Wednesday, December 16, 2015

iPhones autocorrect the word lardass to Kardashian. Not only that, when you type in the word “Trump,” it reminds you of your upcoming rectal exam.

Jeb Bush was named the winner of the fifth republican debate. This came as much needed good news to his followers. All ten of them.

America’s newest high-tech warship broke down and had to be towed after just 20 days at sea. No word yet on what caused the problem on the USS Ben Carson.  

Five years ago, they opened the nuclear meltdown plant, Chernobyl, for tourists. It’s going well. Yuri, the curator, gave it three thumbs up.

Since you asked:

The Federal Reserve announced they are raising the Fed Funds rate by a 1/4 percent. Oh my word, do you realize what this means? No, really does anyone know what this means? 

Going back to my Wall Street bond broker days, I can explain it the way I remember it. (That does not mean I am right) 

When I was on Wall Street, from ’83 to ’86, Paul Volcker was the chairman of the Federal Reserve. He was the head of the Fed from 1979 to 1989 when he saved our financial asses when interest rates were at 19% and even higher. 

Volcker was appointed by Jimmy Carter and neither get nearly as much credit as they deserved for the rebound of the economy that Reagan and Clinton took way too much credit.

The Fed lends money to the top 30 or so financial institutions in the country. Volcker described his job as the guy who takes the punchbowl away from the party.

Well, for the past ten years, the party has been so dead, to get people to drink from the punchbowl, or even come to the party, they put their lending rate, the Fed Funds rate, at an-almost-nothing .25%. 

(Now, I know what you’re asking: what does this have to do with the opening of “Star Wars: The Force Awakens”? At this point it is too soon to tell)

Now there are signs of life at the party; unemployment is down and production is up. Hell, even Rob Kardashian is filthy rich. (Many would argue the economy is not better, namely yours truly whose cash flow has slowed to whatever unit of measurement is less than a trickle) 

Imagine you want to sell a table on Craigslist. You post a picture out if and list the price at $100. Next thing you know the phone is ringing off the hook. (Wow, did I just date myself. Your phone is ringing out of your pocket) 

You priced the table too cheap. So you raise the price to $300. Now nobody calls. You now know the table will sell around $222. That is what the fed is doing with raising interest rates. 

Another way to look at is how you microwave a burrito for three minutes, but it takes seven to ten minutes to cool off enough to eat.  That is a horrible example because nothing is that stupid. How in the hell can a microwave burrito take more than twice as long to cool off as it does to heat? It makes no damn sense. 

But I digress . . . 

By raising the interest rate 1/4 % to .50%, the Fed will see how fast the money supply drains. If borrowing slows way down, they know they reacted too soon and the table won't sell.

And the burrito is too hot to eat. They have to wait to raise rates. 

Bam, he tied it all together . . .