The Federal Reserve (a consortium of the major banks in the United States) has indicated that it will no longer give the banks 85 billion (billion) dollars a month and taper such payments over the next six months. This is called  "quantitative easing" will be phased out entirely in the next six months to a year.

The stock market, after the announcement, dropped 500 points in two days. What does it all mean and more importantly what will happen in the future?

First sit down, this boat ride will be rocky in the next few days and thereafter.

But first lets read a little for background as why the 85 billion a month loan to the banks matters and entails an immediate rise in interest/yield rates.

"The wheels fall off the entire financialized debtocracy wagon once yields rise.There's nothing mysterious about this:

4. As asset classes decline, lenders are wary of loaning money against these assets; if the collateral for the loan (real estate, bonds, stocks, etc.) are in a waterfall decline, no sane lender will risk capital on a bet that the collateral will be sufficient to cover losses should the borrower default."

From:

http://charleshughsmith.blogspot.com/2013/06/every-asset-that-depends-on-cheap.html

Talk of not giving the 85 billion a month started in late May: immediate panic.

http://www.cnbc.com/id/100761577

All of the world's assets are over-priced and headed for a fall and no or very lilttle credit will be available. Sound familiar, ala 2008?

http://www.cnbc.com/id/100803010

Fed Chief under heavy criticism now

http://www.cnbc.com/id/100787929

6/24/13

But what does all this mean for me sitting at home on my couch? That later.

85 billion a month being given to the banks soon to stop?

 "Five years since the 2008 financial meltdown, the speculation and fraud that caused the crash are back in full force in the United States. Flush with the $85 billion in cash printed up and handed to the banks every month by the Federal Reserve, business at the Wall Street casino is booming. Stock values are at record levels and so are bank profits, amidst declining wages and mass poverty."

http://www.globalresearch.ca/who-calls-the-shots-government-of-by-and-for-the-banks/5336430

 Bernanke just hints that the 85 billion a month might end in 6 months to a year and the stock market plunges 500 points in three days.

Why should this be so?
Let's explore this in the coming days looking at the down on the ground relationship between the Federal Reserve's 85 billion a month give-away to the banks and the levels of the stock market.

First think about this way, if I gave you 85 billion a month, and you are an American bank, what do they do with it?

Here are a few first answers.

1. Banks don't lend it to Americans seeking loans. They see Americans as too old, losing their purchasing power, maxed out on their credit cards, student debt at a trillion dollars and have concluded that it is bad business to give Americans loans. So they loan it over seas where there is cheap labor and have abandoned Americans in what some have called 'economic treason."   They take our money after we have given them infrastructure and government guarantees and gives that money to others. If they fail in these "investments" the US government bails them out.


Infuriatingly, they have gone to Congress and now, by law, are allowed to use our daily deposits in this gambling scheme, and, harm to injury, we pay for it again via guarantees (Fannie Mae and Freddy Mac) if these gambles fail; and, in increases in taxes and layoff in so-called austerity programs because the US govenment goes broke backing them,  and furthe, they pass on tips to the US congress people via insider trading, so Congress people get rich too, at the expense of the American middle class.  (Great sentence in my estimation.)
Honest, this really happens.

2. They also gamble with that money on derivatives. Most Americans don't know that a stock broker can by a stock with  just 10% down hoping that is 30, 60 or 90 days that the stock will rise. Some say they fix the market so a given stock will rise or fall based on their bets. So banks gamble with each other and other foreign banks with these bets. They take out, in addtion, insurance policies on both sides of a given bet, just like Las Vegas.

 6/24/13

The stock market week two with more on the 85 billion

http://www.washingtonpost.com/business/more-trouble-in-china-and-higher-bond-yields-send-us-stocks-lower-in-early-trading/2013/06/24/b62c6050-dcd8-11e2-a484-7b7f79cd66a1_story.html

 http://www.reuters.com/article/2013/06/24/us-markets-global-idUSBRE88901C20130624

 http://money.cnn.com/2013/06/24/news/economy/federal-reserve-qe3/

http://online.wsj.com/article/BT-CO-20130624-710864.html?mod=googlenews_wsj

http://online.wsj.com/article/SB10001424127887323998604578565820175747866.html

More on the history of the federal reserve

http://www.nytimes.com/2013/06/23/business/the-federal-reserves-framers-would-be-shocked.html?pagewanted=all&_r=0

 One pundit says our entire financial system is a failing Ponzi scheme.

http://theeconomiccollapseblog.com/archives/the-biggest-ponzi-scheme-in-the-history-of-the-world

 6/26/13

So how will this affect you on the couch. Let's start that scenario.

First will be your local government. Taxes will go up and there will be more layoffs in the private sector.  Geez.
 

"So why should the average American care about this?

Well, if the era of "cheap money" is over and businesses have to pay more to borrow, that is going to cause economic activity to slow down.

There won't be as many jobs, part-time workers will get less hours, and raises will become more infrequent.

Those are just some of the reasons why you should care about this stuff.

Municipal bonds are being absolutely crushed right now too.  You see, when yields on U.S. government debt rise, they also rise on state and local government debt.

In fact, things have been so bad that hundreds of millions of dollars of municipal bond sales have been postponed in recent days...

With yields on the U.S. municipal bond market rising, local issuers on Monday postponed another six bond sales, totaling $331 million, that were originally scheduled to price later this week.

Since mid-June, on the prospect that the Federal Reserve could change course on its easy monetary policy as the economy improves, the municipal bond market has seen a total of $2.6 billion in sales either canceled or delayed.

If borrowing costs for state and local governments rise, they won't be able to spend as much money, they won't be able to hire as many workers, they will need to find more revenue (tax increases), and more of them will go bankrupt."


There's more:
 

"Charles Nenner Research (source)

Stocks should peak in mid-2013 and fall until about 2020.  Similarly, bonds should peak in the summer of 2013 and fall thereafter for 20 years.  He bases his conclusions entirely on cycle research.  He expects the Dow to fall to around 5,000 by 2018 – 2020.

Kress Cycles by Clif Droke (source)

The major 120 year cycle plus all minor cycles trend down into late 2014.  The stock market should decline hard into late 2014.

Elliott Wave Cycles by Robert Prechter (source)

He believes that the stock market has peaked and has entered a generational bear-market.  He anticipates a crash low in the market around 2016 – 2017.

Market Energy Wave (source)

He sees a 36 year cycle in stock markets that is peaking in mid-2013 and down 2013 – 2016.  “… the controlling energy wave is scheduled to flip back to negative on July 19 of this year.”  Equity markets should drop 25 – 50%.

Armstrong Economics (source)

His economic confidence model projects a peak in confidence in August 2013, a bottom in September 2014, and another peak in October 2015.  The decline into January 2020 should be severe.  He expects a world-wide crash and contraction in economies from 2015 – 2020."

All quotes from:

http://theeconomiccollapseblog.com/archives/the-trigger-has-been-pulled-and-the-slaughter-of-the-bonds-has-begun

 7/3/13

The Federal Reserve will impose new capital requirement on the big banks. Good for the middle class or bad for the middle class?

https://mail.google.com/mail/u/0/h/pzzxze2ev4mt/?&v=c&th=13fa5c605949c16c

 http://rt.com/shows/keiser-report/episode-466-max-keiser-651/

 http://www.businessweek.com/articles/2013-06-27/david-stockman-takes-on-the-feds-easy-money-policies-and-the-world

 7/11/13

The Fed gave away 16.4 Trillion dollars of American tax payer money and is still giving away 85 billion a month today. Why?

n July of 2011, I was one of the first to bring to your attention to the incredible fact that the US Federal Reserve had secretly given away $16 TRILLION dollars;

"Banks like JP Morgan benefited from the foreign bailouts - they are some of the largest creditors of the bailed out countries. Instead of having to write off their foreign losses the US Federal Reserve bailouts enabled them to be paid in full."

http://news.goldseek.com/GoldSeek/1347653228.php

 7/12/13

Federal Reserve and how the Fed has scammed the American public

http://www.globalresearch.ca/excess-reserves-at-the-federal-reserve-one-of-the-biggest-financial-scams-in-history-a-whopping-us1-794-trillion/5339221
 

 Banks are not making loans to consumers.

http://www.pbs.org/newshour/businessdesk/2013/09/first-time-homebuyers-fighting.html