Predictions > U.S. Economy Predictions > Federal Reserve Forecast 2009-2011
Predictions
Federal Reserve Forecast 2009-2011
The Coming Collapse of the Federal Reserve
Posted August 9, 2009
* See also: Article: Federal Reserve Analysis *
See List of Predictions for the Federal Reserve
It is obvious that the Federal Reserve (the Fed) is largely to blame for the current debt bubble by manipulating the price and supply of money and infusing large amounts of liquidity into the free market while keeping interest rates much too low, for much too long. According to economist Barry Eichengreen of the University of California at Berkeley and Kevin O’Rourke of Trinity College, of Dublin, the current global recession began in April 2008. Below is a black box graph (the Millennium black box module from AIR software allows one to plot weights for aspect for any time span using any type of predictive technique) indicates the dates and the effect of each planetary transit to the natal chart of the Federal Reserve.
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Red bars indicate a period of stress, challenge, and crisis. The green bars indicate periods of progress, expansion, and development. The dotted vertical line represents the beginning of the global recession in April 2008.
Based on results of the Blackbox Module graph, it is obvious that the Fed is completely blind to the catastrophe heading its way. The National Debt now exceeds $12.2 trillion. The fiscal 2009 Federal budget will have a deficit of more than $2 trillion and incoming revenue will make up less than half of that. Although Treasury Secretary Geithner claims the deficit will be reduced, the Obama administration has stated that a $1 trillion annual budget deficit is to be expected for the foreseeable future. Currently the U.S. Treasury has insufficient capital to fund the deficit beyond revenues of $2 trillion that it has to raise by the end of the fiscal year (09/30/2009)!
As the Fed continues to monetize (create money out of thin air!) trillions of dollars:
- 77 bank failures nationwide have occurred, since the start of the recession in 2008.
NOTE (9/19/09): NEW YORK (AP) -- Regulators shut down two banking units of Irwin Financial Corp. Friday, marking the 93rd and 94th failures this year of federally insured banks.
The FDIC estimates the failure of the two banks will cost its insurance fund about $850 million.
Hundreds more banks are expected to fail in the next few years largely because of souring loans for commercial real estate. The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the highest number since June 1994, during the savings-and-loan crisis.
- Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression! (The last time the government's revenues were this severely deficient was 1932.)
- The U.S. government is running a 13% fiscal deficit-to-GDP ratio.
- A wave of municipal defaults is in progress as many cities and states are on the verge of bankruptcy. For example, California may go bankrupt, causing the municipal bond market to grind to a halt (municipal bonds have been seen as a very safe investment with less than 1% of municipal bonds defaulting since World War II), bringing public works and spending to a halt, causing a major drop in GDP.
- The commercial real estate sector is collapsing due to widespread overcapacity of major retail chains, shopping malls, and strip malls, as the market to refinance trillions of dollars of debt obligations has practically closed, resulting in canceled expansion plans, increasing job layoffs, and declining tax revenue.
- The Option Adjustable Rate Mortgage explosion is under way as home prices continue to drop and refinancing will not be sensible for banks and mortgage lending intuitions.
Yet, Federal Reserve Chairman, Ben Bernanke, seems to be confident that the Fed can land the recovery and prevent runaway inflation, by reducing the monetary base before it floods the economy. Will this be so?
In the horoscope of a corporate entity the Sun represents its executive branch. Therefore the Sun in the Fed’s horoscope represents the appointed chairman, and its executive offices. Pluto’s transit to the Fed’s natal Sun in the first half of 2008 is symbolic of the massive expansion of credit and debt encouraged by the Fed prior to the economic meltdown.
During the second Pluto pass to the Fed’s natal Sun, Chairman Bernanke decided along with Finance Secretary Geithner to bail out troubled banks and swap “toxic” assets as collateral in order rescue the financial system. This was done without making the necessary economic reforms within the banking system that created the problem in the first place, thus proving that Washington has done nothing to protect the nation from another crisis but in fact has set the stage for an even bigger financial disaster that will likely have dire consequences for the nation’s long-term economic future.
According the global economist Mike "Mish" Shedlock, “the horrendous bubble creation policies of the Fed (and the fractional reserve lending system), is the major source of inflation, and the Fed has proven without a doubt that they do a poor job of managing inflation, managing credit risks, managing interest rates, and managing sustainable full employment.” To give you an idea of the Fed’s track record, below are some economic forecasts on the housing market by Chairman Bernanke:
- In 2005 Bernanke said there was no housing bubble to bust. "Housing increases," he said, "largely reflect strong economic fundamentals," such as strong growth in jobs, incomes and the number of new households.
- In September 2007, he thought the housing bubble was "well-contained" right before it exploded.
- In January 2008, he said housing would improve by the end of the year.
For this, Ben Bernanke has been commended by global investors. Even President Barack Obama has praised Bernanke’s performance as exceptional in helping rescue the failing financial institutions in the midst of the crisis.
Pluto will continue to afflict the Fed’s Sun well into late 2010 so expect the Fed to attempt a major power move to resolve the ongoing crisis that it created. Therefore, Bernanke’s decisions over the course of this period will play a major role in accelerating another financial crisis moving the country into another great depression – GD2.
It is likely that by the time the Fed realizes that inflation is taking off, it will be too late stop it.
Saturn/Uranus and the Crisis of 2008
The Great Stock Panic of 2008 that saw a 27% drop of the S&P Index in less than 4 weeks in October initiated the Global Rescission that occurred during the transiting Saturn/Uranus opposition. In mundane astrology Saturn/Uranus cycle is strongly associated with capitalistic economies and with global investments. The Saturn/Uranus cycle often indicates periods of extreme economic stress that coincide with major market corrections and low points in an economic cycle. Astrologer Andre Barbault found that the Saturn/Uranus cycle is strongly associated with the politics of order, reform and reorganization. In more general terms, the Saturn/Uranus cycle augurs the collapse and deconstruction of the current system in order to clear the way for fundamental change to occur.
Saturn/Uranus Opposition Aspect 2008 – 2010
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Saturn/Uranus and the Federal Reserve
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In regards to the Federal Reserve, the New Moon on September 18th of 2009 will occur shortly after the 3rd Saturn/Uranus opposition. During the lunation, the pair will be in wide orb to the Fed’s MC/IC axis. In general, the Saturn/Uranus is a deflationary combination that is indicative of a financial crisis and major market corrections due to the collapse of another large financial institution or sector. This crisis, (which I believe will be closely connected to the collapse of the commercial real estate market) will put tremendous pressure on the Fed to inject large amounts of liquidity to stabilize the market.
Also during this period, transiting Mars retrogrades across the Fed's natal Uranus from late October 2009 through mid April 2010. Mars/Uranus transits often indicate periods of struggle and danger, followed by panic and alarm. Therefore, we may see during this period the U.S. bond market (a common indicator of future market trends) start to panic, reflecting a loss of investor confidence in the Fed’s policies to contain the U.S. recession and provide the sustainability of public debt.
Saturn/Pluto and the Federal Reserve
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By mid-November a most powerful configuration will begin as transiting Saturn at 1 degree of Libra squares transiting Pluto at 1 degree of Capricorn; both planets will remain within orb and repeat again in early February of 2010. Saturn/Pluto alignments symbolically represents cycles of crisis and contraction, with a need to eliminate tenuous and unnecessary structures that are no longer sustainable.
In Cosmos and Psyche: Intimations of a New World View, Richard Tarnas says that “the Saturn/Pluto cycle coincides with especially challenging historical periods that are characterized by intense contraction: eras of international crisis and conflict, empowerment of reactionary forces and totalitarian impulses, organized violence and oppression, all sometimes marked by lasting traumatic effects. An atmosphere of gravity and tension tended to accompany these three or four year periods, as did a widespread of epochal closure: 'then end of an era,' 'the end of innocence,' the destruction of an earlier mode of life that in retrospect may seem to have been marked by widespread indulgence, decadence, naïveté, denial, and inflation.” (p. 209, Viking Penguin, pub.)
The New Moon lunation on November 16th of 2009, one day after the Saturn/Pluto alignment, augurs a dark and complex time for the Fed over the coming months. During the lunation both Saturn and Pluto will aspect the Fed’s natal Sun with 1 degree of orb. It is likely during this period, a single secular event (for example, a geopolitical crisis in the Middle East such as an Israeli airstrike on Iran with tactical nuclear “bunker buster” weapons) could set off a chain of events (e.g. a dramatic spike in oil, followed by a major stock market correction as the U.S. dollar drops more then 10% and gold forges ahead to $2,000 an ounce, with nationwide runs on ATM machines) that will create a major crisis within the ranks of the Fed leadership as it fails to prevent the recession from becoming a full-blown depression.
This crisis will coincide with a wave of scandal in the Fed that will most likely involve the systematic unlawful practices by executives of its member banks, which will threaten the very credibility and viability and of the nation’s central banking system.
Uranus in Aries - World Axis
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In late May 2010, Uranus will enter into the sign of Aries, conjuncting the Fed’s Midheaven while squaring the natal Sun/Pluto midpoint. According to astrologer Reinhold Ebertin, the Uranus/Aries - World Axis point corresponds with an extraordinary burst of collective energy, “restlessness with a fanatical fight for ideas and the urge to strive for reform.” The Uranus – Sun/Pluto configuration augurs a sudden adjustment to new circumstances and the carrying out of revolutionary reforms.
Solar Eclipse / Yod Configuration
In July of 2010 during the Total Solar Eclipse, a Yod configuration among the Neptune-Sun-Saturn configuration (also known as the Finger of God - a rare astrological arrangement whenever one planet forms quincunxes to another two planets that are separated by only a sextile) will form during a powerful Uranus/Jupiter- Saturn/Mars- Pluto T-Square. See below:
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The Beginning of the End of the Fed?
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Transiting Saturn opposes the Jupiter/Uranus midpoint along the Fed’s MC/IC axis. This configuration will be active throughout the summer of 2010 and is symbolic of progressive movements within the collective that embodies change and reform which is in direct struggle with the entrenched power elite. The Saturn – Jupiter/Uranus configuration augurs a sudden and dramatic reversal in fortune for the Fed that will likely result in a loss of status and power due to dishonesty, corruption, and negligence. Therefore, expect the major shake-up and reorganization of the Fed as its very authority will be challenged by Congress (under tremendous political pressure) and its powers rescinded.
At any rate, the Fed will be coerced to address the nation’s massive debt obligations by letting the dollar go under which will prompt the Federal government to begin the process of renouncing its debt obligations. (According to Bloomberg News, the United States must procure over $3.25 billion a day from foreign investors in order to keep the economy going.) This epochal moment will have a particularly harsh and severe impact on the global financial system, causing China and most of the G8 industrialized nations to promote a new, diversified, and balanced international reserve currency.
Ron Paul's Federal Reserve Transparency Act (HR 1207)
Currently there is a grass-roots political movement to allow for transparency of the nation’s central banking system. To date, Congressman Ron Paul’s Federal Reserve Transparency Act (HR 1207) calls for a complete audit of the Federal Reserve and removes many significant barriers towards transparency of our monetary system. HR 1207 has reached and surpassed the level of 218 co-sponsors in the House of Representatives, which means it is now co-sponsored by a majority of the members. According to Congressman Paul, "we got into this mess by spending too much, running up debt and printing too much money." Now, on the heels of another just-passed "stimulus" package, Congressman Paul explains that this move will only prolong economic agony.
Also, Senator Bernie Sanders has introduced a companion bill in the Senate (S 604) which will hopefully begin to gain momentum as well. The bill, if passed, will allow Congress to scrutinize the Fed and allow for greater transparency and restore confidence the monetary system.
Grading the Fed
In the summer of 2009, Gallup recently polled Americans about how they rated nine relatively high-profile government agencies. The Federal Reserve came in dead last:
Opinions of the Fed have also deteriorated greatly since the last time Gallup asked Americans about their approval of the central bank. In 2003, a majority of Americans praised the job the Fed was doing:
Based on the result of the poll, most Americans are equating the Fed’s job performance with the current state of the economy, which looked very different in 2003.
Predictions:
- Another financial crises and market meltdown will begin in mid September and escalate through November.
- The Federal deficit will soar due to expansion of government entitlement and economic stimulus programs, compelling the Federal Reserve to monetize the national debt.
- The U.S. government will likely plunge deeper into debt towards insolvency by 2010, creating the foundation for a grass-roots political movement and unprecedented social upheaval for the nation that will invoke radical changes in the nation’s monetary system and governmental structure.
- The "Death of the Dollar" will be a continuing theme as China and other countries begin to reduce its purchase of additional U.S. treasury securities.
- The U.S. Dollar will begin to tailspin downward due to mounting and uncontrollable national and consumer debt, creating inflation in the second half of 2009
- Peak oil production in 2010 and rising energy cost will cause a dramatic increase in cost of food and gas prices.
- Over 8 million mortgages (16% of all mortgages), will go into foreclosure by 2012.
- The nation’s infrastructure and manufacturing base will continue to degrade.
- Organized middle class tax revolts (Tea Parties) will gain momentum due to rising state and local property taxes.
NOTE (9/22/09): Yahoo Finance - Marc Faber Is "Highly Confident" the Future Will Be Very Bleak
"The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society," Marc Faber writes in the September issue of The Gloom, Boom & Doom Report.
Faber has been bullish -- especially on commodities and emerging market stocks -- for some time now and believes the current global recovery trade will last another two-to-three years. But he has major long-term concerns about the dollar's long-term viability given rising U.S. deficits, massive unfunded mandates and the fact "we have a money-printer (Bernanke) at the Fed."
This combination will eventually lead to runaway inflation, wholesale debasement of the dollar, and a major lowering of living standards for most Americans and many Europeans as well, says Faber, who is "highly confident" in this grim prediction.
NOTE (11/3/09): Forbes Magazine: www.forbes.com
November 16, 2009
The large-scale government intervention in the economy is going to end badly.
"Few Americans give much thought to the Federal Reserve System or monetary policy in general. But even as they strive to earn a living, and hopefully save or invest for the future, Congress and the Federal Reserve Bank are working insidiously against them. Day by day, every dollar you have is being devalued."
Ron Paul, Texas Straight Talk, April 9, 2007
Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.
A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.
Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.
This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?
What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.
Ron Paul
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