{"id":38319,"date":"2018-09-26T08:13:50","date_gmt":"2018-09-26T13:13:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38319"},"modified":"2018-09-26T08:13:50","modified_gmt":"2018-09-26T13:13:50","slug":"the-feds-in-a-box-and-people-are-starting-to-notice","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38319","title":{"rendered":"The Fed\u2019s In A Box And People Are Starting To Notice"},"content":{"rendered":"<header class=\"entry-header\">\n<h3 class=\"entry-title\"><a href=\"https:\/\/www.dollarcollapse.com\/feds-box-people-notice\/\">The Fed\u2019s In A Box And People Are Starting To Notice<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p>It\u2019s long been an article of faith in the sound money community that the Fed, by bailing out every dysfunctional financial entity in sight, would eventually be forced to choose between the deflationary collapse of a mountain of bad debt and the inflationary chaos of a plunging currency.<\/p>\n<p>That generation-defining crossroad is finally in sight.<\/p>\n<p>On one hand, a tight labor market is pushing inflation to levels that normally call for higher interest rates:<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/d3fy651gv2fhd3.cloudfront.net\/embed\/?s=unitedstalabcos&amp;v=201809061250x&amp;d1=20130101&amp;d2=20181231&amp;h=300&amp;w=600\" width=\"600\" height=\"300\" frameborder=\"0\" scrolling=\"no\" data-mce-fragment=\"1\"><\/iframe><br \/>\nsource: <a href=\"https:\/\/tradingeconomics.com\/united-states\/labour-costs\">tradingeconomics.com<\/a><\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/d3fy651gv2fhd3.cloudfront.net\/embed\/?s=unitedstaconpriindcp&amp;v=201809131237x&amp;d1=20130101&amp;d2=20181231&amp;h=300&amp;w=600\" width=\"600\" height=\"300\" frameborder=\"0\" scrolling=\"no\" data-mce-fragment=\"1\"><\/iframe><br \/>\nsource: <a href=\"https:\/\/tradingeconomics.com\/united-states\/consumer-price-index-cpi\">tradingeconomics.com<\/a><\/p>\n<p>Today\u2019s Fed-heads are old enough to remember the 1970s, when failure to get inflation under control produced a decade-long monetary crisis that was only resolved with (not exaggerating here) interest rates approaching 20%.<\/p>\n<p>On the other hand, the yield curve \u2013 the difference between long-term and short-term interest rates \u2013 is trending towards zero and will, if it keeps falling, invert, meaning that short rates will exceed long. When this has happened in the past a recession has ensued.<\/p>\n<p><a href=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?ssl=1\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-22250\" src=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?resize=600%2C203&amp;ssl=1\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" srcset=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?w=600&amp;ssl=1 600w, https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?resize=300%2C102&amp;ssl=1 300w\" alt=\"yield curve Fed's in a box\" width=\"600\" height=\"203\" data-attachment-id=\"22250\" data-permalink=\"https:\/\/www.dollarcollapse.com\/feds-box-people-notice\/yield-curve-sept-18\/\" data-orig-file=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?fit=600%2C203&amp;ssl=1\" data-orig-size=\"600,203\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"Yield curve Sept 18\" data-image-description=\"\" data-medium-file=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?fit=300%2C102&amp;ssl=1\" data-large-file=\"https:\/\/i2.wp.com\/www.dollarcollapse.com\/wp-content\/uploads\/2018\/09\/Yield-curve-Sept-18.jpg?fit=600%2C203&amp;ssl=1\" \/><\/a><\/p>\n<p>With a system this highly leveraged it\u2019s completely possible that the next recession will threaten the whole fiat currency\/globalization\/fractional reserve banking world. No one at the Fed wants to preside over that, leading some to view rising inflation as the lesser of two evils. See <a href=\"https:\/\/www.bloombergquint.com\/global-economics\/2018\/08\/20\/atlanta-fed-chief-pledges-to-oppose-hike-inverting-yield-curve#gs.hWRXZcw\" target=\"_blank\" rel=\"noopener\"><strong><em>Atlanta Fed Chief Pledges to Oppose Hike Inverting Yield Curve.<\/em><\/strong><\/a><\/p>\n<p>A lot of people seem to be aware of the Fed\u2019s dilemma. Here\u2019s an excerpt from a recent Reuters article on the subject:<\/p>\n<blockquote><p><strong><a href=\"https:\/\/www.reuters.com\/article\/us-usa-fed-fomc\/feds-powell-between-a-rock-and-hard-place-ignore-the-yield-curve-or-tight-job-market-idUSKCN1M10D5\" target=\"_blank\" rel=\"noopener\">Fed\u2019s Powell between a rock and hard place: Ignore the yield curve or tight job market?<\/a><\/strong><\/p>\n<p>Unemployment near a 20-year low screams at the U.S. Federal Reserve to raise interest rates or risk a too-hot economy. The bond market, not far from a state that typically precedes a recession, says not so fast.<\/p><\/blockquote>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Fed\u2019s In A Box And People Are Starting To Notice It\u2019s long been an article of faith in the sound money community that the Fed, by bailing out every dysfunctional financial entity in sight, would eventually be forced to choose between the deflationary collapse of a mountain of bad debt and the inflationary chaos [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2809,213,303,426,16888,7544,8701,8625,8816,3650],"class_list":["post-38319","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bailouts","tag-dollar-collapse","tag-fed","tag-inflation","tag-jerome-powell","tag-john-rubino","tag-qt","tag-quantitative-tightening","tag-sound-money","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38319","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38319"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38319\/revisions"}],"predecessor-version":[{"id":38320,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38319\/revisions\/38320"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}