities. It is also clear the first cases appeared weeks before the outbreak at the Huanan wet market that was once thought to be ground zero. None of that is conclusive proof that a lab leak caused the virus.
As the DRASTIC revelations swayed a once skeptical Western media and scientific community, President link to newsweek.com ordered a U.S. intelligence investigation to determine the origins of the pandemic. The intelligence agencies issued an inconclusive report last month.
When contacted for comment about the documents released by DRASTIC Research, DARPA told Newsweek that it could not share identifying information about individuals or organizations that submit grant proposals. Even so, DARPA said it “has never funded directly, nor indirectly as a subcontractor, any activity or researcher associated with the EcoHealth Alliance or Wuhan Institute of Virology.”
Newsweek reached out to EcoHealth Alliance for comment but did not receive a response in time for publication.