armstrongeconomics.com / By Martin Armstrong /
If anyone thinks that the Fed does not know in advance what is happening with the numbers, well you must be from another planet. Just hours after the Commerce Department reported that there was the first decline in quarterly GDP in 3-1/2 years, the Federal Reserve announced it was maintaining its policy of near-zero interest rates and $85 billion worth of long-term Treasury and mortgage-backed purchases per month. The Fed has no intention of change that policy even though it does not work or cause inflation. Why not? They are bailing out the banks still and the banks are not freely lending money anyhow. People who are trying to remortgage are finding the banks have adopted the attitude of TSA workers – shut up; one at a time; couples not recognized – see that yellow line?
The Fed said that it would keep interest rates near zero “so long as the unemployment rate remains above 6.5%.” Well, that means they will be there into 2020 at least. Remember this chart and forecast made back in 2009? The real rate of unemployment is closer to 15% than 6%. But even using the Fed’s bullshit number of 7.8%, there is no way. State and local government have to cut since they do not print money. Corporations are playing games using excuses to get rid of people close to retirement to save money.