E Clever Fed Plan May Destroy Demand

The Federal Reserve Bank, the bank that is supposed to be watching out for the United States but that really only wants to watch out for big finance has created a clever plan. The simplicity of the plan is genius. But the plan guarantees the new normal and only has one major weakness. That weakness is discussed at the end of this article.

Fake reflation, as revealed by Jeffrey P. Snider, is just a small part of the plan. It is much more ambitious.

The plan even enlists the help of big corporations, dirty tricksters, as Ted Bauman calls them, not just big banks.

Let’s look at how it all works:

The Fed keeps interest rates low or rising slowly on the short end. The Fed knows there is a conundrum at the long end. Even a little rise in longer interest rates is viewed with fear among Wall Street insiders. It must mean reflation. But it isn’t. According to Tyler Durden, 30-year bond yields already fell back from the little bout with volatility.

The big companies issue stock buybacks. The tax cuts were mainly for the purpose of stimulating the economy, but not really. They were for stock buybacks. This is asset inflation. The assets inflated are stocks. But the underlying economy is not inflated. Wages are not inflated. This is all good for the Fed.

As Ted Bauman has said:

Just after the tax bill passed, retail giant Walmart announced it was granting a $1,000 bonus to celebrate. It soon emerged that employees were eligible only if they’ve worked in the company for 20 years. That ruled out nearly all shop-level workers … those who need it most.
Here’s something else: The total value of Walmart’s bonuses was $400 million. The value of the tax cut to the corporation will be $18 billion. So only 2% percent of its tax cut is going to its (best-off) workers.
Stock buybacks have helped to concentrate income and wealth among the richest U.S. households. After all, the top 10% of households own 86% of all stocks. Buybacks appear to have little to no impact on real investment or job creation.

So, what is the end game of the Fed and these companies, like Walmart, that are disgusting in their behavior towards their employees?