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The Federal Reserve: Illusion Of Understanding, Illusion Of Control

The Federal Reserve: Illusion Of Understanding, Illusion Of Control thumbnail
The net result is nonsensical policies that fail to achieve their stated objectives.
We live in an era of illusion: the illusion of understanding, and the illusion of control.
Few institutions reflect these illusions better than the Federal Reserve, though the Pentagon, Congress, the Imperial Presidency, the sick-care cartel and the higher education cartel are certainly giving it a run for its money.
The foundation of the illusion of understanding is data–Big Data. That the Fed has no idea of how the real economy actually functions is painfully apparent. But the state’s vast flood of data, neatly organized into slop-troughs that suggest precision, creates a very compelling illusion of understanding: media shills go to absurd lengths to treat bogus or marginal data as the equivalent of the tablets brought down by Moses.
Sorry, Corporate Media: the unemployment rate and the official rate of inflation are not real. They are illusions rigged to lull the masses and enrapture the simulacrum experts living high on the hog in academia, NGOs (non-governmental organizations) and think-tanks.
Here is the reality, as expressed by IMF Chairwoman Christine Lagarde: what passes for precise data is a guesstimate at best, and a carefully executed distortion at worst.
The net result is nonsensical policies that fail to achieve their stated objectives.Even more tragicomic, the spokespeople tasked with presenting this failure to the Great Unwashed are forced to speak gobbledigook that borders on the psychotic if taken at face value.
For example, Janus Yellen must claim she is planning to raise interest rates while also proclaiming that she’s keeping rates at zero for the indefinite future.If a non-Elite person rambled on in this fashion, they would be tossed in jail as a 51-50 (involuntary psychiatric hold).
Equally perverse is the illusion of control–the fantasy that the Federal Reserve controls the real economy. Note to Fed: hosting the financial feasting of the Power Elites for 7 long years had essentially zero positive effect on the real economy.
All the Fed’s QE and ZIRP (zero interest rate policy) accomplished was the inflating of multiple bubbles (housing, stocks, bonds, student loans, subprime auto loans, etc.) and chumming the feeding-frenzy of financiers gorging themselves on income-producing assets while the dwindling middle class has been mesmerized into accepting debt servitude as the acme of middle class membership.
The notion that the Fed or the IMF understands the real economy is pure illusion. So is the notion that they control the real economy. All they control is the level of exploitation of the many by the few.

Charles-Hugh Smith | Of Two Minds

20 Comments on "The Federal Reserve: Illusion Of Understanding, Illusion Of Control"

  1. makati1 on Wed, 28th Oct 2015 7:31 pm 

    “All they control is the level of exploitation of the many by the few.”

    The One World Government is proceeding on course. Gotta level the field and eliminate those pesky middle class consumers. The growth of the middle class in the developing world is slowing. The developed world’s middle class is shrinking. The plan seems to be working.

  2. BC on Wed, 28th Oct 2015 8:28 pm 

    @mak: The plan seems to be working.

    Yes, all according to “The Plan”.

  3. Truth Has A Liberal Bias on Wed, 28th Oct 2015 10:13 pm 

    Lol one world government?! Gimme a break! It’s gonna be government by ox cart in less than 10 years.

  4. GregT on Wed, 28th Oct 2015 11:14 pm 

    “It’s gonna be government by ox cart in less than 10 years.”

    The upper echelons could care less what form of transportation you have THALB. They will still be flying around the globe in their multi-million dollar personal jet aircraft, long after your Oxen die of starvation. And they aren’t going to give you a break, you are a nobody to them.

  5. James Tipper on Thu, 29th Oct 2015 12:12 am 

    “For example, Janus Yellen must claim she is planning to raise interest rates while also proclaiming that she’s keeping rates at zero for the indefinite future”

    My prediction, they will remain zero until we are in the shitter. If there wasn’t enough evidence to raise rates in 2014 then there’s EVEN LESS evidence to raise them now.

  6. GregT on Thu, 29th Oct 2015 12:41 am 

    NIRP is the new ZIRP. It has a better ring to it.

  7. marko on Thu, 29th Oct 2015 7:13 am 


  8. Davy on Thu, 29th Oct 2015 7:14 am 

    Greg this is where I differ from you slightly. Your above view of the elites depends on the degree and duration of collapse and at what stage of the collapse. In the beginnings of the die off ahead we are going to see the elites continue their status quo. The poor extremities in Asia, Africa, and South America will be allowed to die off. The safety net will be failing in the other major developed economies with people falling through the cracks but the elites will still be at it.

    Where I see this ending is at some point the social and economic fabric will fail. Our hyper connected and just in time economic system will fail probably quickly once a significant die off get going in the third world extremities. Too many resources will become stranded in failed states. The economic system will lose confidence and liquidity.

    It is still possible the power that be and elites will be able to engineer economic activity through financial control. Yet, I am not sure this can go on very long when the global system is collapsing. Confidence and liquidity is so fragile and fickle. There is no level of control that can contain chaos and panic. Fossil fuel infrastructure and the modern economy of financial exchange, production, and distribution will grind transport to a stop quickly. Global military powers, which are self-contained nations in themselves will limp along longer but not much longer as we know them now. Things will likely go south quick. Again, this all hinges on degree and duration of collapse and the degree and duration of cooperation among the global powers to be.

  9. Davy on Thu, 29th Oct 2015 7:42 am 

    James T, I agree because this is a process of collapse which means a downward trend. We will likely see financial volatility and gyrations. Rates may be moved up in an absurd attempt at a break out to the old normal. In other words a vain crap shoot of desperation. The failure will be worse than just staying the course in a slow death.

    This market is repressed and under top down financial manipulation. The powers that are at the level of central banks, political, and business are part of this in a lose association of control. The cooperation is behind the scenes with overt and covert understandings. These people have access to the best minds and data. They know exactly what is going on. I feel where they are deceived is at the level of their confidence in themselves.

    This deception of confidence is centered on technology and knowledge. How many times in history have we seen the same circumstances with empires being swept away by circumstances? The power of dysfunction, the irrational, and economic abandonment found in the chaos of random descent is so much more powerful than human institutions. Entropy is clearly wining at all levels. We see this entropy with depletion, deflation, and ecological degradation. These natural forces cannot be overcome but the elites. The elites think they can transcend entropy because of their corruption by power and control.

    Those who practice power and control get lost in its inebriation. They become addicted to it and cannot imagine life without it. It is a habituation of grandiosity. We are on a descending energy gradient without contingency plans. If you look around now nothing is going right anywhere with any region globally. Population and consumption overshoot are the primary causes. There is no way we can overcome entropy in a descending energy gradient especially in an interconnected world in population and consumption overshoot. Depletion, deflation, and social poverty cannot be contained very long. They destroy the system from within. The power that are cannot fathom loss of control. There moto is “failure is not an option”. Anyone with that kind of attitude when pitted against nature is doomed.

  10. shortonoil on Thu, 29th Oct 2015 8:47 am 

    “But the state’s vast flood of data, neatly organized into slop-troughs that suggest precision, creates a very compelling illusion of understanding: media shills go to absurd lengths to treat bogus or marginal data as the equivalent of the tablets brought down by Moses.”

    The government, and big corp have been sold a healthy heaping of crap by the techno geeks. More data is not necessarily better data, and the more that is collected the faster it degrades into a useless pile of garbage. The US government is the largest collector of data in the world, and the only thing that they have been able to do with it is to terrorize little old ladies at the airport, and piss off the Germans. They have an immense pile of junk, and they might as well be using Ouija boards for all the help it has provided.

    Big Government is big screw up, and that also applies to big data collection. They love to spin the myth that their super data collection makes them the Masters of the Universe. In reality these jerks couldn’t find their way out of a paper bag.

  11. paulo1 on Thu, 29th Oct 2015 9:24 am 

    Good comment, Short. Every culture needs creation myths. For some, it is 6 days long, others it is a raven finding people hiding in a clam shell, and still for others it is techno geeks working for politicians who grease the financial skids for their friends and pretend to know how the economy really works.

  12. Truth Has A Liberal Bias on Thu, 29th Oct 2015 3:22 pm 

    Is Greg T fucking retarded? He has trouble following conversations and maintaining relevant input.

  13. Davy on Thu, 29th Oct 2015 3:54 pm 

    Not true with liberal doses of dumbass. Greg has a brain. Greg has manners. Greg is my friend. Shut your focking suck you asswipe. Nobody on this board except maybe your asswipe friend Makati1 cares if you live or die.

  14. GregT on Thu, 29th Oct 2015 8:25 pm 

    Thanks Davy.

  15. BC on Thu, 29th Oct 2015 10:01 pm 

    The Fed’s primary job is to run political cover for the TBTE banks’ (owners of the Fed) license to steal via the monopoly control of the creation of private fiat digital debt-money at compounding interest at an effective infinite term.

    The Fed follows “the market”, i.e., the requirements of the Fed’s owners, the TBTE banks, who telegraph well in advance their requirements and what the Fed will eventually do.

    IOW, whatever the Fed’s owners want, and when, they get it. Whatever actions taken by the Fed (or not taken) are in the interest of the needs of the TBTE banks.

    How individual Fed Chairs and BOG/FOMC members carry out the political cover for the TBTE banks varies with events and personalities, but no one in those positions does anyhing unless it is privately vetted and affirmed by the principal capos of the int’l banking syndicate. Period.

    If one actually understands and internalizes this, the veil of mystery, intrigue, and confusion is lifted and the reality of the Fed’s purpose is clear. Moreover, all of the incessant chatter about will the Fed raise or not, when, how much, whether the Fed is behind the curve, etc., is just wasted breath and little gray cells.

    Then again, watching the breathless money honeys chatter on with the sound muted is not all bad. 😀

    Granted, espousing this view is likely to result in one being accused of being a conspiracy nutter, but examine closely for yourself and observe the public posturing, “the market” signals, and outcomes as I have for nearly 30 years, and it’s obvious.

    But we peasant cretins are not supposed to understand how the Fed and banking/financial system works or we might become so incensed that we revolt en masse against the banksters’ criminal int’l syndicate’s license to steal and shut them down.

    Yeah, sure. 🙂

  16. GregT on Thu, 29th Oct 2015 10:27 pm 

    Driving home this afternoon, I heard the great news. (not that I have the slightest fucking clue what this means) The FED is going to raise interest rates! Woo Hoo!

    Wait a second? Didn’t they say they were going to do that last month? And the month before that? And the month before that? Never mind.

  17. makati1 on Fri, 30th Oct 2015 12:51 am 

    GregT, there is nothing but liars in the government and the Fed. Some laugh at my One World Government ‘conspiracy’ talk, but, what is the Fed but a cog in the world wide financial setup?

    One World Money first, then government. After all, didn’t someone state that a long time ago? Oh, yes… “1790: Mayer Amschel Rothschild states “Let me issue and control a nation’s money and I care not who writes the laws.” Money first, then government. And if you think the Rothschilds are still not pursuing that plan, you are blind. SDRs anyone?

  18. GregT on Fri, 30th Oct 2015 1:24 am 


    I’m sure that you remember back in the days when I first started posting here, that I mostly agreed with you? Well, that hasn’t changed much. Could you please do me a favour, and stop with the anti-Americanism. I understand, as I have stated many times in the past, that you have put in the time, so to speak, but considering where we are all headed, it would serve us all better if you at least tried to show some semblance of respect for others on this forum that for the most part share the same views as you do. As I have repeatedly harped on Davy, this isn’t a competition. I don’t disagree with you Bill, but please tone it down a bit. For many of us here, there really isn’t anywhere else to go to discuss these issues. We have far more in common than not. I for one, would really appreciate not having the underlying animosity on top of the rest of the shit coming down the pipes.


  19. makati1 on Fri, 30th Oct 2015 2:45 am 

    GregT, I like to pull the Empire’s chain and also run up the blood pressure of a certain Missouri farmer here. I have no respect for any American that supports their war mongering government. Nor sympathy at all.

    I’ll make no promises. Without disagreement, all this would be is a back patting club and boring. You and I both know that the world would not be in this mess if the US had minded its own business and stopped promoting greed, but it didn’t and it deserves what is coming.

    Most Americans can only point the finger of blame at others as they never see the shit in their own back yard. I know what is happening in Asia, but Americans do not. They have no real experience with Asia, only the propaganda they read and watch between entertainments.

    I appreciate your similar thoughts and agreement on some topics which tells me that you are open minded and educated. I suspect that the faux Missouri farmer is still pulling up faux info on Asia to make a rebuttal to my comments, but I do not read his 1%er bullshit. So be it.

    I’ll only say that I will try to refrain from posting anti-Us comments, but there are so many ways to prove that most of the articles that are posted on this site is pure bullshit, that it is hard to resist. The Us is committing suicide and it’s citizens are still asking for more, more, more.

    Thanks for the advice. Have a great day!

  20. Davy on Fri, 30th Oct 2015 6:23 am 

    Makati1, the ball is in your court. We have dealt with this question so many times and you drift right back to the same agendas. This is not competition it is about finding the truth about something that is going to level the whole global system to a localized situation through a dangerous die off. All locals have comparative advantages and disadvantages. All nations are interconnected in this global system especially China and the US. Everyone has no choice but to suffer the end of this globalized human experiment.

    You don’t see me making outrageous claims about US foreign policy. The reason is it is a complete failure but so are many other nations including China and Russia. It takes two to tango. Your anti-American topics get excellent coverage because the US is so exposed to criticism. You damage that message by your obsessive anti-Americanism. The US is the number one problem in the world with foreign policy but China and the US are together number one economic problem. On population overshoot it is Asia with her 4.5BIL people. On consumption overshoot it is clearly the west but also Asia because of the sheer size of Asia’s population and its recent population growth.

    We can find balance on this board and present a more accurate message for the folks who visit. We can assist each and everyone here with the valid doom issues to counter the cornucopian narrative of the status quo. Peak oil is well supported here by experts. This is a good board if we could just get a few of the tangles untangled. You and I are a tangle. I will not back down until you do. I have backed down multiple times and you continue your same behavior of hate and resentment. Now is your chance. You should be smart enough to see China and the US are going down together and your Club Med Philippines will not survive that.

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