The Federal Reserve’s balance sheet unwind was MIA again this week as agency MBS increased with latest System Open Market Account Account Holdings report. SOMA January 24 holdings reflected a magical $705 million INCREASE in agency mortgage-backed securities. This is rather strange behavior indeed for what was advertised as a balance sheet “unwind”. It’s looking more like the un-unwind, at least for the past two weeks.

Much like the crony capitalist elite dining in Davos, the fine purveyors of bogus economic theory inhabiting the halls of the Marriner Eccles building are probably a tad bit concerned with the recent rise in rates. Perhaps not. Time will tell, but for now it appears that the pundits who said they were going to be rolling off $8 billion per month in agency MBS and $12 billion a month in Treasuries this quarter certainly have their work cut out for them.

The 10-year yield has spiked to levels not seen since last March. Today’s new home sales report is yet another reminder that artificial asset inflation has consequences. Things could get particularly interesting if the Fed follows through with more rate hikes this year. The latest Freddie Mac survey on mortgage interest rates saw the 30-year fixed rise to 4.15 percent. New home prices in the U.S. are at record highs. U.S. wage growth is tepid at best. Throw in higher interest rates and things could get interesting in a hurry.

Global inequality is getting worse. That’s not exactly a shock considering the coordinated efforts of global central banks during the last 9 years. They serve the interests of capital above the human kind, and when push comes to shove they are more closely aligned with the interests of major Wall Street banks, banks which closely resemble a criminal enterprise, a remnant of America’s decaying brand of predatory capitalism. It should come as no surprise that the “wealth effect” is not feeding the middle class. That’s a feature, not a bug.

The good news for now is that we’re not Canada or Australia. The bad news is that it may not matter in the long run. You may recall that it wasn’t so long ago when those steadfast “conservatives” were screaming from the rooftops about the spiraling deficit. Now that they are calling the shots in Congress, huge deficits are suddenly en vogue and gigantic corporate subsidies are the order of the day. It would seem the color of money is the ultimate corrupter.

Mr. Powell may find that he’s trying to land his plane on a burning runway when this is all said and done. I would imagine he’s already feeling very skittish with the mess he inherited from Bernanke and Yellen. Before you start feeling sorry for Powell, however, remember that he accumulated a good chunk of his wealth during his work at the Carlyle Group. He’s reportedly one of the wealthiest members of the Federal Reserve Board of Governors with a net worth between $20 million and $55 million. Birds of a feather flock together, and that’s particularly the case when you are talking about predatory finance.