Much of that liquidity, however, has sat fallow. Banks have put away close to $2.8 trillion in reserves, and households are sitting on $2.15 trillion in savings-about a 50 percent increase over the past five years.
"So why did the monetary base increase not cause a proportionate increase in either the general price level or (gross domestic product)?" economist Yi Wen and associate Maria A. Arias asked in the St. Louis Fed paper. "The answer lies in the private sector's dramatic increase in their willingness to hoard money instead of spend it. Such an unprecedented increase in money demand has slowed down the velocity of money."...
Factoring in the growth in the money supply against output, inflation should have grown at a whopping 33 percent annually, when in fact it has been rising less than 2 percent. ...
During the first and second quarters of 2014, the velocity of the monetary base was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. This implies that the unprecedented monetary base increase driven by the Fed's large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP. Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP....
The hoarding of money, then, is attributed to two factors:
A (gloomy) economy after the financial crisis.The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds ...
The risks of continued low interest rates when measured against market benchmarks such as corporate bond spreads and volatility suggest to us that the longer the (Fed Open Market Committee) continues current policy, the more likely we are to see an adverse event in the financial markets when interest rate policy does change," Whalen said in a note. "We believe that the Fed's refusal to normalize interest rates now, during a time of high investor demand for assets, and relative economic stability and growth, could lead to adverse market conditions in the future."
2---Fed Watch, Bottom Line: The baseline path for interest rates is a delayed and gradual rate hike scenario beginning mid-2015. It seems reasonable, however, to believe that the risk is that this baseline is too dovish given the general progress toward the Fed's goals, a point made repeatedly by Fed hawks. Internal dissension to the baseline would only intensify in the face of another six months of generally solid economic news, especially on the labor front. Yellen would not want to risk the recovery, however, on an overly aggressive approach, especially in the face of low inflation. Considering the path of the data relative to the various policy factions with the Fed, I believe the risk is that the Fed pulls forward the date of the first rate hike as early as March - still seven months away! - while maintaining expectations for a gradual subsequent rate path.
3---Russia to adjust military doctrine due to NATO expansion, Ukraine crisis, RT
4---Ukraine ceasefire: Putin lays out 7-step plan to stop hostilities in E. Ukraine, RT
5--Obama: more accusations, zero hedge
Russia did this... "These are facts, provable," President Obama declared... we let him continue...
- *OBAMA SEES `BRAZEN ASSAULT' ON UKRAINE'S TERRITORIAL INTEGRITY
- *OBAMA: VISION OF FREE EUROPE `THREATENED' BY RUSSIAN AGRESSION
- *OBAMA SAYS `AN ATTACK ON ONE IS AN ATTACK ON ALL'
- *OBAMA PROMISES U.S., NATO DEFENSE AGAINST RUSSIA FOR BALTICS
- *OBAMA SAYS BORDERS `CANNOT BE REDRAWN BY THE BARREL OF A GUN'
- *OBAMA: RUSSIA ENCOURAGING, FINANCING, TRAINING UKRAINE REBELS
- *OBAMA: U.S. REJECTS `ANY TALK OF SPHERES OF INFLUENCE' TODAY
- *OBAMA: WON'T ACCEPT RUSSIAN OCCUPATION OF ANY PART OF UKRAINE
As fighting between the army and Russian-backed rebels rages in eastern Ukraine, preparations are under way near its western border for a joint military exercise this month with more than 1,000 troops from the United States and its allies.
The decision to go ahead with the Rapid Trident exercise Sept. 16-26 is seen as a sign of the commitment of NATO states to support non-NATO member Ukraine while stopping well short of military intervention in the conflict.
The annual exercise, to take place in the Yavoriv training center near Ukraine's border with Poland, was initially scheduled for July, but was put back because early planning was disrupted by the crisis in the eastern part of the country.
"At the moment, we are still planning for (the exercise) to go ahead," U.S. Navy Captain Gregory Hicks, spokesman for the U.S. Army's European Command said on Tuesday.
NATO stepped up military activity in its eastern member states after Russia's annexation of Crimea in March, and is expected to agree at a summit in Wales this week to create a new rapid reaction force of several thousand troops.
In addition to staging air force exercises, the United States is moving tanks and 600 troops to Poland and the Baltic states of Estonia, Latvia and Lithuania for joint maneuvers in October, replacing a more lightly armed force of paratroopers.
But Rapid Trident will entail the first significant deployment of U.S. and other personnel to Ukraine since the crisis erupted.
7---'Mortgage crisis' is coming this winter: Bove, cnbc
Bove envisions a scenario in which long-term financing, like the ubiquitous 30-year mortgage, that has come with fixed interest rates is endangered as mortgage buyers dry up.
"This means there will be less money available to fund housing, and the terms of the available funds will be considerably more onerous than what was available under 30-year, fixed-rate loans," Bove said in a report he sent to clients Tuesday. "This means higher monthly payments and lower housing prices. It means a crisis in the mortgage markets—and the economy."
8---Russian bank hires two former U.S. senators, center for public integrity
U.S. sanctions against Russia are becoming a boon for Washington's lobbyists
Gazprombank GPB (OJSC), a Russian bank targeted with sanctions by President Obama over the Ukraine crisis, has hired two former U.S. senators to lobby against those sanctions, according to a new disclosure filed with the Senate.
Gazprombank is controlled by Russia’s state-owned energy company Gazprom, the country’s largest gas producer; it supplies about a third of Europe’s natural gas.
In a filing submitted Friday and effective that day, former Senate Majority Leader Trent Lott, R-Miss., and former Senator John Breaux, D-La., are listed as the main lobbyists under the Gazprombank account for the firm Squire Patton Boggs, lobbying on “banking laws and regulations including applicable sanctions.”
Gazprombank GPB (OJSC) is a subsidiary of Gazprombank, Russia’s third largest bank. On July 16th, the U.S. Treasury Department added it to a list of Russian firms barred from debt financing with U.S. institutions.
Lott and Breaux left public service almost a decade ago and are among more than 300 members of Congress who’ve become lobbyists, and begun petitioning former colleagues on behalf of clients, according to the Center for Responsive Politics. In 2008, they started a lobbying firm with their sons, Breaux Lott Leadership Group, which was acquired by D.C.-lobbying powerhouse Patton Boggs in 2010. Patton Boggs merged with Squire Sanders to form Squire Patton Boggs in June.
9---Subprime Blows up on Retailer, CEO Warns on ALL Subprime, Hits Auto Sales , wolf street
10---Oops! There goes Mr Greenback! Russia’s Gazprom Neft to Sell Oil for Rubles, Yuan, RIA novosti
August 27 (RIA Novosti) - The Russian oil company Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers, the Russian business daily Kommersant reported Wednesday.
The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports.
Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September. According to Kommersant, the payment for these shipments will be received in rubles.
Gazprom Neft will not only accept payments in rubles; subsequent transfers via the ESPO may be paid for in yuan, the newspaper reported.
According to the newspaper, the change in currency was made because of the Western sanctions against Russia.
In March, in response to Crimea’s reunification with Russia, the United States and the European Union introduced a number of targeted sanctions against Russia.
As the Ukrainian crisis escalated, the United States introduced several new rounds of sanctions targeting Russia’s defense, energy and banking sectors, and persuaded its allies to blacklist several Russian citizens and companies.
As a protective measure, Russia decided to avoid making its payments in US dollars, which can be tracked and controlled by the United States government, Kommersant reported.
11--How America Made ISIS: Their Videos and Ours, Their "Caliphate" and Ours, smirking chimp
12---Military Victories by Ukraine's Separatists Cause Heads to Explode at the New York Times, smirking chimp
In addition to cunning and deceit, the Times editorial makes a statement of fact without a shred of evidence to support that fact. Although the coup regime in Kiev refuses to release the communications that took place between Kiev’s air traffic controller and the crew of Malaysia Airlines Flight MH17; although international investigators have yet to release the flight’s black box data; and although U.S. intelligence cannot rule out the possibility that Ukrainian troops shot down MH17, the Times recklessly asserts that “the rebels shot down a Malaysian jetliner.” Should we blame the editorial board for stupidity — or dishonesty?
Worse, a few days later, the International New York Times sank to a new low in anti-Russia hysteria, when it published Ben Judah’s essay titled, “Arm Ukraine or Surrender.” It is an abomination that gives both the paper and the author a self-inflicted black eye.
First, Mr. Judah asserts that “Mr. Putin is not rational.” Forget that his assertion cannot be proved. Instead, consider how this sleazy ad hominem attack reveals far more about Mr. Judah’s panic, desperation and fear mongering over the turn of events in Ukraine than it does about Mr. Putin. Had he kept his wits about him, Mr. Judah would have recalled the recent words of Henry Kissinger: “The demonization of Vladimir Putin is not a policy; it is an alibi for the absence of one.”
Second, Mr. Judah admits that “unlimited European Union and NATO expansion have meant war with Russia by proxy.” Thus, he explicitly blames the West for provoking Russia’s reaction. Perhaps, he read John Mearsheimer’s recent article in Foreign Affairs (“Why the Ukraine Crisis is the West’s Fault”) and could no longer deny the obvious.
Yet, his article is dishonest, insofar as it fails to mention the illegal anti-Russia coup which was supported by the U.S. State Department and CIA, as well as the European Union, but spearheaded by Ukrainian neo-Nazis.
13---Robert Parry on Fire (Ukraine; The lies of the media) smirking chimp
“You need to know that accusations of a major Russian ‘invasion’ of Ukraine appear not to be supported by reliable intelligence." Veteran Intelligence Professionals for Sanity....
Indeed, for the past eight months, we have seen arguably the most one-sided coverage of a major international crisis in memory, although there were other crazed MSM stampedes, such as Iraq’s non-existent WMD in 2002-03, Iran’s supposed nuclear bomb project for most of the past decade, Libya’s “humanitarian crisis” of 2011, and Syria’s sarin gas attack in 2013......the U.S. mainstream news media’s distortion of the Ukraine crisis is something that a real totalitarian could only dream about. Virtually absent from major U.S. news outlets – across the political spectrum – has been any significant effort to tell the other side of the story or to point out the many times when the West’s “fair and factual version of events” has been false or deceptive, starting with the issue of who started this crisis.....
the Post and other mainstream U.S. outlets have ridiculed the idea that neo-Nazis played any significant role in the putsch that ousted Yanukovych on Feb. 22 or in the Kiev regime’s brutal offensive against the ethnic Russians of eastern Ukraine.
However, occasionally, the inconvenient truth has slipped through. For instance, shortly after the February coup, the BBC described how the neo-Nazis spearheaded the violent seizure of government buildings to drive Yanukovych from power and were then rewarded with four ministries in the regime that was cobbled together in the coup’s aftermath.
When ethnic Russians in the south and east resisted the edicts from the new powers in Kiev, some neo-Nazi militias were incorporated into the National Guard and dispatched to the front lines as storm troopers eager to fight and kill people whom some considered “Untermenschen” or sub-human.
You might think that unleashing Nazi storm troopers on a European population for the first time since World War II would be a big story – given how much coverage is given to far less significant eruptions of neo-Nazi sentiment in Europe – but this ugly reality in Ukraine disappeared quickly into the U.S. media’s memory hole. It didn’t fit the preferred good guy/bad guy narrative, with the Kiev regime the good guys and Putin the bad guy.
Now, the Washington Post has gone a step further dismissing Putin’s reference to the nasty violence inflicted by Kiev’s neo-Nazi battalions as part of Putin’s “Big Lie.” The Post is telling its readers that any reference to these neo-Nazis is just a “fantasy.”
The original lie behind Official Washington’s latest “group think” was that Russian President Vladimir Putin instigated the crisis in Ukraine as part of some diabolical scheme to reclaim the territory of the defunct Soviet Union, including Estonia and other Baltic states. Though not a shred of U.S. intelligence supported this scenario, all the “smart people” of Washington just “knew” it to be true.....
One former U.S. intelligence official who has examined the evidence said the intelligence to support the claims of a significant Russian invasion amounted to “virtually nothing.” Instead, it appears that the ethnic Russian rebels may have evolved into a more effective fighting force than many in the West thought...
Yet, the once-acknowledged – though soon forgotten – reality was that the crisis was provoked last year by the European Union proposing an association agreement with Ukraine while U.S. neocons and other hawkish politicos and pundits envisioned using the Ukraine gambit as a way to undermine Putin inside Russia.
The plan was even announced by U.S. neocons such as National Endowment for Democracy President Carl Gershman who took to the op-ed page of the Washington Post nearly a year ago to call Ukraine “the biggest prize” and an important interim step toward eventually toppling Putin in Russia.
Gershman, whose NED is funded by the U.S. Congress, wrote: “Ukraine’s choice to join Europe will accelerate the demise of the ideology of Russian imperialism that Putin represents. … Russians, too, face a choice, and Putin may find himself on the losing end not just in the near abroad but within Russia itself.”
In other words, from the start, Putin was the target of the Ukraine initiative, not the instigator. But even if you choose to ignore Gershman’s clear intent, you would have to concoct a bizarre conspiracy theory to support the conventional wisdom about Putin’s grand plan.
To believe that Putin was indeed the mastermind of the crisis, you would have to think that he somehow arranged to have the EU offer the association agreement last year, then got the International Monetary Fund to attach such draconian “reforms” that Ukrainian President Viktor Yanukovych backed away from the deal.
Then, Putin had to organize mass demonstrations at Kiev’s Maidan square against Yanukovych while readying neo-Nazi militias to act as the muscle to finally overthrow the elected president and replace him with a regime dominated by far-right Ukrainian nationalists and U.S.-favored technocrats. Next, Putin had to get the new government to take provocative actions against ethnic Russians in the east, including threatening to outlaw Russian as an official language.
14---Used Car Loans at All-Time High, Average Monthly Payment Now $355, NBC
15---The Declining U.S. Reliance on Foreign Investors, Big Picture